14 February 2017




SENATOR LEILA DE LIMA (LDL): This reports of the FATF or the Financial Action Task Force is threatening to put the Philippines in the gray list if we do not enact this legislation. Is this a correct report or correct assumption?

SENATOR CHIZ ESCUDERO (CHIZ): Not exactly, Mr. President, your honor, more specifically the Philippines is part of the APG or the Asia Pacific Group on Money Laundering which in turn is an associate member of FATF. We had met with them a few months back together with our distinguished Senate President and they had some recommendations that they wanted them the Philippines to review and a relation to it to pass legislation. According to them, I sat in that meeting, Mr. President, your Honor; according to them there will be another review of the Philippines comes June of this year and that it is possible, according to them if we are not compliant that we will be put in the gray list of the FATF.

LDL: So, it is not really yet a threat. It is not a nature of a threat.

CHIZ: Based on our discussion with them, we did not perceive it as a threat. It's more of a warning, Mr. President, your Honor. It is not really a threat. We did not consider it as a threat.

LDL: OK. Is it a warning to put the Philippines in the gray list if it fails the Philippine government fails to enact this legislation?

CHIZ: That is correct, Mr. President.

LDL: My understanding is that you can be put in a gray list, in a dark gray list and you can be blacklisted. Can the good sponsor, please enlighten us about the difference between those three levels?

CHIZ: That is correct Mr. President, your honor. A 'dark gray list' means countries not making sufficient progress. 'Gray list' means that the country is attempting to make significant progress but is not yet compliant and a 'black list' would mean that a country is totally noncompliance and has no intention of complying. Example of that country, Mr President, your Honor would be Iran and North Korea.

LDL: And Philippines is not yet in any of those list?

CHIZ: Malayo pa po tayo sa North Korea and Iran. Lamang pa ho tayo sa kanila.

LDL: Would the good sponsor know, what is the current government policy when it comes to the Philippines membership with FATF? Do we really still want to be a member of the FATF?

CHIZ: As far as I know Mr. President, your Honor, it is not under consideration by this or the previous administration. Meaning to say, whether or not to be a member, it is a question of compliance since most of the world's adapted standards with respect to financial systems, it is not a question of whether or not we want to be part of the FATF because if you are not a compliant whether we are a member of the FATF, APG or not – these countries will impose a function on us by their own commitments and membership to the FATF or the respective regional aggrupation. Mr. President, your Honor, this was the subject matter recalls Senator (Franklin) Drilon, I think and the late Senator Arroyo was precisely questioning that. If we are not a part of the FATF and we don't need to comply. If we are not a part of the FATF then they have no jurisdiction to impose sanctions upon us.

LDL: May we know the mindset of the sponsor?

CHIZ: The reply given at that time, Mr. President, your honor was that whether or not we are a member of the FATF or not and given that we a founding member of the APG; the Asia-Pacific Group on Money Laundering, it would reflect badly in our country if we all of a sudden removed ourselves from the APG. And definitely the countries who are the member of the AFTF most countries of the world members of the FATF would nevertheless impose sanctions on us, including countries in the Middle East and America's where the country has a lot of OFWs and do a lot of trade list.

LDL: So the good sponsor earlier mention sort of a deadline to enact this legislation and you mention, June or July of this year?

CHIZ: June 2017.

LDL: So, if we fail to enact these amendments there's a possibility that the Philippines will be put in on the gray list?

CHIZ: On the gray list, Mr. President, your Honor.

LDL: Mr. President, the good sponsor, one of the FATF criticisms of the previous AMLA (Anti-Money Laundering Act) amendments is the absence of the casinos on the list of covered institutions. We understand that PAGCOR then opposed the inclusion; during the last amendment, the grounds that it may discouraged the investments from casinos in our country? Would the good sponsor know that the PAGCOR (Philippine Amusement and Gaming Corporation) is still of the same deal or whether PAGCOR is still opposing the proposed inclusion of casinos from the coverage of the law?

CHIZ: Borrowing the minutes from the Committee on Banks hearing, Mr. President, your Honor, to the latest as of January 30, 2017. PAGCOR went on the record before the house committee stating that is against the inclusion of the casinos in the proposed legislation.

LDL: So up to this point, they're still in opposition and of course the good sponsor of this committee is rejecting the opposition of PAGCOR? May we know again the exact reason for the opposition on the part of PAGCOR?

