Dirty money

I was in early primary school when I first heard the song Magic Penny. The lyrics say “Love is something if you give it away… It’s just like a magic penny. Hold it tight and you won’t get any…”
In its entirety, the song is about sharing and receiving love. However, it does briefly mention the lyricist’s two cents on money management: It is essential to move our money to benefit from it.

We use money to buy necessities, comforts, and luxuries. We send money as financial assistance to our families. We invest our extra money, because a penny in the pocket would be the same penny no matter how long it stays there.

If not moving money is unwise, is frequently moving it better? Yes, but only if the reasons would not put one in hot water with authorities.

Have you heard about dirty money? This is money derived from activities like trafficking of drugs, firearms, and women and children; smuggling of goods and endangered animals; illegal gambling; theft; prostitution; and other illegal trades.

Has someone ever asked you to receive on his behalf unusually large sums of money that made you suspect where the money came from? And then the next day, were you told to use the same money to pay for your supposed long-outstanding personal loans in installments over the next few months to another individual you have never met? And because of the personal favor given to you,, you brushed off further verifying the source of the money and agreed to proceed with the installment loan payments? If your answer is yes, then congratulations! Your willful blindness has now made you a money launderer’s accomplice!

Money laundering converts dirty money to clean money, and the prior example is one of the many ways it can be done.

In response to the increasing threat of money laundering in the country, the Philippine government has recently introduced a more expansive set of anti-money laundering guidelines in the form of Anti-Money Laundering Council (AMLC) Regulatory Issuance (B) No.1, Series of 2018, “Anti-Money Laundering/Counter-Terrorism Financing Guidelines for Designated Non-Financial Businesses and Professions (DNFBPs)”. DNFBPs refer to businesses and professions that include money servicing businesses (MSBs), casinos, car dealers, jewelry dealers, real estate companies, lawyers, and accountants.

With the new anti-money laundering guidelines, the Philippine government acknowledges that DNFBPs play an important role in efficiently moving money in our country and may contribute to the risk of money laundering. For example, there is no denying that MSBs like over-the-counter remittance centers in pawnshops and couriers, and online remittance services, such as PayPal, have become an increasingly popular alternative to sending money through bank transfers, because of their lower fees and higher accessibility to the masses. In some Philippine towns, they probably outnumber banks and are more strategically located in places that people visit regularly, such as department stores and local markets.

DNFBPs are expected to establish formal anti-money laundering policies and processes designed to detect, investigate, and report money laundering at its placement stage. This stage is when cash is first introduced into the financial system and money laundering is at its most susceptible state of being discovered. DNFBPs need to be registered with the AMLC by December 2018.
The success of this policy is far from assured, though. Money laundering is not an easy crime to catch because the intent to deceive is executed in a series of complex transactions. The illicitness of the source becomes masked once dirty money is used on legal activities.

As individuals, we can be key players in the success of this anti-money laundering effort. Our personal decisions dictate whether money laundering gets caught and reported, or not. Our decision on whether we want to be involved mainly hinges on the assurance of personal safety. For instance, those working within the DNFBP sector would be more interested, and concerned, about how safe it will be to report money launderers and terrorist financers to the AMLC. Will they be provided with adequate protection from retaliation (if their employer is a suspected money launderer) or even against the threat of death (if a DNFBP customer is a potential financer of terrorist activities)?

Supporting government programs such as a law protecting whistleblowers, an effective national ID system, and a centralized credit investigation bureau may strengthen the new anti-money laundering guidelines. Ultimately, however, our willingness to participate in this campaign will drive the success of the implementation of these guidelines. We also need an adequate understanding of how money laundering works so we can identify and report it at the earliest time.

Or, we can turn a blind eye, become part of the crime, and be continually haunted by it. If we choose this path, then we will not be any different from a penny in a pocket suspended in an eternal state of sameness.

Mark Anthony Basa is a managing consultant in the Advisory Services Division of P&A Grant Thornton.

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As Published in The Manila Times dated 31 October 2018