Criminals use real estate transactions in PH to wash dirty money — anti-money laundering body
30 Oct 2020

Criminals are using real estate transactions to launder dirty money in the Philippines, a top official of the Anti-Money Laundering Council revealed.

AMLC Executive Director Atty. Mel Racela confirmed this during a Senate hearing on Wednesday after lawmakers asked him why real estate developers and brokers should report cash transactions worth ₱1 million to AMLC.

AMLC has been proposing to include them as covered persons under the Republic Act 9160 or Anti-Money Laundering Act (AMLA).

“There are also several estate assets found to be related to terrorism financing which are the subject of existing freeze orders,” Racela told senators during the hearing on the proposed amendments to AMLA.

Racela cited as an example the Maute Group that attacked Marawi City and clashed with state forces in 2017.

He said the AMLC has earlier frozen the ISIS-inspired armed group’s 120-hectare training ground in Lanao del Sur.

The AMLC chief said real estate transactions allow integration of illicit funds into the legal economy, while serving as a safe investment.

Racela added that real estate provides a “veneer of respectability, legitimacy, and normality” to the criminal funds.

“Real estate is as attractive to criminals as it is to any investor, prices being generally stable and likely to appreciate over time,” Racela explained, adding that the property also can be used as a second home or rented out to generate income.

AMLC data showed real estate assets account for 22% of total assets and properties that are subject of AMLC civil forfeiture proceedings.

Racela said these assets have an estimated value of ₱861 million (US$17.71 million) as of October 22.

The AMLC has confiscated so far, through civil forfeiture, ₱26.78 million (US$551 thousand) worth of real estate assets.

He explained most of these are connected to drug trafficking cases of the Parojinog political clan in Ozamis City.

A looming deadline

The Philippines is racing against time to avoid being “grey-listed” by the international body Financial Action Task Force.

FATF periodically reviews and grey-lists nations considered to be high-risk when it comes to money laundering.

The Philippine government has until February 2021 to implement and prove that its anti-money laundering reforms are effective.

FATF members then have four months to assess and decide if the Philippines did enough to counter money laundering.

Racela said if the Philippines is grey-listed, financial institutions overseas will be stricter on transactions involving Filipinos.

He added Filipinos abroad may have to spend more when sending cash remittances to their families here, among other repercussions.

“For OFWs, higher cost of remittance means less money for the family. A five- to 10-day delay will mean two to four percent reduction of annual foreign currency remittances,” the AMLC said.

Among the gray-listed countries are Southeast Asian neighbors Cambodia and Myanmar, as well as Pakistan, Syria, and Yemen.

Other countries on FATF’s gray list are Albania, The Bahamas, Barbados, Botswana, Ghana, Iceland, Jamaica, Mauritius, Nicaragua, Panama, Uganda, and Zimbabwe.

By Rex Remitio, CNN Philippines, 29 October 2020

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