CHIZ: For the same reason that the good lady mention, they are afraid that the revenues might be affected. The position of this representation, Mr. President, your Honor however is different from PAGCO – mainly because PAGCOR is one of the oldest casinos, oldest law establishing casino in this region. And yet, PAGCOR has been taken by both Macau and Singapore. Singapore being the latest one to go into the casino bandwagon. And Mr. President, your Honor, both Macau and Singapore are compliant with FATF recommendations. And yet, in this region these are the two areas namely Macau and Singapore where revenues have been rising exponentially in the past several years. In fact, in the past year operations of Singapore alone they netted about a billion dollars which PAGCOR never reached for the past 30 years since its enactment and yet on the first year of its operation even with the CDD rule – Customer Due Diligence rule – of the FATF being followed by the Singapore. They would still be able to generate that many revenues for their country.

LDL: Would the good sponsor confirm that perhaps one of the reasons why we're now insisting on the inclusion of the casinos in this piece of legislation is because of there is an offshoot of $81-M scandal?

CHIZ: Definitely Madame Chair, but even before that FATF is already pointing that out to their counterparts here in the Philippines but I guess that was the last straw when this actually happen when this was discovered. And it went through the casinos without AMLC (Anti-Money Laundering Council) or any of our regulators. Actually, being able to stop it or see it before its consummation.

LDL: Was the committee able to really figure out and find out exactly what went wrong in that particular incident?

CHIZ: Personally, Madame Chair, Mr. President, distinguished lady, when we conducted an inquiry on this we found two flaws. One is the fact that casinos are not covered and are not duty bound to report. And number two, there is also a basic flaw with respect to the banks through which this money came through or went through. And as you very well, known cases had been filed against certain bank officials involved in this heist. And certain private individuals involved as well in the heist.
But the latest update given by the Bangko Sentral , your honor is that our own Bangko Sentral does not want to be used as a collection agent of the Bangladesh government because their latest information from Bangladesh is, they themselves are not lifting a finger in so far as filing cases against those behind the heist. So, the level of cooperation diminished since then, according to them. Unless, they see Bangladesh showing more interest than the Philippine's so far particular case is concerned. That is the point of view of the BSP, Mr. President, your Honor.

LDL: So we just have to leave it really to the cases now offending?

CHIZ: Yes, Mr. President.

LDL: No extra effort actually?

CHIZ: None of the moment as far as far as we are aware of, Mr Honor.

LDL: Thank you, Mr. President. Now let's go the covered person under the proposal. There are a few additional items under the covered persons of section 1 amending section 3A of the current law and among the new covered persons in these proposals a mandatory law is a money service business, transfer companies that subparagraph 4 of section 1, paragraph A, second page, Line 7. But in the same enumeration under section 1, paragraph A, subparagraph 1, there is also mention and it's already in the current law remittance and transfer companies that's under line 6, page 1.
May we know how different is this category of covered persons, the new one, money service business or money transfer companies from the current covered person, remittance and transfer companies? Are this in fact different? And why the need for a separate category for this? Money service business or money transfer companies and separate and distinct from remittance and transfer companies.

CHIZ: Yes Mr. President, your Honor, the inclusion of the new items is merely supervised by the BSP for AMLC compliance but they themselves are not covered under the law. Hence, the need to specifically cover it because we are also undertaking amendments to the BSP charter which will also specifically clarify its inclusion under this law. We merely seek to clarify and make sure that indeed there is no doubt as with respect to their coverage under the AMLC and not simply through the BSP, Mr. President, your Honor.

LDL: Thank you. I actually, on the list of predicate offenses, Mr. President, we note that the amendment of the proposed amendment would now include "acts or omissions or instrumental in the commission of predicate offenses and resulting in money laundering of the illegal proceeds." So it's not just an additional list of additional predicate offenses which used to be referred to as simply unlawful activity and I agree that we should change the term unlawful activity to predicate offenses.
But I just need to understand this new phrase from the list of predicate offenses. Because it is the understanding of this representation that this acts or omission that are instrumental in the commission of predicate offenses may not be criminal act as per se. So what is the rational for including this or for adding this?

CHIZ: We take the suggestion Mr. President, your Honor of the distinguish lady positively and at the proper time, we will delete number 44 of section 4. In order to remove any all doubts with respect to what predicate offenses are and so that implementation of the law will be simpler and clearer.

LDL: Thank you, Mr. President. And I thank the good sponsor for considering and for finding merit for the observation of the representation. Still in the enumeration of additional predicate offenses, specifically 36, 37 and 38. Also page 5 and I'm referring to falsification of documents under Articles 171-172 of the Revised Penal Code as amended and violations of RA 8484 otherwise known as Access Devices Regulation Act of 1998 and violations of RA 10173 otherwise known as Data Privacy Act of 2012.

