Press Release
September 1, 2016

AMLC told to hit drug money hard
Senator baffled by P500M worth of checks paid out by drug lord without getting detected by regulators

The Anti-Money Laundering Council (AMLC) and other law enforcement agencies should attack the financial infrastructure of drug trafficking syndicates to suppress their supply and distribution operations, Sen. Juan Miguel Zubiri said Thursday.

"We are counting on the AMLC in particular to quickly spot and seize suspected drug money flowing through our banks, and to forcefully prosecute cases of money laundering by traffickers," Zubiri said.

"Regulators should disabuse the perception that they have been inadequate in thwarting the criminal use of banks by drug traffickers," he said.

The senator singled out the case of suspected drug lord Rolando "Kerwin" Espinosa Jr., who is now on the run.

Espinosa was supposedly able to pay out more than P500 million worth of checks from eight bank accounts between 2014 to June 2016, with the bulk of the money apparently going to his alleged "protectors" in the criminal justice system, according to the Philippine National Police (PNP).

"We are stumped that a 'high risk' individual can issue so many checks unobstructed, in amounts of up to P20 million per check, without the AMLC acting on suspicious transaction reports that should have been diligently filed by the banks involved," Zubiri said.

From the start, the fact that Espinosa is the son of an incumbent mayor should have been a "red flag" or warning for the banks and the AMLC, the senator said.

The instant Espinosa opened his bank accounts, he should have been correctly tagged as a "politically exposed person," or PEP, by the branch manager based on the know-your-customer rule, according to Zubiri.

Under the law, PEPs, including family members of politicians, are considered "high risk" due to their exposure to potential bribery and corruption, the senator said.

Thus, he said the bank and other financial accounts of PEPs are supposed to be subject to stronger anti-money laundering due diligence checks by banks and the AMLC.

"Our sense is, this is a glaring case of inadequate enforcement of controls by regulators begetting poor compliance by banks," Zubiri said.

"Regulators should also put an end to the practice of bank branch managers simply vouching for a depositor's unusually large transactions, even if the account owner does not have a lawfully registered business or a legally established trade or profession," Zubiri said.

Under the Anti-Money Laundering Law, banks are supposed to report every "covered transaction" or any transaction involving a total amount in excess of P500,000 per day.

Banks are also supposed to report every "suspicious transaction," regardless of amount, that could not be properly justified by the account owner.

Zubiri said Philippine banks should be doing what their counterparts in the United States have been doing for a long time to fight potential money-laundering.

"In America, if the amount of more than $10,000 gets deposited into your bank account and the sum deviates from your past transactions, the money is automatically withheld. You will have to show up at the bank to provide a convincing underlying legal or trade obligation, purpose or economic justification for the amount, before you may withdraw the money. Otherwise, the money is sequestered," Zubiri said.

"If the amount in excess of $10,000 happens to come from abroad by wire, your US bank account is instantly closed. You may still get the money, but only after personally going to the bank and providing a satisfactory explanation for the amount. Otherwise, the money gets confiscated," he said.

The senator urged the AMLC "to henceforth exercise greater due diligence in thoroughly scrutinizing 'suspicious' as well as 'covered' transaction reports filed by banks."

Addressing the AMLC, PNP and the Philippine Drug Enforcement Agency, Zubiri said: "If you find the money, you find the syndicates."

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