https://www.manilatimes.net/2024/12/03/opinion/columns/laundered-dirty-money-in-the-philippines/2014278
THE 2023 Basel Anti-money Laundering Index ranked countries with the highest risk of money laundering and terrorist financing. The Philippines placed 53 out of 152 countries with a score of 5.64 out of 10, higher than Japan (ranked 106th at 4.66), South Korea (ranked 112th at 4.56) and Singapore (ranked 118th at 4.30).
The Paris-based Financial Action Task Force (FATF) put the Philippines on the gray list. It means that 23 countries, including us, are closely monitored by the FATF to improve measures to stop money laundering and financing of terrorism. Being included in the gray list cautions other countries to exercise due diligence in dealing with those on the list.
Dirty money from organized crime, terrorist groups and corrupt officials has been laundered into the Philippines for decades now. This does not bode well for our banking and financial systems. Global investors won't engage in our economy when dirty money circulates for fear of criminal prosecution. In addition, it is difficult for them to burnish their capital stocks or improve credit ratings if they are complicit in money laundering.
Dirty money was introduced into the country's financial systems during the heyday of illegal gambling and kidnapping by local crime lords and their political backers in the 1980s. Soon, organized crime networks since the 1990s saw the Philippines as a haven for expanding their illegal drug operations. They tucked their dirty money in our banking system and lawful businesses away from authorities.
The Philippines has one of the world's strictest banking secrecy laws favoring depositors. Law enforcers are legally prohibited from prying open an account or freezing illicit deposits without a court order or written waiver from its owner. It is very difficult to catch money launderers in the Philippines since its banking laws are designed to protect the secrecy of deposits.
Dirty money is now mixed with clean money in the Philippine economy. These are invested in stocks, real property, commercial malls, food franchises, hotels and car dealerships. It is now hard to decouple illicit money from clean money unless you intend to bankrupt the entire economy. A lot of Philippine businesses prospered through the infusion of dirty money from prostitution, illegal gambling, narcotics, gun and wildlife smuggling, kidnapping and armed bank robberies, and kickbacks and corruption. A business tycoon attested that with globalization and free trade, it is difficult to distinguish clean from dirty money.
Terrorist groups exploited our lax financial systems to funnel money to their proxies. This is how an international terror organization financed the Maute and IS militants in attacking Marawi City and bombing security checkpoints across southern Mindanao. Drug cartels in Asia and South America have diverted their dirty money into the Philippines by buying stocks and equities through their shell companies in the Cayman Islands.
The worst is China, which used its Belt and Road Initiative to invest in the country's big-ticket infrastructure projects. The entry of China's state funds was facilitated by highly placed government officials. Chinese crime surrogates also set up POGO online scamming farms, invested in karaoke nightclubs, and bought off properties in strategic prime areas. China aims to position its forces deep within our territory without firing a single shot.
The national government has passed laws to regulate digital banking and monitor illegal money transfers into our financial systems. However, unscrupulous businessmen have welcomed dirty money in their resorts, casinos and other ventures. This does not even exclude religious, educational and non-government organizations that accepted and benefited from dirty money.
The best model for curbing dirty money in our financial systems is a transparent and open monitoring system. There must be a financial database to track down and identify deposits entering our banking industry. This can be done by a third party, which will be tasked to disclose the background of funds from unknown sources.
Dirty money will destroy our economy, corrupt our political institutions, and weaken the social fabric of our nation. The economy will be infected with the fruits of a poisonous tree and will eventually be treated like a pariah by the international finance community.
Dirty money is like taking short sniffs of narcotics for the high but, in the long run, kills the lifeblood of our economy.