My initial observation is it seems to be broad, when we say falsification of documents under Articles 171-172, we are referring to falsification of public documents and also of commercial documents. May we know the rational for inclusion why are we considering this as a predicate offense also violations of the Access Devices Regulation Act of 1998 and the Data Privacy Act of 2012. Would this contemplate violation of any of the provisions of these relatively new laws? I'm not very sure if there's a valid rational for the inclusion of these three items.

CHIZ: May I request just a minute suspension, Mr. President.

SENATOR FRANKLIN DRILON (FD): One minute suspension.

CHIZ: Mr. President, by way of response according to our resource persons here, these were discussed in a face to face meeting with the APG representatives. Now, it is not any all violations of these laws but only those acts involving a violation of this laws that generate proceeds. In other words, meron pong pera o perang nagkapasahan dahil po sa paggamit ng isa sa mga pinagbabawal sa mga batas na ito.
So kung ang hinihinging kapalit halimbawa sa paggamit halimbawa o sa pag-violate halimbawa ng privacy ng isang tao sa Data Privacy Act ay hindi naman may katumbas na pera. May hinihiling na gawin o huwag gawin. Hindi po siya saklaw ng pinapanukala nating batas. Subalit, pag may pera na pong hinihingi o may perang nag generate o may perang binayad kaugnay nito, doon lamang po yan masasaklaw at makokonsidera na predicate offense.

LDL: For that matter, ganoon din po siguro ang explanation sa lahat ng mga predicate offense.

CHIZ: That is correct, Mr. President.

LDL: 'Pag may perang involved at 'yun na nga, 'yung sa money laundering, 'yun lang ang pwedeng isakop under the law because like the another law would be the strategic management act. So one would have difficulty trying to image what could be violations under this law that would make it a predicate offense.

CHIZ: Even the Cybercrime Prevention Act, Mr. President, they key is according to our resource person that if we generates proceeds then it will be considered as predicate offense. But if there are no proceeds, meaning walang pera na dumaan o pinagdaanan kaugnay sa paggawa ng mga krimeng ito. Hindi po siya saklaw ng Money Laundering.

LDL: Salamat po. Thank you, Mr. President. Thank you to the good sponsor. Next is on the covered transactions under section 2 of the proposed bill, amending section 3-B. The covered transaction would now refer to the following: 1) Transaction in cash exceeding Php500,000 and 2) Transaction in cash or other equivalent monetary instrument exceeding Php500,000 would covered persons with certain selected covered persons.
So only cash transactions beyond Php500,000 need to be reported. However, for non-cash transactions or the equivalent monetary transaction, I note that this would be the first time in the history of this law that such dichotomy has introduced in the definition of covered transactions. What is the reason may we be enlightened us the reason why the covered cash equivalent transactions or noncash transaction would apply to certain institutions?

CHIZ: Thank you for that question your Honor. A brief history, a short answer and a solution. Brief history. Mr. President, your honor, originally, our Anti-Money Laundering Law offered cash or other equivalent monetary instrument amounting to Php500,000. Everyone was covered by that phrase.

LDL: Yes

CHIZ: As a product of our meeting with the APG representatives, it became clear to me, as chair of the Committee on Banks, that at the end of the day, they were simply after cash, nothing more but cash. And that our inclusion of other monetary instruments have no relevance, really, because it will be covered by banking sector already. So we clarified in the proposed amendment to cover or include only cash which basically removed a lot of objections from covered persons – potential objections from covered persons.

For example, in the real estate business. Wala naman ho sigurong bahay na mabibili ng Php500,000 na lamang kahit medium-cost housing. So lahat iyun higit Php500,000 na sabi nila. Masyadong maraming requirement naman ito kung magre-deport pa kami at covered transaction ito at covered person pa kami. When we clarified, that actually it's only those who pay in cash that you actually report. Only cash transactions to be considered covered transactions. Therefore, kapag may bumili ng real estate, although ang
threshold ay Php500,000 lamang, kung nagbayad siya ng tseke, hindi na siya covered transactions na kailangang i-report nung real estate broker. Kasi hindi naman po cash eh.
Ang layunin, itulak ang mga tao na gumamit ng monetary instrument imbes na cash para at least merong paper trail. Magkahabulan man, magkahanapan man, may paper trail. Para ma-discouraged ang pagbabayad ng cash. Dun po pumasok Mr. President, your Honor, 'yung pangalawang depenisyon. Kasi matapos po namin gawin iyun, pinagaang na namin para sa karamihan, pumasok naman ang katanungan, "Ang bangko ba talaga ay covered o hindi?"

