‘Secrecy law hampers anti-laundering fight’

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Tetangco in favor of lifting the secrecy law under ‘certain’ conditions

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The country’s strict bank secrecy law and the exclusion of certain sectors from coverage of the Anti-Money Laundering Act are making it difficult for the authorities to prevent such crimes from happening, the central bank governor said on Friday.

More preventive measures need to be included in the country’s anti-money laundering framework, which is why the Anti-Money Laundering Council (AMLC) has been working with Congress to expand the coverage of the Act to also include casinos and the real estate sector, said Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr., who is also the chairman of the AMLC.

“If you look at this, assuming it is an adequate legal framework, we have to make sure that prevention aspects would be present. Because when a case reaches AMLC, that is only where the investigation begins,” Tetangco told reporters on the sidelines of the Chamber of Thrift Banks (CTB) annual conference on Friday.

Tetangco was speaking in public for the first time about money laundering since the current scandal involving the hacking of the Bangladesh central bank account in New York and the subsequent $81 million cross-border transfer to the Philippines’ Rizal Commercial Banking Corp. (RCBC) and out again through the casinos broke out and triggered a Senate investigation into the case.

“So the incident has already happened. We need some kind of preventive measures. The prevention of this particular activity is being hampered by the very strict banking secrecy law,” he added.

With this, Tetangco said he is in favor of easing or lifting the bank secrecy law under certain conditions, which he did not specify.

Investigation ongoing

As the chairman of AMLC, Tetangco said the agency is ready to take appropriate action against those involved in the $81 million money laundering transaction in RCBC if there is liability discovered.

“I am constrained from discussing the specifics about any case because of the confidentiality provisions under existing laws. But in principle, if there is liability discovered in the course of investigation, then the appropriate action should be taken,” he said.

“The principle applies to all covered institutions. It does not have to be a specific bank or specific remittance company. We will apply the same thing if there is a similar situation,” he concluded.

Markets unaffected so far

The central bank said so far it sees no indication that the money laundering scandal has negatively affected the financial markets.

“If you look at the behavior of the financial markets for the last several days, there has been no indication that there is a negative impact,” Tetangco said.

For instance, he said, the peso has been appreciating in the last few days, bond markets were steady, and the local bourse has been steadily gaining.

Nevertheless, Tetangco suggested that a market reaction is still possible if progress is not seen in the current case.

“We have to recognize that there is a risk associated with this. Therefore, we need to address that,” he stressed.

Tetangco pointed out that the government must show that there is action being taken with respect to any money-laundering case and with respect to any further strengthening of the legal framework, particularly in terms of prevention.

“This is an opportune time to take a look at this and really make a decision consistent with our desire to strengthen the anti-money laundering framework in the country so we do not become a center for money laundering. We will be working with the government and Congress,” he said.

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