In search of dirty money

Let’s say you held your neighbor’s wonder dog for ransom and you were paid P17 million.

The drop-off was successful, you have the money and the dog is back with your neighbor.

You have P17 million, you want to spend it, but first you have to put the money somewhere–a bank is the most obvious choice. Or you can "donate" it to a foundation that you created two months before the dog-napping. You can even use the cash to buy shares of San Miguel Corporation. Or, if you’re really paranoid, you can get a canoe and physically take the money to some island republic and deposit it in a bank there.

ot this island republic, says Vicente Aquino, executive director of the two-year-old Anti Money Laundering Council (AMLC), an obscure but crack group of highly-trained financial analysts, financial investigators, lawyers, accountants and information technologists.

The council, funded mostly by the Bangko Sentral ng Pilipinas (BSP) and some presidential discretionary funds, is known to financial reporters as the blackhole.

By law, the country’s financial institutions are required to pour data into the AMLC which then generates such information as who deposited how much, where and for what. Also by law, the council is expressedly and strictly prohibited from ever sharing this information until cases are prosecuted in court.

But Aquino is eager to explain what you can no longer do with your dog-napping money.

For starters, he says, banks are now required to report suspicious transactions to the BSP which then reports the information to the AMLC. So if you suddenly deposit P17 million to your bank account which normally hovers just a few hundred pesos above the minimum deposit requirement, the bank will report your transaction. An alarm is tripped and someone in the council will be looking at your past transactions.

What if you split it up and deposit the money in six hundred small accounts?

"We will see that, too," Aquino says. "Our database system is capable of tracking transactions carried out over the entire system by individuals or entities."

Under the law, financial transactions over P500,000 are automatically reported by the banks. If you split your deposit into smaller amounts and put them in seven bank accounts, that qualifies as a suspicious transaction and that will get reported as well.

"It has so far worked," Aquino says. "There have been several instances where one bank would report a suspicious transaction involving the amount less than P500,000 and other banks would not report when in all these transactions, only one person is involved." AMLC investigators can easily detect when several transactions are structured, involving several banks or several branches of the same bank.

According to Aquino, even the foundation idea will not work anymore. At some point, whichever entity receives your money will have to deal with a bank and the transaction will be reported.

"All it takes is one bank report, one insider to enable the AMLC to investigate," Aquino says. "Sometimes we get our information and leads from congressional exposés, some privileged speech someone delivered in Congress or even newspaper articles."

Once tagged as one of the world’s last remaining havens for money launderers, the Philippines was recently removed from the blacklist of the Paris-based Financial Action Task Force on Money Laundering or FATF.

Money laundering simply means turning dirty money into clean money," Aquino explains. "It’s a process of cleansing criminally created funds and giving them the appearance of having been legitimately acquired."

In this area, Aquino is a trailblazer. Before 2001, the Anti Money Laundering Law did not even exist. "Our laws didn’t exactly allow money laundering; it just wasn’t identified as a specific crime although proceeds from criminal activities may be confiscated in favor of the government," Aquino shares.

With mounting pressure from the FATF, the Philippines enacted the Anti Money Laundering Act of 2001, shortly after it was put in the FATF blacklist of countries that face possible sanctions for their failure to address money-laundering concerns.

The creation of the AMLC was made even more urgent by the US-led crackdown on anti-US organizations and their considerable financial backing from supporters around the world, particularly in the oil-rich Middle East.

"The law was enacted in order to ensure that the Philippines will not be used as a money laundering haven for organized crime groups and other criminal elements including terrorists," Aquino explains, adding that the Philippines was largely a transit point for such activities, indicating that the country’s financial system was indeed the washing machine that turned dirty money into clean money.

"Our financial system was then being used to launder the proceeds of these criminal activities but that is, I must say, a thing of the past," Aquino states.

Pouring over computer-generated data and sitting through hours of lectures on the detection and prosecution of financial crimes is not exactly what one would consider a swashbuckling job.

But AMLC agents, including Aquino, are all armed and trained to defend themselves if and when it becomes necessary. They are, after all, dealing with malefactors who are not about to sit back and watch their loot being seized.

"We are trained in various areas by agencies here and abroad," including the US Federal Bureau of Investigation Academy, the US Financial Crimes Enforcement Network, the Australian Transaction Reports and Analysis Centre, the United Nations office on drugs and crime and a nebulous, ominous-sounding entity that Aquino refers to as the "technical assistance office of the US treasury department."

Aquino, after all, is doing a job that two years ago did not even exist. It had to be invented and he was picked to do it–the first person in the country to ever hold such a position and perform such a job.

How does something like that happen to anyone?

Aquino was hand-picked by BSP governor Rafael Buenaventura who currently heads the AMLC as its co-chairman, together with Securities and Exchange Commission (SEC) chairman Fe Barin.

Buenaventura is known as the chief babysitter of the controversial Anti Money Laundering Law when it was going through the Congressional grinder not once, but twice.

One of Buenaventura’s many gifts, according to bankers, is to handpick quiet, unassuming people who could blindside you by actually getting the job done with minimum fanfare and maximum results.

Although Aquino can be articulate and even verbose, he falls squarely in the category of quiet and unassuming, an image ruined only by his height and posture. The man is tall and when he walks by you feel like backing up against the wall.

