If ever there was any doubt on the effectiveness of the Anti-Money Laundering Act as a deterrent to the laundering of ill-sourced funds, that doubt has been demolished by the testimonies given before the Senate blue ribbon committee by the management and personnel of Rizal Commercial Banking Corp. and the other players in the $81-million Bangladesh Bank drama. The common verdict of the testimonies is that AMLA has not been effective.
If the question were asked, “Who’s afraid of AMLA?”, the highly disconcerting answer would be, hardly anyone. This response was – or should have been – clear from the substance and manner of delivery of the testimonies given during the hearing, especially those of the RCBC folk. The representative of AMLA should have been the star performer in the hearing, but that was not the case. AMLA’s executive director was just another expert witness.
True, few people in government wanted AMLA. It was forced upon the Philippines by the Paris-based Financial Task Force, which had placed this country in its blacklist and had issued a pass-AMLA-or-else threat against the Philippines. But, having swallowed the bitter pill, discerning observers expected that the rules of the new regulatory regime would be adequately implemented.
The truth of the matter is that actual or would-be perpetrators of money-laundering schemes appear to believe that they can get away with their nefarious activities. They seem to believe that the Anti-Money Laundering Council is a paper tiger. Two facts have brought them to this judgment. One is a wound inflicted on AMLC by Congress. The other is a self-inflicted wound.
Originally designed to encourage savers to deposit their savings in banks rather than under mattresses, the Bank Secrecy Act has gravely hamstrung the operations of AMLC. The depositaries of individuals who have been red-flagged by AMLC, when faced by requests for access to the accounts of the red-flaggees, are quick to deny such access on the basis of the prohibitive provisions of the Act. Truth to tell, one gets the feeling this country’s bankers are happy that there is a Bank Secrecy Act. Part of the DNA of bankers is the concept of secrecy and they instinctively dislike being compelled to open up anything. My own gut feeling is that the Philippine banking community is merely paying lip service to the idea of broadening AMLA’s coverage or repealing it.
I spoke earlier of AMLC’s ineffectiveness partly as being a self-inflicted wound. The bankers that I speak to about AMLC are definitely neither scared nor awed by AMLC as it has been operating. They view AMLC as essentially a reactive rather than a pro-active or investigative agency. As one banker put it, “We are required by law to send AMLC ed-flag and suspicious-transaction reports, but usually nothing happens after that.”
I agree with my banker friend. Without a doubt, the Bank Secrecy Act has been an enormous obstacle to AMLC’s effective operation, but it is a tiger not entirely without teeth. It has some teeth, but what teeth the tiger has are not being effectively used. Tigers can and do growl, and one wishes that the AMLC would occasionally growl. Enough of being laidback and reports-oriented.
The Bank Secrecy Act is in my view totally inimical to the concept of fighting money laundering. It needs to be repealed, rather than merely amended.
Until that happens, AMLC does not have to behave like it was a paper tiger. It should more effectively use the teeth that it has, and it should stop operating like an 8-to-5, laidback institution. That way, the banking community will begin to fear and respect it.
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