AMLC seeks stricter regulations in anti-money laundering actions

MANILA, Philippines — The Anti-Money Laundering Council (AMLC) is pushing for enhanced regulatory controls and enforcement actions, as well as deeper understanding of money laundering and terrorist financing risks, as suspicious transaction reports (STRs) from 2015 to 2019 amounted to P52.3 trillion.

Based on its latest risk assessment, the AMLC said the application of STR for the five-year period generally shows an increase in the reporting of suspicious transactions involving legal persons and business entities.

“Sample STRs filed involving legal persons and business entities also show an estimated value of P52.3 trillion with a significant increase in 2019,” the AMLC said.

Data showed the estimated STR value amounted to P43.81 trillion in 2019 or 164 times the P267.54 billion booked in 2015. Year-on-year, the amount in 2019 was almost 10 times the P4.69 trillion worth of STRs filed in 2018.

“The 87,190 STRs involved 6,177 unique subjects or account names. It is not clear, however, on the number of STRs related to each type of legal person or business entity, as there is no specific field on the type of business registration,” it added.

The financial intelligence unit attributed the increasing number of STR submissions to the existence of case typologies and typology reports that serve as guidance papers to various covered persons in transaction reporting.

Banks accounted for the bulk or 95 percent of the STRs, followed by credit card companies with 1.1 percent, and e-money issuers with 0.82 percent.

The AMLC said banks and credit card facilities remain the preferred channels for business entities, but there is a potential trend in the use of e-money issuers and money services businesses, with 1,148 STRs recorded from 2017 to 2019, from zero in 2015 and 2016.

For the same period, the STRs filed by insurance companies recorded at 0.12 percent, while STRs filed by financing companies and investment houses, including those with quasi-banking functions, registered at 1.24 percent.

The AMLC said the report showed STRs filed in relation to violations of Securities Regulation Code of 2000 cornered 12.3 of the total filings, followed by drug trafficking with 6.4 percent, swindling with 6.1 percent, violation of the Electronic Commerce Act of 2000 with 1.3 percent, as well as graft and corrupt practices with one percent.

It added a considerable number of STRs were also filed on transactions with no underlying legal or trade obligation or economic justification with 31.5 percent and transactions not commensurate with the business of financial capacity with 18.6 percent.

In terms of value, STRs related to fraud and illegal exactions, forgeries and counterfeiting as well as swindling ranked among the top predicate offenses.

The AMLC said the terrorism- and terrorist financing-related STRs filed on accounts of legal persons and business, entities account for 0.20 percent of the total sample STRs used in the study.

The value of terrorism and terrorist financing-related STRs is estimated at P1.56 billion and involved non-stock corporations such as foundations, education services as well as certain types of businesses, such as construction firms, gas/petroleum, and trading businesses, among others.

The AMLC urged the Securities and Exchange Commission (SEC), as well as the Cooperative Development Authority (CDA), to reevaluate the process of issuing licenses for legal corporations.

It also urged the SEC to reconsider risk-based reportorial and registration requirements for corporations and partnerships.

The financial intelligence unit also urged regulators and supervising agencies such as the SEC, CDA, the Bangko Sentral ng Pilipinas (BSP), Insurance Commission (IC), and Department of Trade and Industry to further enhance coordination with the AMLC and law enforcement agencies in addressing risks associated with money laundering and terrorist financing.

The Philippines is in danger of being included in the gray list and facing sanctions from Paris-based global watchdog Financial Action Task Force (FATF) after it was placed under a 12-month observation period by the Asia Pacific Group on Money Laundering (APG).

The country was blacklisted by the FATF in 2000 for failing to address “dirty” money issues paving the way for the enactment of AMLA in 2001. The country was subsequently removed from the blacklist in February 2005.

It narrowly avoided being placed on the blacklist in 2012 as it criminalized terrorist financing and pursued quicker freezing of suspect accounts.