Typical of most lawyers, Aquino talks in long, compound sentences; you can almost hear the semi-colons in his statements which are all categorical and leave nothing to ambiguity. If you didn’t get it right the first time, it’s your screws, not his.

Coming from an impoverished family in Magalang, Pampanga, Aquino went all the way through high school only because he was smart enough so that his parents did not have to pay for his tuition.

Aquino’s father was a farmer and laborer, his mother spent full time raising nine children of which he is the second youngest. The stereotype, however, was only surface-deep.

His mother, Aquino says, was a remarkable woman with indelible strength. "I will have to say she was the strongest influence in my life. She was completely uneducated, an illiterate. But she was a very strong and intelligent woman."

She taught him the value of hard work and independence. "When you are poor, you will be left to your own devices. She taught me dedication to duty and appreciation of what I already had. She told me to do what had to be done to get what I wanted and it worked."

After completing high school, Aquino went to Lyceum of Manila and took up journalism, supporting himself by working for the public relations firm of the late Bren Guiao, who later became governor of Pampanga.

"I was writing press releases, speeches, news articles and sometimes editorial pieces," Aquino recalls. At some point, he also wrote for the Manila Times during its heydays in the darkest of the Marcos years. "It was frustrating sometimes, the atmosphere was too hostile."

After college, Aquino started working for the city prosecutor’s office of Manila. "That’s where I got the idea of going to law school," he says. "I spent a lot of time with lawyers there and I said to myself, why not?"

That meant working during the day and going to school at night. "My parents would not have been able to send me through law school so I had to support myself."

After becoming a lawyer, Aquino worked as a prosecutor for a time before ending up as legal counsel in a major commercial bank. Then he became vice president for legal affairs for a conglomerate and finally landed a job as director of litigation and investigation at the BSP.

Soon, Aquino was director of the BSP’s special investigation department before he was appointed as executive director of AMLC.

No one starts out as an eight-year-old dreaming of running after white-collar criminals engaged in complex financial crimes. Not even Aquino, even if he is tailor-fitted to the job that almost looks like it was invented for his personal pleasure.

"I never dreamed of becoming a lawyer," he admits. "My interest in commercial law came only much later. I was fascinated by its complexity, the many ways you can twist it and the many ways you shouldn’t."

Aquino, however, is a natural investigator and puzzle-solver. "People are like snails," he says, chuckling at the image. "A snail always leaves a trail and even if people try their best to conceal what they have done, we can always follow their trail and this is what excites me about the job."

Aquino is the bounty-hunter running after the cashier. Instead of merely bringing the perpetrator bodily into the folds of law, he would hunt down every last cent of profit they made out of their criminal activities.

"Once you corner your quarry, you find the satisfaction of seeing your efforts not having been in vain," he says.

At 53 and with three more years left in his five-year ALMC term, his job is far from over.

"I gave myself my entire five-year term during which the Philippines would be removed from the FATF’s blacklist," Aquino says. The delisting came three years early but he was not surprised. "I knew we were going to be delisted, considering what AMLC has been doing together with the work of all the relevant law-enforcement agencies."

Being removed from the FATF blacklist, Aquino says, removes a heavy burden from the AMLC. "Now that we can focus completely on the effective implementation of our law, we are not being distracted by the blacklist and we can concentrate on all areas of financial investigation as well as sharing of intelligence and information with our counterparts."

This leads to the other major objective that Aquino has set out to accomplish during his term. The Philippines, specifically the AMLC, must become a member of the so-called Egmont Group, a loose organization of all financial intelligence units like the AMLC.

"That’s the last jewel missing in the AMLC crown," he says. "If we are effective now, we will become even more effective when we become a member of the group. We will have access to the wealth of information that they have accumulated."

After all, criminal activities, particularly terrorism, are borderless transnational crimes. The net has to be big and equally borderless in order to catch the perpetrators.

Another job waiting to be completed, Aquino says, is the anti-terrorism law which would add another dimension to the operations of the AMLC. "We still don’t have an anti-terrorism law but under the AMLA, acts of terrorism are considered predicate crimes," he explains. "In our applicable jurisprudence, the persons financing the commission of terrorism are equally criminally liable as those who committed the actual acts of terrorism. The financiers are considered principals by inducement or indispensable commission. Actual people who did it are principals by direct participation."

In English, that means: if you funded it, you did it.

Eventually, Aquino says the AMLC’s present complement of 36 men and women would have to expand to be able to cope with the increasing amount of work.

"We have a small budget. I’d like a bigger budget for AMLC so we could fill in the vacant positions and eventually expand the plantilla," he says. "We really need to increase the number of financial analysts, investigators and litigators. The number of reported cases is increasing. We also need IT experts so that we can cope with the volume of transaction reports we are receiving."

That done, what next?

"I really haven’t thought of it. But there’s a book there somewhere," he smiles.

"It is said that a man must do at least three things before passing on: plant a tree, have a child and write a book," he explained. "That’s two out of three so I plan to write the book eventually."

The book, naturally, will be the definitive text book on money-laundering. It’s the ceremonial transfer of primary knowledge to the next generation. "I like farming too. I have several trees on a very small piece of land," he shares. "I’m a simple man with simple needs. I do only what I can afford."

That, too, was a lesson from mother.