So itinuring naming cash transaction ba ang pagbabayad ng tseke? Cash transaction ba ang pagma-money transfer? Ang sagot po ay hindi. Kaya ang balak, na inilagay po namin, covered 'yung mga banking institutions para kapag maitulak na natin sila gumamit ng hindi cash or rather monetary instrument, covered na ho dapat sila.

We wanted to clog that loophole as well. Since banks are used to being covered and banks generally are supervised by the BSP, they can more easily comply with these requirements. But we will have to admit, we will simply clarify the second part.

LDL: Actually, I just need to understand why certain supposedly covered institutions are excepted from these covered transactions of non-cash or equivalent monetary instruments as against those that are covered? Well, perfectly understood about the banks, and quasi-banks, non-banks, etcetera, even insurance companies, security dealers, brokers.

Now the others that were excepted from the applicability of the reporting or reportorial requirement as to equivalent monetary instrument or non-cash transactions like real estate developers, brokers and sales agents, they were excepted. And then money service business or money transfer companies. Any substantive reason?

CHIZ: Actually Mr. President, your Honor, we intend to clarify this provision given the observations of the distinguished lady, to simply state that the transaction in cash or other equivalent monetary instrument exceeding Php500,000 would simply apply to BSP covered persons namely banks, non-banking institutions, quasi-banking institutions, trust entities, foreign exchange, money changers, remittance and transfer companies and casino and junket operators, Mr. President, your Honor.

The reason would be this: wire transfers are considered non-cash. And if we do not include casinos and junket operators, they would easily fall into the cracks. Another problem, Mr. President, your Honor, is a casino usually does not know who the players are. They only deal with the junket operators themselves. They are given a commission from the winnings of the junket operators. And the settlement of payments are done mostly in China for example, most players come from. So, casinos don't really deal with junket operators, rather with players themselves and simply with junket operators who deal mostly with non-cash instruments because they usually simply offset each other abroad. So, iyon na lang po ang balak naming i-cover Mr. President, your Honor. Para iyong dichotomy ay mawala at maliwanag iyong distinction. Para matanggal din po iyung gap kaugnay ng non-cash at cash transactions lamang. Again, the objective is to push people towards using monetary instruments in lieu of cash so that they can easily trace, there will be a paper trail. At kung magkaroon man po ng aberya, imbestigasyon, mas madaling makita kung ano ang pinanggalingan nito.

FD: So just to clarify, can you summarize, at bottom, if you are a covered institution supervised by the Central Bank and deal with financial instruments in the course of your business you are vote a covered institution and you have a covered transactions which would cover cash and monetary instruments?

CHIZ: That is correct Mr. President, your Honor. Cash and non-cash.

FD: Right. And not include the casinos?

CHIZ: Yes Mr. President, your Honor.

FD: Other than the banks and financial institutions supervised by the Central Bank and casinos, only transactions which involved actual cash, Php500,000 and above, would be considered as covered transactions?

CHIZ: That is correct Mr. President, your Honor. I clarified that several times with the APG representatives. And I told them, in fact, "bakit parang ngayon ninyo lang sinabi sa amin iyan?"

FD: Because that would be a departure from the present system.

CHIZ: Yes, Mr. President. That also explains that now the dichotomy. Because before, whether it's cash or non-cash, you are obliged to report.

FD: That is correct if you are a covered institution.

CHIZ: In fact, kaya nga ho natin tinaasan iyung threshold, hindi ba, sa real estate? Ginawa ho nating Php3-M dahil wala pa naman daw bahay Php500,000. But now, if it's only cash, I think there would be fewer objections Mr. President, your Honor. They will simply say, "pay me in check." Wala na silang requirement kaugnay sa pag-report because it is no longer a covered transaction.

FD: And for the record, that kind of a new system would make us compliant with the standards imposed by the FATF?

CHIZ: Yes Mr. President, your Honor.


LDL: So that is desirable?

CHIZ: Yes, your Honor.

LDL: The dichotomy is in fact a desirable innovation?

CHIZ: It is meant to ease compliance requirements by certain sectors by simply requiring them to pay in check or to use a monetary instrument because those institutions would be covered already anyway.

