Senate, House ratify amendments to AMLA

THE Senate and the House of Representatives on Wednesday separately ratified the bicameral conference committee report adopting amendments to the 2001 Anti-Money Laundering Act (Amla), paving the way for its submission to Malacañang for signing into law.

The ratification allows the Philippines to beat the February 2021 deadline set by the Paris-based global dirty-money watchdog Financial Action Task Force (FATF).

Speaker Lord Allan Velasco said the reconciled version of the bill, which introduces more stringent provisions to Republic Act 9160 or the Anti-Money Laundering Act (Amla) of 2001, would help the Philippines avoid being included on the gray list of FATF-International Cooperation Review Group.

Velasco said the bill, one of the priorities of the 18th Congress, will now be transmitted to President Duterte for signature.

“We are glad that the bill is now just one step away from becoming a law and we are poised to beat the deadline for us to come up with a much stronger legislation against money laundering so we can avoid being placed on the FATF gray list,” Velasco said.

“The Philippines cannot afford to be on that list as it would further hurt the economy already struggling from the devastating effects of the Covid-19 pandemic,” he added.

Inclusion on the gray list means an additional layer of scrutiny from regulators and financial institutions, delayed processing of transactions and blocking the country’s road to an “A” credit rating, he added.

“We need to avoid adverse finding against the Philippines which could lead, among others, to increased cost of financial transactions, including OFW remittances,” Velasco said.

The approved bicameral version had included tax crime as a predicate offense to money laundering and set a threshold to excess of P25 million.

The bicameral panel also agreed to require the submission to the Anti-Money Laundering Council (AMLC) of reports on all real-estate transactions exceeding P7.5 million.

It kept the House provision granting the AMLC the power to investigate, issue subpoenas and conduct search and seizure.

The final version will now include Philippine offshore gaming operators or POGOs and their service providers among the covered persons.

The FATF has given the Philippine government until February 1 to enact and implement the changes to the Amla, in accordance with its standards against money laundering and terrorist financing. The initial deadline was originally set in October 2020, but was extended due to the Covid-19 pandemic.

The Philippines was gray-listed by the FATF in 2000 for failing to address “dirty” money issues, paving the way for the enactment of RA 9160 in 2001. It was subsequently removed from the list in February 2005.

Conflicting provisions: Poe

Seeking the final vote to ratify the updated Amla, Sen. Grace Poe, who chaired the Senate panel in the bicameral conference committee, said it took some time to finish the task as “there were many conflicting provisions between Senate Bill 1945 and House Bill 7904.”

But, she added, “through the hard work and perseverance of our colleagues, Senators Ralph Recto and Frank Drilon, as Senate conferees, and that of Representatives [Junie] Cua, Stella Quimbo and [Virgilio] Lacson, as House conferees, we were able to reconcile these differences,” Poe said.

She added the bicameral conference committee eventually agreed to “use the House version as the working draft, and from there, the common and reconciled provisions were assimilated.”

Agreements at bicam level

Poe reported the agreements settled by the bicameral panel:

a. First, the Senate proposal that transactions in excess of P500,000 of all offshore gaming operators or POGOs as well as service providers be included within the purview of Amla was accepted, to ensure that POGOs and service providers are not used for nefarious activities.

b. Second, real-estate brokers and developers are included as covered persons but only for single cash transactions involving an amount beyond P7.5 million. This qualification sufficiently narrows down the burden of reportorial requirements to the high-risk transactions that are usually flagged in money-laundering regime. The proposed Senate amendment to increase the reporting threshold of the LRA from P500,000 to P5 million was deleted to retain the current coverage.

c. Third, the tax crime covered by the amendments was limited only to tax evasion as provided under Section 254 of the National Internal Revenue Code, as amended. The basis for this: tax evasion or attempted tax evasion is the provision most correlated with the crime of money laundering.

d. Fourth, after key negotiations, the panel agreed to provide additional but limited investigative powers to AMLC, such as the power to apply for the issuance of a search-and-seizure warrant before any competent court, as well as the power to apply for the issuance of subpoena with any competent court. This adheres to the key recommendation of the Financial Action Task Force Asia-Pacific Group (FATF/APG) while still maintaining the integrity of the Constitution and Philippine laws.

e. Fifth, the panel adopted the Senate proposals related to proliferation-financing of weapons of mass destruction, as provided under pertinent UN resolutions. These measures include the addition of certain terms and their definitions; the expansion of “unlawful activities” to include violation of Section 19 (3) under the Strategic Trade Management Act; and the concretization of AMLC’s power to implement targeted financial sanctions, including ex parte freeze without delay, against those financing the proliferation of weapons of mass destruction related to the UN resolutions.

f. Sixth, the Senate provision granting AMLC the additional power to preserve, manage or dispose assets pursuant to a freeze order, preservation order or judgment of forfeiture was adopted.

g. Seventh, the provision empowering AMLC to enlist the assistance of and/or direct any government agency in any anti-money-laundering operations was deleted, as this power already exists under the present Amla provisions.

h. Eighth, the panel adopted the proposed section on information security and confidentiality. This would safeguard any information processed through AMLC, and deter AMLC staff and personnel from otherwise leaking or misusing information they acquired by reason of their office.

i. Ninth, the provision on the system of incentives and rewards was deleted to avoid confusion and curtail possible legal implication.

j. Tenth, the panel kept the section on the non-intervention of BIR, but adding a new sentence allowing AMLC to coordinate with the BIR on investigations related to tax evasion under Section 254 of the NIRC, as amended. This amended provision aptly provides for AMLC’s ability to pursue investigations in coordination with BIR, while maintaining AMLC’s independence from BIR and vice versa.

Gray list

Earlier, the AMLC urged Congress to immediately pass the bill amending the Amla to address strategic deficiencies in the country’s law.

The AMLC warned that failure to amend weak areas in the law may place the Philippines in the gray-list jurisdiction and even in the black-listing of the FATF.

The FATF publicly identifies jurisdictions that have deficiencies in strategic anti-money-laundering and counter-terrorism financing.

According to AMLC, deficiencies and legislative amendments should include tax crimes and proliferation financing under Amla.