Banks told to guard vs dummy accounts

THE ANTI-MONEY Laundering Council (AMLC) has warned banks and other financial companies to tighten their watch against dummy accounts, used by drug dealers to hide illicit funds.

The AMLC issued an advisory that requires reporting institutions to be on guard against “lend-out” accounts, or those named to certain individuals but used and managed by another.

“In a recent financial investigation, the AntiMoney Laundering Council Secretariat noted the modus operandi of certain illegal drug traffickers. Said modus operandi entailed using a person with no known criminal record to execute a Special Power of Attorney in favor of another person, authorizing another person to open, maintain and manage his accounts, which would be used to launder money,” the issuance read, as signed by AMLC Secretariat Executive Director Mel Georgie B. Racela.

“In effect, the account owner lends out the account. Transactions on these accounts are usually attended by suspicious circumstances warranting the filing of suspicious transaction reports (STRs).”

Banks, insurance firms, casinos and other covered entities need to report covered transactions — those worth at least P500,000 — as well as suspicious transactions to the AMLC within five to 10 working days from occurrence. These reports are used as leads in pursuing potential money laundering cases and other predicate crimes.

Citing the revised implementing rules of Republic Act No. 9160, or the Anti- Money Laundering Act of 2001, the financial watchdog said all covered firms must establish and record “the true and full identity” of account holders as well as transactors, or those who carry out fund transfers, deposits and withdrawals for every account.

“In case the covered person entertains doubts as to whether the account holder or transactor is being used as a dummy in circumvention of existing laws, it shall apply enhanced due diligence or file an STR, if warranted,” the AMLC said.

Firms, however, have the option to file STRs if they think that a sudden tightening of requirements — such as requesting supporting documents or introducing transaction limits — would “arouse suspicion” or tip off the customer in question.

Mr. Racela pointed out that the failure to file transaction reports may be penalized as a money laundering offense under existing laws.

The US State Department has identified the Philippines as a “major” money laundering site in 2016 due to reported cases of public corruption, human trafficking and drug transit.

The AMLC’s own National Risk Assessment for 2015-2016 identified drug trafficking as one of the biggest sources of illegal funds and remains at “high” risk of money laundering. In particular, the watchdog said the Philippines has become a “trans-shipment point” for local and international syndicates for those based in Africa, China and Mexico.

There were 34,077 anti- drug operations conducted nationwide in 2016 that yielded P18 billion worth of illegal substances and led to the arrest of 28,056 drug personalities, according to data from the Philippine Drug Enforcement Agency.

Despite the warning on the illegal drug trade in the country, only one anti- money laundering case was filed that year, according to AMLC data.