Entrenched thievery: The Philippines remains home to institutionalised money laundering


In an era that has seen the demise in just a couple of decades of the legendary secrecy that shrouded Swiss banking and the shadowy transactions of its princely clients, the Philippines stubbornly persists as a blight to global banking transparency thanks to its infamously outdated bank secrecy laws.

Certainly it comes as no surprise that the country will always have been more fun as a den for routine money laundering. Even then it takes a scandal involving a foreign entity — this time a foreign government — to highlight the primitive state of the Philippines’ banking institutions. Deferring to Manila Times columnist Ben Kritz in his piece A new center of excellence in financial services

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Efficient money-laundering services are evidently in high demand; with most of the needed infrastructure already in place, the Philippines, with just a little more effort, could become the world leader in the industry.

Why not? The scandal has proven that the country is powerless to either stop or deal with the consequences of money-laundering; it may as well make a business out of it.

To quickly summarize what has happened for those who may be unfamiliar with the case, on February 5 someone—widely believed to be “Chinese hackers,” although based on what evidence is not clear—hacked the account of the central bank of Bangladesh at the Fed in New York and snatched $100 million, transferring it into a number of accounts in RCBC bank, using the Jupiter Street branch in Makati. The money was then reportedly passed through a foreign exchange dealer and three local casinos—a typical money-laundering exercise—before being transferred to other accounts in Hong Kong, Sri Lanka, and possibly other places.

Interestingly, it was an even earlier circus that initiated a half-baked reform of banking regulation in the Philipines. Back in 2012 following the conviction of former Chief Justice Renato Corona, the Philippines was at the cusp of a dawn of enlightenment — a rare opportunity to raise the political will to reform its banking system and transfrom its financial services industry into a modern and transparent one. The conviction of the Chief Justice and the process with which this was executed had given us the following premises upon which the tools can be crafted to make good on this aspiration:

(1) Understating wealth held in both local and foreign currency on the hallowed pages of the Statement of Assets Liabilities and Net Worth (SALN) of the nation’s government officials has been clarified beyond further debatability as an absolute violation of the law.

(2) The attempt made by the prosecution team to introduce information on Corona’s dollar-denominated bank accounts as evidence in the trial and then to get the Senate impeachment court to go as far as to actually debate the possibility of bypassing Section 8 of Republic Act 6426 (“Foreign Currency Deposit Act of the Philippines”) to allow the use of this information in the trial implies a clear legislative agenda over the next several years to repeal what are now evidently outdated bank secrecy laws in the Philippines.

(3) Information routinely gathered and tracked by the Anti Money Laundering Council of the Philippines (AMLC) can be employed by the Ombudsman to investigate government officials when banking activity and movement of funds that can be interpreted as suspicious are detected.

(4) Police action can be mounted and criminal charges filed on the basis of evidence gathered by investigations conducted by the newly-strengthened partnership of the Ombudsman and the AMLC.

The above four premises are nothing new. Indeed, the only hard and long journey required of us is to see the legislative agenda to reform the country’s bank secrecy laws through — a big challenge indeed for a famously forgetful people whose ningas-cogon tradition routinely dooms them to chronic mediocrity and flaccidity of purpose.

But the tools we now have coming out of Corona’s half-year trial gives us unprecedented clarity of what needs to be done next. It is also clear that bank secrecy reform (Point 2) is essential if we truly want to be serious about giving teeth to the imperatives described in Points 3 and 4. Indeed, it is quite the usual irony that Senator Miriam Santiago who voted to acquit Corona spelt out the simple and obvious call to action post-trial:

“God, please give me one more life so I can investigate all of them in Senate and Congress, including myself,” Santiago said.

It seemed, at the time, that people’s marching orders were a a lot clearer than they had ever been in recent memory: (a) there is now a clear legislative agenda to be expected of the 188 congressmen and 20 Senators who convicted Corona — reform of the Philippines’ antiquated bank secrecy laws, and (b) there was a clear mandate on Ombudsman Conchita Carpio-Morales and the AMLC to implement the New Order.

