Commentary on freeze of VP’s assets

By Dean dela Paz

(First of two parts)

This commentary is occasioned by recent events where the financial assets and bank deposits of the Vice President and other individuals being linked to him were frozen by the courts.

When our anti-money laundering laws were initially being drafted, these were being drawn under demanding duress. The international watchdog, the Financial Action Task Force (FATF), had given nearly impossible deadlines and threatened even more severe penalties, should the Philippine Congress then fail to produce an acceptable document given previous years of congressional pussy-footing and bureaucratic neglect on such an important and over-arching statute in today’s globally linked economies.

To understand, it is important to view the inception against the objectives of the FATF, as that European-based organization had been the principal driving force that forced the hand of a reluctant Congress, to effectively, both literally and figuratively, draw the limiting parameters covered by the law.

The FATF links global terrorism with anti-money laundering and the organization sought to control the spread of the former by shutting valves on the latter. While general criminality and corruption are affected by these, the specificity of global terrorism for the FATF was extremely influential in drawing up the eventual law’s details.

Of increasing relevance at the time was the spread of terrorism and its funding. Money travels invisibly through debit-credit channels and does not pass physical security checks, metal detectors and sniffer dogs. In the financial system, money passes at the speed of a key being pressed and pointing devices clicked. Thus the global intervention, and pressures brought upon by the FATF on a country where public markets are occasionally blown up, ferry boats torched, kidnapping turned into livelihood, and a raging secessionist movement continues unmitigated justify stricter financial controls.

This is important where a statute deals with two crimes. The first is the predicate crime from which funds are generated and are thereafter hidden by the secondary crime of laundering. This bipolarity necessitates a litany of crimes and the kind of sanctions threatened on economies that do not have adequate safeguards where the predicate crimes, especially terrorism, might be perpetuated.

Thus, the initial FATF sanctions on an economy insistent of lackadaisical anti-money laundering laws were in the nature of freezing international financial transactions that fuel terrorism.

The international clearing and financial reconciliation system necessary for trade and financial transactions would have been suspended. Remittances from overseas workers would have been stopped dead in their tracks and the export and import trade conducted by our domestic manufacturing that, to this day, is essentially wallowed along the earlier phases of the value chain frozen. All of these would have cost billions and made the Philippines economy a virtual pariah.

The prior years of congressional neglect was understandable, given that Congress, both then and now, remains populated by vermin. Money laundering is integral to the kind of criminality practiced by politicians. Being compelled by a foreign entity to write strict laws that would not only limit their principal preoccupation, but more important, deny them the utility of malversing the fruits of criminality was akin to asking these characters to draft the anti-dynasty provisions of the Constitution. It was simply out of character and antithetical.

The politicians, senators and congressmen, drafting the initial anti-money laundering laws were faced with issues curiously much too close to their hearts for them to write definitive provisions from an entirely objective perspective.

Drawing from their unique universe and parochial experiences, they worked into the law safeguards to address their particular circumstances. In next week’s conclusion, we will analyze these against the objectives of the FATF. Interestingly, we will see in the latent issues involving the Vice President, how politicians might have turned the law on its head and applied it politically in line with the very fears they once held against it.