LDL: Thank you, Mr. President. Dun naman po tayo sa standard, require to AMLC action. That is an application to a freeze order and application for formal inquiry, bank inquiry, etcetera. I note Mr. President that the proposed bill replaced the standard of evidence from probable cause to reasonable ground to suspect. And number one, Defining Suspicious Transactions, under page 4, section 3, amending section 3D-1. And number two, in Exercising the AMLC Authority to Inquire Inter-Bank Accounts, page 14, section 9, amending section 11. And number three, In Exercising AMLC's Power to Restrain Currency or Bearer of Falsely or Erroneously Declared. That is page 19, section 15, inserting a new section 20. So, is a new standard of evidence of reasonable ground to suspect or based on reasonable suspicion compared with or in contrast to probable cause, although I note, that in the application for a freeze order, it is still a probable cause. Is that correct? And may we know also why there is a new standard being proposed?

CHIZ: Thank you Mr. President for that question. Mr. President, your Honor, indeed, the issuance of a freeze order still based on a probable cause, which in ordinary cases would be sufficient to file a case against the person.

LDL: And the determination, in respect to that, Mr. President, sponsor, in relation to requirement of probable cause in applying for a freeze order, in the grant of a freeze order, the probable cause is determined at what level?

CHIZ: By the courts already Mr. President, your Honor.

LDL: By the courts. And therefore the applicant, either the AMLC itself, or through the Solicitor-General, representing AMLC.

CHIZ: Should prove probable cause.

LDL: Should prove probable cause.

CHIZ: Yes, Mr. President.

LDL: And these are? This is actually the function of the regular prosecutors of the DOJ (Department of Justice)?

CHIZ: That is correct, Mr. President.

LDL: Even without yet a case?

CHIZ: That is correct Mr. President, your Honor.

LDL: Alright. So, it's still probable cause to be proved by the applicant, either the AMLC or the SolGen representing AMLC. But in the definition of suspicious transactions, and in the application for formal bank inquiry, it has been changed to reasonable ground, to suspect. Whys is that so? When it is still the same position? Correct?

CHIZ: We ease the requirement Mr. President, your Honor, admittedly because of the AMLC's experience in the past that is having it hard and difficult time to meet that particular threshold of evidence even at the investigative stage. Kasi, hindi pa naman po nila sigurado kung meron taagang nagawa o wala?

Ang problema, kung probable cause na agad yung standard, which is again, as you've said earlier, a standard that a court would be able to find or prosecutors would be able to find, at the level of the AMLC or even on the banks, that would be a high-threshold evidence even before they could act or investigate or look into a particular account or transaction.

Ang panukala po sinadya talagang pagaangin, pakontiin yung evidence, standard of evidence para mas magaan din 'yung rason para matignan nila ang partikular na account o transaction. Para makalikom ng ebidensiya, to be able to prove or establish probable cause. That was the position taken by AMLC in this regard, Mr. President, your Honor. Hence, the lighter threshold of evidence.

LDL: 'Yung principle I would concur that there is a need to really lighten. Bawasan ho 'yung threshold para mas madali. Ang problema lamang po is, as I mentioned, when you apply for a freeze order, you would also apply for a bank inquiry, or inquiry to the bank account because the freeze order here is a provisional relief, interim provisional relief actually for the main petition to inquire into the bank accounts.

So how come in the, for the application for a freeze order, you have a higher standard. But with respect to the main thrust of the petition, which is an inquiry into the bank accounts, it's now a lesser threshold.

CHIZ: Mr. President, your Honor, it may not always end with a freeze order. It may end already with a simple inquiry. And after finding out that there is nothing, no violation of Anti-Money Laundering Law, and then it would end there.

LDL: Alin po ba ang nauuna, in practical, I think alam po nila iyan.

CHIZ: Inquiry daw po muna. Kasi hindi po sila makakapaglista ng bank account na gusto nila ipa-freeze. Unless malaman muna nila kung ano 'yung mga account when they apply for a freeze order. It is usually required when the account is already classified Mr. President, your Honor.

LDL: But isn't there a preliminary inquiry or preliminary confidential investigation?

CHIZ: 'Yun nga po 'yung sinisikap na i-provide nung panukalang batas. Pagaangin para mas madali nilang makita preliminarily, using a lower standard of evidence than probable cause because right now, it's covered by the Bank Secrecy Law. And unless there is probable cause, they can look into their account to be able to get a basis for probable cause to freeze.

So gusto ho nila, pagaangin ho sana ng kaunti iyon para makita nila may basehan nga ba o wala para ma-apply ng freeze order? At kung wala naman, titigil na ho iyun doon. Kung meron, doon nila itutuloy.

