The Senate should be commended for holding an incisive inquiry into the jueteng scandal to tag those who are part of the illegal numbers game network and at the same time clear the air for those unwittingly dragged into the huge controversy.
Jueteng has been a scourge to the nation primarily in the countryside’s since it feeds on the abject poverty of the majority of Filipinos who have depended on daily betting to vastly improve their lives.
Unfairly dragged to the issue were rural banks, which were alleged to have allowed the transfer of huge amount of money with the least document requirements which is far from the truth since banking laws and the tough deposit rules under the Bangko Sentral ng Pilipinas (BSP) and Anti-Money Laundering Council (AMLC) do not exempt rural banks.
The AMLC is an all-powerful body being composed of the BSP Governor as chairman and the Commisioner of the IC and the SEC Chairman as members.
Under the Anti-Money Laundering Act (AMLA) of 2001 that created AMLC, banks are required to report suspicious transactions from which the agency base its orders to any of the BSP, Securities and Exchange Commission (SEC) or the Insurance Commission (IC) to check on the transaction involving suspected dirty money.
The AMLC is then authorized to institute forfeiture proceedings through the Office of the Solicitor General on the suspect accounts and the filing of anti-money laundering charges through the Department of Justice (DoJ) on the owner of the spurious bank deposit.
The law also allows the AMLC to examine or inquire into bank deposits or investments upon a court order including those suspected as proceeds from the illegal number games jueteng and masiao which were specifically identified as sources of dirty money under the AMLA.
The BSP was also vested the authority to inquire into or examine any deposit or investment with any banking institution or non-bank financial institution in the course of a periodic or special examination to determine their sources.
Under the amended rules of the AMLA issued on March 7, 2003, the threshold for transactions that can be covered by AMLC scrutiny was lowered from P4 million to P500,000. This means deposits of at least P500,000 are now covered by the law allowing government bank account inspection.
The amendments also allowed the BSP to inquire or examine any deposit or investment with any banking institution without court order in the course of a periodic or special examination while removing the provision prohibiting the retroactivity of the law, thus any bank account of individuals suspected of laundering money before the AMLA took effect is also covered by possible AMLC or BSP examination.
Jueteng bad for business
The Philippines has long been in the watchlist of the international anti-dirty money group Financial Action Task Force (FATF), which is under the Organization for Economic Cooperation and Development (OECD) that comprises the world’s richest nations, and the lowering of the limit on the amount deposited in an account covered by the bank secrecy law was among the conditions for the removal of the country from its dirty money list.
With the approval of the AMLA amendments, FATF sanctions which include debilitating trade penalties were not imposed on the country.
Lately the Bureau of Internal Revenue (BIR) had joined the fray saying it will conduct lifestyle checks on government officials who have been linked to the jueteng expose of retired Lingayen-Dagupan Archbishop Oscar Cruz during the Senate hearings.
The banking industry, rural banks most of all, would be the first to welcome a non-nonsense government campaign against jueteng since illegal gambling is a bane to rural economic growth as it siphons off the limited money of the mostly poor in the countryside’s to non-productive use.
Banks, however, may remain vulnerable to the many ways that gambling syndicates have been designing to conceal the huge daily proceeds from jueteng or any other forms of illegal gambling and that is where cooperation from all concerned groups mainly the Church are most needed.
The BSP and the AMLAC have been continuously strengthening its regulations to keep tab on local banks and spot early on symptoms for financial problems. The BSP, for instance, has kept in step with international norms on regulation with the implementation of tough capital requirements on banks under the Basel accords, which is on its way to its third revision or Basel III that will require tighter definitions of Tier 1 capital and higher liquidity ratios.
Rural banks, which have less capability to build up capital compared with its commercial bank counterparts, are even finding it tough to negotiate with the BSP to ease up somehow on the capital and liquidity requirements.
The Rural Bank Association of the Philippines (RBAP), nevertheless, has not been remiss in educating its members throughout the country of the various rules and regulations against money laundering and ways to prevent them from being used as conduits for dirty money.