EDITORIAL - Endangered remittances

Several banks have denied shutting down their operations in Italy following the multimillion-dollar electronic heist that saw money stolen from the Bank of Bangladesh account in the US Federal Reserve being laundered through Philippine casinos and the banking system.

The scandal has not only become a national embarrassment for the Philippines, where a large portion of about $81 million still has to be traced, but has also endangered the remittances of millions of overseas Filipino workers. This concern has been raised by the Department of Foreign Affairs, even as it denied yesterday the reports about several Philippine banks shutting down their operations in Italy due to the money laundering scandal.

Credit rating agencies and various analysts have expressed confidence that the Philippine banking system will weather this storm. There are also no indications so far that the scandal might put the country on an international blacklist as a money-laundering haven.

Much will depend, however, on how the country will deal with the scandal. Lawsuits have been filed against the individuals believed to have participated in the laundering scheme; more indictments are expected.

What the international community will be expecting, however, are reforms to plug the loopholes that allow the Philippines to be used for funneling dirty money. The case has highlighted the weaknesses in the country’s anti-money laundering laws, which do not cover casinos, as well as the risks posed by having bank secrecy laws that are considered among the toughest in the world.

Most of the reforms must emanate from Congress, and there lies the problem. Lawmakers were the ones who kept casinos out of the reach of the money-laundering police. Lawmakers are also among the major opponents of proposals to ease bank secrecy laws, even if only for purposes of fighting tax evasion.

The congressional resistance is widely deemed to be self-serving, with the ongoing Senate probe meant largely to raise politicians’ profiles during an election campaign rather than in aid of legislation. With OFW remittances endangered by the scandal, perhaps there will be greater pressure for the necessary legislation to be passed.