Banks must be penalised too, senator says

Sen Joker Arroyo said he would insist on a provision in the second bill of Amla amendments to include severe penalties for banks that take in “dirty” money deposits, saying that money laundering could not take place without the banks’ acquiescence in the crime to hide illegally acquired wealth.

Arroyo said banks in the United States had been meted out stiff penalties for accepting “dirty” money deposits.

The Philippine government should take its cue and do the same, otherwise, Arroyo said, amendments to the Amla would just be regarded as a pallid attempt to placate the global-based Financial Action Task Force (FATF) which monitors terrorist financing and money laundering around the world.

The FATF had warned that the Philippines would be included in its blacklist unless it amended and put more teeth into its current Amla.

Inclusion in the blacklist would make it more difficult for Filipinos to remit or receive funds from overseas.

Arroyo said that at present, the Anti-Money Laundering Council (AMLC) freezes the deposits of an individual suspected of laundering cash through banks.

“How about the bank that accepted the money? That is crucial. The AMLC says the bank should not be penalised, only the owner of the ‘dirty’ money. But laundering would not have taken place if the bank did not accept the money in the first place,” Arroyo said.

The senator noted that banks are supposed to follow a “know your client” policy that requires its officers and employees to know the background of their depositors.

He said the rule becomes more necessary “if very big amounts being deposited are not commensurate to the financial standing of a depositor.”

“We cannot make it easy for a money launderer to hide his loot,” he said.

Arroyo lamented that the AMLC would rather look the other way when it explains that banks also have to adhere to a rule that protects their depositors.

Arroyo noted that banks in the US found accepting “dirty” money are first made to explain why they accepted the deposit. Then they are meted out penalties for repeated infractions.

Arroyo e-mailed to the Inquirer a list showing the fines meted out to banks in the US that accepted “dirty” money.  They include HSBC, which paid $1.9 billion (Bt56.6 billion); Chartered Bank $667 million; ING $619 million; Credit Suisse $536 million; ABN AMRO, $500 million; Lloyds $350 million, and Barclays $298 million.

Arroyo recalled that the AMLC recently announced it had collected Bt2.3 million — about Bt183,000 a year — in penalties from local banks in the last 12 years.

“You can imagine that for the past three years the total of penalties paid by American banks was $190 billion. That translates to Bt5.71 trillion. So why should the AMLC protect our banks?” he said.