AMLA amendments sent to Congress

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Finance and monetary authorities submitted to Congress amendments to the Anti-Money Laundering Act and Bank Secrecy Law in a bid to strengthen the Philippine financial system’s legal framework.

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The proposal transpitted by the Department of Finance (DOF) was prepared jointly with the Anti Money Laundering Council (AMLC) and the Bangko Sentral ng Pilipinas (BSP) to strengthen the country’s Anti-Money Laundering Act (AMLA).

The DOF also sent a proposal to amend the Bank Deposit Secrecy Law.

The agencies said amendments to the AMLA have been made more urgent by recent financial controversies that have exploited the weakness in the country’s tax and financial system’s legal framework.

They cited the laundering in the country of the money stolen from the Bank of Bangladesh, the Panama Papers exposing offshore bank transactions from across the globe that may have avoided or evaded domestic taxation, and the “de-risking” phenomenon, where foreign banks are closing the accounts of Philippine money transfer operators abroad, and may double the cost of remitting money to the Philippines from abroad.

The proposal to amend Republic Act 9160, or the Anti-Money Laundering Act of 2001 (AMLA) will include casinos as mentioned in the Financial Action Task Force (FATF) recommendations. Tax evasion, among other crimes, will be included as a predicate crime to money laundering.

The proposal also seeks to improve the AMLC’s ability to safeguard the financial system from money laundering activities by authorizing the AMLC to issue subpoenas and freeze orders.

The bill also increases the monetary penalty for administrative sanctions.

Among the amendments is the designation of the BSP as the supervising authority over foreign exchange dealers, money changers, and remittance and money transfer businesses for purposes of the AMLA.

“The banking and financial system of the Philippines remains stable and strong. To respond to emergent risks and challenges, we are proposing a thorough update of the Anti-Money Laundering Act to further strengthen our regulatory institutions in safeguarding a robust financial system,” BSP Governor Amando Tetangco Jr. said.

Bank secrecy
Meanwhile, the proposal to amend Republic Act 1405 or the Bank Secrecy Law and Republic Act 6426 or the Foreign Currency Deposit Act of the Philippines includes the lifting of restrictions on the bank secrecy of peso deposits and foreign currency deposits for tax purposes.

“Developments in the past few months have created more impetus and pressure for what we have been advocating for the longest time: updating the laws governing our financial system for a more secure economy to flourish,” Finance Secretary Cesar Purisima said.

“Weaknesses and loopholes in our legal frameworks breeds risk; we intend to stamp these out as best we can,” he added.

Purisima said the Philippines is one of only three countries in the world where the tax administration cannot access bank transactions for tax evasion purposes.

It is also one of only two countries worldwide where tax evasion is not a predicate crime to money laundering.

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