LDL: In an internal confidential investigation, which I think does not require any standard for all intents and purposes, you have reasonable ground to suspect threshold for inquiry into the bank accounts, then probable cause for a freeze order. Ganoon ho ba talaga?

CHIZ: According to them Mr. President, your honor, they cannot inquire into bank accounts right now without a court order unless you fall under terrorism financing, kidnap-for-ransom, drug trafficking and acts of terrorism.

FD: Can I intervene? Just one question, Mr. Sponsor?

CHIZ: Yes so that we can have to interpellate at the same time Mr. President. I welcome it Mr. President, your Honor.

FD: Yes, just a query. What is the position of the sponsor in so far as bank inquiries are concerned? Is that in the nature of search warrant?

CHIZ: Para namang bar question iyan, Mr. President (laughs).

FD: (laughs) No. Because in defending your answer, you would have to answer to whether or not you impose probable cause or lesser standard.

CHIZ: According to them, Mr. President, your Honor, I was not probably listening or absent during the debates (laughs). According to Senator (Joker) Arroyo during the latest amendments, it is akin.

FD: It is a?

CHIZ: It is akin or similar to search warrant.

FD: It is akin to a search warrant.

CHIZ: Yes.

FD: If it is akin to a search warrant, what should you not impose a standard under the constitution of probable cause?

CHIZ: Exactly Mr. President, your Honor. That is how under the law stands. That's where the current law stands right now, Mr. President. And that is why the proposal is to lighten the level of evidence if this body, Mr. President, would subscribe.

FD: But if, now it involves the constitution. If you are saying that the inquiry is in the nature of a search warrant under the constitution, the standard of a search warrant must be met. And therefore, probable cause must be the standard now.

CHIZ: Agree, Mr. President. But your honor, the constitutional provision provides for both search and seizure. In this case, the level of evidence that they are imposing is simply for the purpose of again by analogy, search but they are not authorized to seize or freeze or do anything with it. They can simply look or watch. And on the basis of that, establish the level of evidence, called probable cause, before they can actually "freeze or re-seize". That is the position Mr. President of the AMLC.

LDL: Malinaw po sa explanation kanina na mauuna muna siyempre 'yung authority to inquire.

CHIZ: 'Yung inquiry.

LDL: Yes. Correct?

CHIZ: That is correct, Mr. President.

LDL: Before you apply for a freeze order.

CHIZ: That is correct Mr. President, your Honor.

LDL: So lesser 'yung standard dun sa inquiry than the freeze order?

CHIZ: Yes Mr. President, your Honor.

LDL: Because on the basis of the results of the inquiry, saka mo made-determine the propriety of a freeze order.

CHIZ: Of freeze order.

LDL: Kung ganoon ho, pwede bang baliktarin natin 'yung sequence ng provisions? Although it would appear in the current law, the provision of freeze order is ahead of the provision on the authority to inquire into bank deposits. Kung ganun ho, pwede bang baliktarin natin para mas malinaw?

CHIZ: Point well taken Mr. President, your honor, we will make the corresponding adjustment.

LDL: Thank you, Mr. President and to the good sponsor. I'm still talking about the freeze order and inquiry into the bank deposits. Although, yes, as I've said, I understand the need and wisdom to reduce the threshold in the current probable cause; but why reasonable suspicion or reasonable ground to suspect, instead of lesser reasonable ground to believe or reasonable belief? There is a difference between suspicion and belief. And between the two, reasonable suspicion is a lower standard than reasonable belief.

CHIZ: We are amendable to such a proposed amendment in proper time.

LDL: Thank you. I would definitely propose such an amendment.

CHIZ: We would be amendable, accept it to proper time.

LDL: Para hindi naman masyado mababa from the current threshold.

CHIZ: We agree Mr. President, your Honor.

LDL: Thank you. Dun naman po uli. Bakit po doon sa, I'm referring to section 8, Amending section 10, and that I still on the freeze order. So within 24 hours of freeze order can be issued and the effectivity lasts for 6 months as a general rule, shall not exceed 6 months. Pero meron naman na only for 30 days instead of 6 months. There's an enumeration of the unlawful activities. And I think we should, should this be predicate offenses? Not unlawful activities? I'm referring to line 28, page 12, section 8, line 28.

CHIZ: Yes Mr. President, these are predicate offenses.

LDL: These should be again predicate offenses not unlawful activities.

CHIZ: Yes Mr. President.

