Based on the 2021 Bangko Sentral ng Pilipinas (BSP) Risk Assessment of Cash, Cross-Border, Cross-Sector Transactions Report, the following are the top predicate crimes in terms of value 2017-June 2020 (Cash Transactions Assessment): Swindling, PHP12.83B (41%), Violations of the Anti-Trafficking in Persons Act of 2003, PHP6.19B (20%, Drug Trafficking and Related Offenses, PHP4.6B (15%), Fraudulent Practices and Other Violations under the Securities Regulations Code of 2000, PHP3.01B (10%), Qualified Theft, PHP1.36B (4%), Electronic Commerce Act of 2000, PHP0.85B (3%), Felonies of Offenses of similar nature under the penal laws of Other countries, PHP0.73B (2%), Graft and Corrupt Practices, PHP0.56B (2%), and Smuggling, PHP0.19B (1%). All these were processed through the country’s financial institutions (FIs), per STR filings.
These prompted the Anti-Money Laundering Council (AMLC) to expand the predicate crimes of money laundering from 34 to 36 to show the resolve of the government to address criminality in the country and Financial Institutions are under enormous regulatory pressure to ensure that they are not being used as conduits of the proceeds of the illegal activities.
In the previous study conducted by the AMLC on the Philippines’ Exposure to External Threats based on submitted Suspicious Transaction Reports (2018), its key findings include the following:
- The Philippines has become a source country of illicit funds generated from smuggling, and
- The majority of the illegal proceeds from predicate crimes such as illegal drugs and their related crimes, plunder, graft and other related practices, investment scams, and estafa are only circulating within the Philippine Financial System.
As a member of the Asia Pacific Group on Money Laundering (APG), the Philippines is bound to adhere to the global general standards and recommendations set by the Financial Action Task Force (FATF) in relation to the strengthening of its Anti Money Laundering (ML), Counter-Terrorism Financing (CTF) and Proliferation Financing (PF) Program. In recent years, the AMLC has introduced measures that will address the various areas of concern in the ML/TF/PF space, such as,
- 2018 – AMLC Regulatory Issuance A, B, and C, No. 2, Guidelines on Digitization of Customer Records
- 2018- AMLC Regulatory Issuance A, B, and C, No. 3, Guidance on Identifying Beneficial Ownership
- 2020 – AMLC Regulatory Issuance No. 4, Freeze Order for Potential Target Matches under the United Nations Security Council Consolidated Lists (Targeted Financial Sanctions)
- 2021 – AMLC Regulatory Issuance No. 2, Amendments to Certain Provisions of AMLC Regulatory Issuance No. 4, Series of 2020
- 2021 – Targeted Financial Sanctions
Laws have also been enacted that will further strengthen the government’s fight against money laundering and terrorism financing and its related offenses, such as Republic Act No. 11479, otherwise known as the Anti-Terrorism Act of 2020, and Republic Act No. 11521, an amendment to RA No. 9160 of 2000 which became effective last year. These enactments expanded the coverage of the Targeted Financial Sanctions (TFS) to include not just terrorism and terrorism financing but proliferation financing as well. Since the passage of the Anti-Terrorism Act of 2020, the AMLC has already issued multiple resolutions relating to designations of persons as either terrorist individuals or groups and ordered the freezing of their respective accounts.
These developments have placed the covered persons (CP) front and center in the fight against money laundering and terrorism financing and its related offenses. As cited above, the billions of pesos suspected to be proceeds from illicit activities are just circulating within the country’s financial system. CPs have to revisit and recalibrate their Anti-Money Laundering and Counter-Terrorism Financing Programs and strengthen their internal controls to prevent getting entangled with lawless elements.
Covered Persons (CP) in the Philippines have instituted several internal controls such as, but not limited to, the following:
- Customer Due Diligence (CDD) — Identification and verification of customers and ultimate beneficial owners including ongoing monitoring.
- Transaction Monitoring (TM) – Implementation of a system that identifies suspicious transactions.
- Suspicious Transaction Reporting – Investigation and reporting of suspicious transactions to the AMLC.
And, the AMLC requires the submission of a Covered Transaction Report (CTR) for transactions involving amounts in excess of PHP500,000.00.
Despite existing internal controls, money launderers and fraudsters have still found creative ways to circumvent the system and some managed to dupe even big banks — case in point — the Bangladesh Bank heist in 2016 where $101M was successfully transferred to two banks in Asia, $81 million of which went to the Philippines. Clearly, there is still some work to be done. It has become apparent that the existing AML/CTF controls are inadequate in managing the kind of risks that financial institutions (FI) are now facing.
Thus, it is understandable that FIs are now investing in next-generation technology not just to avoid the scenario shared above which must have surely left a dent in the reputations of those that were involved, but also to prevent incurring unnecessary penalties due to regulatory violations. It is expected that, in the long run, FIs will be able to reduce operational costs and save more.
SIEVE AML Transaction Monitoring System
Empowering both rural banks and regulatory bodies to achieve these tasks, MDI Novare is introducing SIEVE AML Transaction Monitoring System. A comprehensive anti-money laundering solution, the SIEVE AML system leverages data integration, analytics, alert/case management, and AMLC regulatory reporting.
The new solution is built on a sophisticated, high-performance platform that supports the end-to-end process of combating financial crime and working with large volumes of data while automating tasks as much as possible.
The key features of the SIEVE AML system include automated transaction monitoring, intelligent network analysis, 360-degree understanding of customers and their transactions, and a simple, highly configurable business user/investigator-centric interface.
SIEVE AML Transaction Monitoring System is built by MDI Novare. Backed by more than 30 years of experience and expertise in the information technology industry, the company is a leading digital transformation enabler for telecommunication companies, financial institutions, manufacturing and BPO firms, and government agencies through next-generation technologies, automation processes, and other end-to-end solutions.
Built by an Award-Winning Company
For its initiatives, MDI Novare bagged multiple awards from local and multinational technology companies.
Recently, VMWare awarded MDI the 2022 Cloud Partner of the Year for Southeast Asia and Korea. MDI previously received the Top Data Center Networking Partner 2020 and the Highest Growth Partner 2020 awards from Dell Technologies; Advance Partner of the Year 2020 award from Red Hat; Partner of the Year 2020 award from FireEye; and Emerging Technology Partner of the Year 2020 award from Exclusive Networks. MDI was also named the ASEAN Partner of the Year 2020 by Talend; and Top Security Partner 2020, Top Data Center Partner 2020 and was given the Resiliency Award 2020 by Comstor.
Other recognitions MDI received in recent years include Unionbank’s Integrity Partner of the Year FY 2017 and Canalys’s Cloud Partner of the Year FY 2019. MDI has been Globe’s Agile Partner of the Year from 2018 to 2021.
MDI Novare is an ISO-certified company with ISO 9001-2015 for Quality Management Systems and ISO 27001-2013 for Information Security Management Systems.
“We are grateful to our partners for recognizing our work and expertise in utilizing the transformative power of technology to improve their systems and make lives easier. These recognitions make us double down on our goal to accelerate digital transformation here in the country to create better opportunities and experiences for consumers,” according to Agnes Gervacio, Chief Executive Officer of MDI Novare.