Kritz points out in his piece that a key exemption to this effort — the gambling industry — left a gaping loophole that, as is evident now, is clearly being exploited by big-time organised crooks. This comes at a time when the Philippines’ lucrative gambling industries are aggressively ramping up, even hailed as the next big source of domestic employment that could prop up the Philippine economy over the coming years.

Will the latest Senate “probe” on the scandal yield any further results? Many Filipinos aren’t holding their breath. Bank secrecy is also a key component of the Philippines’ deeply-embedded kleptocratic infrastructure. It is likely that the vast sums of public funds routinely lost to corrupt government officials are also channeled in much the same way through the system. To count on Filipino legislators to investigate issues that may very well impact their personal money trains is just plain unrealistic. It’s like asking them to shoot their own feet.

Even discounting its failure to go the whole nine yards and re-evaluate the purported wisdom of the country’s bank secrecy laws, the Corona trial for its part attracted more scrutiny on the lifestyles and ethical standards of the people who presumed to judge the former Chief Justice — the obvious elephant in the room that moved Ilda to write her seminal piece Some Senators who found Corona guilty committed worse crimes than what he was accused of.

Neither does it help that many of the self-described “activists” who pine for a “clean” and “just” government traditionally did so under the banner of the Yellow “people power” and/or Laban movements of which key members of the Aquino-Cojuangco clan have crowned themselves princes and princesses. The interesting thing to note here is that pork barrel and the unique way it is practiced in the Philippines was a creation of the government of the late former President Corazon “Cory” Aquino, mother of current President Benigno Simeon “BS” Aquino III. This fact might go a bit of a way in explaining why calls to abolish the pork barrel in Philippine Congress in the past have never reached the crescendo seen during the Corona trial (after which it, predictably, ebbed).

In the same way, there this little hope seen in the beneficiaries of bank secrecy in the Philippines mounting a fair inquiry into their very own money train. There’s just too much vested interest in it amongst the very investigators themselves.

7 Replies to “Entrenched thievery: The Philippines remains home to institutionalised money laundering”

  1. Has anyone investigated the sweetheart deal given to Lucio Tan when Aquinos sold off PNB? Many accounts were emptied and claims never settled.

    In 2012 after 25 plus years a RTC awarded one such depositor a judgement that included the interest too. But then the CA ruled that out on bogus reasoning and inside influence of PNB. Almost 3 years later the case still languishes in the SC. The deposit being made almost 30 years ago.

    I have heard that other large accounts were sucked dry by PNB.

  2. Bank secrecy laws are the places, where the corrupt politicians hide their loots, that they have stolen from the Philippines.
    Pork Barrels, DAP, PDAF, BBL Law,…etc…so many ways and funds to steal from easily.

    I, myself, don’t trust electronic banking system. If Hackers could hack the encryption from the Bank’s computer system…all path to bank transfer, to any destination and accounts are possible. I always go personally, to transfer and withdraw from my bank accounts. It is safe and secure…

  3. It’s funny. The Philippines may as well be the new Sodom and Gomorrah at this rate. Considering the twisted state of things. Except this blighted land is the result of generations of stupidity as well as flawed institutional groundwork.

  4. ENTRENCHED THIEVERY, EXACTLY !!! Since 1965 the country has been run by thieves who have stolen the wealth of the nation.

    The Estrada’s,Marcos’s,Aquino’s,Arroyo’s,Binay’s (did I mention the Marcos family?) are all staggerringly wealthy because the have looted, and never returned a peso, the country.

    Not a single one of these scam artists should be allowed to hold public office until their wealth is confiscated and distributed throughout the country.

    Especially Bong-Bong Marcos who is going to inherit the wealth that his parents openly bragged about stealing and still brag about stealing to this very day. It is not about Martial law, it is about the plundering of the wealth of the Filippine Nation and having the balls to act as if it never happened.

  5. this, in a nutshell, is what makes Singapore a model of good governance and probity – honesty to the point of standing aside should any elected official come under suspicion, whilst in the Philippines, institutionalized plunder on a monumental scale hardly raises an eyebrow any more.
    Has it come to this – that one nation can be confident on the world stage in so many areas, whilst another seems content to wallow in sadomasochism?

  6. It boils the blood and chills the spine to see a sitting judge in the midst of a mob-directed money-laundering conspiracy.

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