LDL: But there is enumeration here of the predicate offenses, well instead of a maximum of 6 months, it's a shortened period of 30 days. May we know the rationale?

CHIZ: Actually, Mr. President, your Honor, so that I can answer to interpellators also at the same time. This is actually administrative freeze order. Meaning it's not issued by the court. This is issued by the AMLC. The maximum period for a freeze order issued by the court would be 6 months. AMLC can only freeze it for a maximum of 30 days. But this is by nature of an administrative freeze order Mr. President, your Honor.

May kasbaihan nga ho sa Tagalog. "Libre namang mangarap". Ang katumbas nun sa Ingles, "aim high, shoot low". Ibig sabihin po Mr. President, your Honor, we have seen it happen in the past. Someone is caught red-handed stealing money, or caught actual, stolen money itself, it lands in the newspapers, AMLC does it inquiry, and by the time a freeze order is issued, it takes only one or two days, to actually withdraw certain amounts. Five days maximum, if you give an advice to a bank. Ganoon po kadali maiakas yung pera.

Kaya madalas, sinumang public official, halimbawa, makakasuhan, ma-identify 'yung bank account mismo, nakita may testigo, kung ano talaga iyung bangkong pinupuntahan, but by the time the freeze order is imposed, the money has long been taken away or withdrawn. This is the situation that we were looking at as we proposed such administrative freeze order, that AMLC can issue on its own and not only through the courts.

LDL: Is that really contemplated in the amendments? This particular section 8? Because all I see here is really the filing of the petition, verified ex-parte petition with the Court of Appeals. It doesn't say here with the AMLC.

CHIZ: It says Madame Chair, the AMLC may issue – at the bottom of page 12, top of page 13 – the AMLC may issue ex-parte, a freeze order which shall be effective immediately and which shall not exceed 30 days.

LDL: What page is that again?

CHIZ: At the bottom of page 12, line 32, "the AMLC". And then at the top of page 13, lines 1-3. That was the intention Mr. President, your Honor. Again, "aim high, shoot low" nga po ito at libre mangara pero what I'm saying is, we have often seen the situation wherein sometimes we are hit, or the government is hit by the people for not doing enough.

LDL: Yes.

CHIZ: But the fact of the matter is the hands of government are tied. It cannot just simply freeze an account. Kumbaga sa larong bata, ang laki ho kasi nung "give chance to run" dun sa mga magnanakaw. Ang laki at ang haba ng panahon nila para i-withdraw 'yung pera sa bangko. At 'yung bangko, kapag winithdraw naman yung pera, kahit na ho nasa headline ng dalawang linggo iyan, wala hong magagawa iyong bangko para hindi payagan i-withdraw.

LDL: This representation actually supports that this particular amendment. I just need some explanation as to, ito ho ba ang enumeration ho ng mga predicate offenses ay sapat na ito? Na dito lamang sa mga predicate offenses na ito pwedeng mag-issue ng administrative freeze order ang AMLC for a maximum 30 days?

CHIZ: We are open Mr. President to adding to this list. But we tried to be more conservative in so far as the…

LDL: Kasi hindi ba that's the rationale? The need to immediately act bago maunahan ng pag-withdraw o pag-close ng accounts, then why a select list?

CHIZ: We would be amendable to including everything Mr. President, your Honor, to proper time, if an amendment will be proposed. But right now, it only includes the following: kidnap-for-ransom, dangerous drugs, anti-graft, plunders, swindling, hijacking, arson and murder, terrorism, financing of terrorism, bribery, malversation, human trafficking.

LDL: The grave offenses.

CHIZ: Yes Mr. President, your Honor.

LDL: Sa Death Penalty, heinous offenses iyan.

CHIZ: Wala ho tayong para sa Death Penalty.

LDL: Kung sa Death Penalty. Sa mga nagpapanukala ng Death Penalty. (laughs)

FD: With the permission of the gentleman on the floor.

CHIZ: Yes, Mr. President.

FD: May we request to bring those plants to put them aside first because you know, it's difficult presiding here and we are distracted by all of this plants moving around. (laughs) Can we just put them aside first?

CHIZ: Can you put also the one especially in the table of Senator (Manny) Pacquiao.

FD: Yeah.

CHIZ: (laughs) He seems to be working under the tree. (laughs)

FD: Oo pakitabi po. Para lang, can we just put it aside because it is so disturbing from where we sit. Those plants are moving around. It's difficult to concentrate on the proceedings.


FD: Yes?

