Real estate sector at medium high vulnerability to dirty money

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines — The Philippines’ real estate sector has a medium high vulnerability to dirty money transactions due to limited anti-money laundering/combating the financing of terrorism (AML/CFT) regulation, according to the Anti-Money Laundering Council (AMLC).

In a report, the AMLC said it received 142,562 covered transaction reports (CTRs) worth P684.4 billion, as well as 5,416 suspicious transaction reports (STRs) worth P321.4 billion.

Under Republic Act 11521 or the Anti-Money Laundering Act (AMLA) of 2001, real estate covered persons are required to report single cash transactions in excess of P7.5 million or its equivalent in other currencies.

Likewise, covered persons, including banks and other financial institutions, are also required to submit STRs regardless of the amount and mode of payment.

The AMLC said that most of the sample CTRs ranging from P500,000 to P3 million cornered 76.1 percent of the total CTRs, while transactions in excess of P7.5 million accounted for only 10.7 percent.

The banking sector accounted for 99 percent of the CTRs, with commercial banks corner 85.8 percent followed by savings and mortgage banks with 9.4 percent, government banks with 3.2 percent and private development and rural banks with 1.25 percent.

When it comes to STRs, the financial intelligence unit said 76 percent was filed under suspicious indicators and 24 percent was filed under associated predicate crimes.

The AMLC assessment showed that swindling or fraud, violations of the Securities Regulation Code, plunder or corruption, as well as illegal drugs were the most reported suspicious transactions associated with predicate crimes with a combined value of P42.97 billion.

On the other hand, STRs under other suspicious indicators, including the amount involved not commensurate with the business and financial capacity of clients, no underlying legal or trade obligation or economic justification, among others amounted to P278.43 billion.

“These STRs may likewise be related to other financial crimes and tax offenses. Transaction analysis reveals that in terms of STR value, cash and check-related transactions, and inward remittances rank among the top five of the most reported suspicious transactions,” it said.

The AMLC reported that it has subjected 11 real properties worth P737.07 million involved in fraud, graft and corruption, drug trafficking and violations of the SRC between 2013 and 2017 under freeze orders or civil forfeiture as well as 64 properties worth P139.29 million between 2018 and 2020.

The financial intelligence unit has frozen seven properties involved in drug trafficking, as well as 126 hectares of real properties owned by two United Nations Security Council Resolution (UNSCR)-designated individuals, and a five hectare land owned by a certain alleged associate of a designated terrorist group under RA 11479 or the Anti-Terrorism Act of 2020 and RA 10168 or the Terrorism Financing Preventions and Suppression Act of 2012.

While there have been improvements, the AMLC said the overall risk of the real estate sector is still within the medium high level amid the low level supervision of the sector for AML/CTF, the increase in sector’s threat to money laundering and terrorism financing, as well as the increase in customer risk.

“The overall threat of the real estate sector is rated medium as the sector is exposed to illegal drugs, corruption, fraud, and terrorism threats. On the other hand, the limited AML/CTF regulation of the sector at the time of the assessment has exposed the sector to medium high vulnerability to money laundering or terrorism,” the AMLC said.


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