With only 99 days to go before his term expires, President Aquino must account for yet another shameful distinction achieved by the Philippines under his watch.
The latest dishonor is headline-grabbing and hair-raising. In the 2016 international Narcotics Control Strategy Report of the US state department, which was submitted to the US Congress on March 2, our country is named as one of the major money laundering countries of the world. It goes on to report that we are also No. 8 in the world in illicit outflows.
As though to confirm the high-ranking, the Philippines has turned up as a destination for funds stolen in the biggest bank heist in history – the theft by hacking of Bangladesh funds from the Federal Reserve Bank of New York. Specifically, some $81 million is reported to have been illegally transferred into the country’s financial system.
Drug transit country, illicit money laundry
The US State Department report on money laundering and financial crimes provides a pitiful picture of the Philippine financial system and its vulnerability to illegal money transfers and international crime syndicates.
The report said:
“The Philippines is integrated into the international financial system but is not a regional financial center. It is increasingly becoming an important financial player in Asia, with an economy growing steadily at 6 percent annually.
“Money laundering is a serious concern due to the Philipines’ international narcotics trade, high degree of corruption among government officials, trafficking in persons, and the high volume of remittances from Filipinos living abroad.
“The Philippines faces challenges from sophisticated transnational drug trafficking organizations (DTOS) such as the “Hongkong Triads,” which use the Philippines as a drug transit country for cocaine and methamphetamine.
“These DTOS use the Philippine banking system, commercial enterprises, and particularly casinos, to transfer drug proceeds from the Philippines to offshore accounts.”
The report suggests that several known strengths of the Philippines serve as channels for money laundering.
• The high volume of formal and informal remittances from overseas Filipinos provides a channel for money laundering.
• The Philipine casino industry is a weak link in the anti-money laundering/counter-terrorist financing (AML-CTF) regime. Organized crime groups, such as Chinese triads, have infiltrated casino operations in the country.
As a jurisdiction flooded with illicit funds, the Philippines is vulnerable to the breakdown of the rule of law, the corruption of public officials, and the destabilization of its economy.
The development of new technologies and the possibility of linkages among illegal activities exacerbate the challenges that this country faces.
Bangladesh heist blows the lid off
The Bangladesh heist shows all this in bold relief.
Between Feb. 4 and 6, hackers transferred $101 million from Bangladesh Bank’s account at the New York Fed to accounts in the Philippines and Sri Lanka. The $20 million sent to Sri Lanka has reportedly been recovered, but the remaining $81 million transferred to the Philippines remains missing. Some of the money is reported to have been funneled through casinos.
The government has been slow to act despite the long- suspect activities of some businessmen.
A certain Kim Wong, the Chinese businessman who is believed to have gotten the biggest chunk of the Bangladesh money, was able to leave the country earlier this March. Sen. Serge Osmeña has tagged him as the brains behind the Philippine end of the Bangladesh bank heist. The RCBC bank manager at the center of the scandal looks more like a pawn of Wong. RCBC may be in this much deeper than Senate probers are willing to dig.
Toll on finance officials
The Bangladesh bank heist has already netted the resignation of the Bangladesh Central Bank chairman.
In the Philippines, there could also be resignations and firings of top officials of the Anti-money Laundering Council (AMLAC).
The Securities and Exchange Commission, Bangko Sentral ng Pilipinas and the Insurance Commission together make up the council.
The usually lordly BSP Gov. and AMLAC Chairman Amando Tetangco, Jr. is hard-pressed to explain how the country ‘s financial system has been turned into a laundry for illegal fund transfers by criminal syndicates
In 2012, Congress had the opportunity to include the casinos under the ambit of the Anti-money Laundering Law (AML), but it desisted from including them because of the strong lobby by the Philippine casino regulator, Pagcor.
Philippine authorities are now scrambling to tighten rules on illicit fund transfers and understand what happened in the Bangladesh bank theft.
The Bangladesh money was routed to the Rizal Commercial Banking Corp. by hackers and then ended up in Philippine casinos last month.
AMLAC has launched a probe to salvage its badly tattered reputation.
The Senate also launched an inquiry last week to look into gaps in the country’s anti-money laundering law.
At the first hearing last Tuesday, lawmakers as well as financial and gaming officials were one in urging that casinos be included under the Anti-Money Laundering Act, whose amendment in 2012 excluded casinos.
An AMLA amendment is unlikely at this time because Congress is on a break for the May elections.
Philippine authorities are plainly overmatched against the skillful operations and resources of money launderers and crime syndicates, who also have the corruptibility of Filipino officials as their ace in the hole.
Darling of international syndicates
One clear sign of Philippine weakness in stopping money laundering operations, is that whereas in most countries the hackers were stopped from stealing $951 million from the Bangladesh account at the Federal Reserve Bank of New York, in the Philippines the transfer of $81 million to RCBC accounts went through.
The accumulating evidence of money laundering, international narcotics trade, and financial crimes being perpetratred in the country has made international executives and observers highly suspicious and wary of the Philippines. An expatriate friend has suggested in a note to me that the Philippines is becoming “the Mexico of Asia.” I was aghast.
He lamented that we have become a country run by three groups – economic oligarchs, political dynasts, and crime fixers. That’s where we are today.
This Bangladesh business has made all my protestations very lame.
It appears that President Aquino’s boast that we are now the new darling of Asia needs radical editing. It looks more like we are the darling of international crime syndicates.