RG: With all due respect, it's Valentine's Day. And it is a gift from one of our revered senator, Loren Legarda, And it also represents the mango, which in my province is number one and I would like to say that she is wondering why they are taking it down? Because I would like to see, the whole world, she's on television, and asked why there are mango trees here? Because we are a "Green Senate". We want to make sure that we show that we want to grow mangoes. So that people can eat more. I'm sorry this disturbs the Senate President. But if you are really going to be serious about it, I will have to ask permission from our colleague, Senator Legarda, who gave it to me.

FD: The Chair is making an appeal, request, because if you are sitting here, you will really see how difficult it is to concentrate on the proceedings on the floor while these pages is moving around with these plants.

RG: Mr. President, I bow to your wishes after I consult…

FD: It's not a question of wishing it. It's a question of being considerate also to the Chair who is presiding.

RG: I'm all considerate with the Chair. We've known each other for so long. There have never been a time where I have not being considerate with the wishes of the Chair.


RG: I will set it aside Mr. President.

FD: OK. Please.

RG: Out of consideration for you. Thank you very much.

FD: OK. Thank you.

CHIZ: Mr. President, ibaba ho 'yung kay Manong Dick dahil mahaba ho. (laughs) 'Yung kay Joel maikli lang naman. (laughs). Kaya OK lang dun ho sa mesa. (laughs)

FD: Ready to resume.

CHIZ: Ready resume, Mr. President.

FD: Session resumed.

SENATOR JOEL VILLANUEVA (JV): For clarification, what the distinguished Gentleman from Bicol is talking about?

CHIZ: Ang sinasabi ko pong 'maikli', Mr. President your Honor, 'yung halaman.

JV: Thank you, Mr. President.

FD: Can we now proceed with the matter on the table. Ready the interpellation of Senator De Lima.

LDL: Thank you Mr. President. We now proceed. Where were we?

CHIZ: We left with respect to administration page 12, lines 28 to 30 and this representation Mr. President your Honor said, we are amenable and open to increasing the list if not including everything but we simply included the more grievous or grave offenses in so far the administrative power to freeze the AMLC is concerned.

FD: With the provision of Senator De Lima, the matters of administrative freeze were raised just before the suspension.

CHIZ: Yes.

FD: Of the session. The chair would like to inquire the AMLC and this proposal would given the power to freeze accounts ex partes for thirty days.

CHIZ: Yes Mr. President, your Honor.

FD: Isn't the freeze thing of an account is interference on the property right of a depositor and therefore when that should be with a court rather with an administrative agency because that is the privation of property. The privation of property is a matter of that should pertain to courts and not to an administrative body. We have this administrative freeze before in the previous law. But this was removed in the last around of amendments. I do not know that this is a requirement of the FATF. Is this required in FATF?

CHIZ: No Mr. President, your honor. As I have said earlier this was the dream sequence of the AMLC so that they will be given more teeth and powers to perform their duty.

FD: This representation is to grant the administrative body the power to ex parte freeze an account of a depositor is repugnant to the Constitution. Because you deprive the depositor of his property, arbitrarily without any opportunity to complain at least going to the CA (Court of Appeals), to judiciary there is somebody would examine whether this basis of the freeze order of the Court of Appeals. I would have very serious reservations and I would object to preposition that an administrative body would be given the right to freeze the account of Senator Gordon for thirty days.

CHIZ: Mr. President, we actually have that in our current laws right now on terrorism financing. AMLC right now is empowered to issue an administrative freeze order in fact without limit, ni wala pong thirty days. Yes, again for terrorism.

FD: For terrorism.

CHIZ: But that is found in our current legislation right now. Again, that's why we are also careful in not including all of the…

LDL: Predicate offenses.

CHIZ: Predicate offenses.

FD: Senator Lacson wishes to intervene with the permission of the two gentlemen.

SENATOR PANFILO LACSON (PL): With the permission two distinguish, one gentleman and one lady, Mr. President. With the distinguish Sponsor enlighten us on the basis for an administrative freeze if it is spelled out in proposed measure?

LDL: It is.

CHIZ: Probable cause, Mr. President your honor already to be determined on the part of AMLC.

PL: Mr. President, probable cause wouldn't entail due process, am I correct? Before, during preliminary investigation as I understand it the prosecutor will have to afford due process to the respondent in that regard, Mr. President. So how would an ex parte administrative freeze order be implemented without due process?

CHIZ: May I request for few minutes' suspension just to clarify the terrorism financing.

FD: One minute suspension.

CHIZ: Ready to resume, Mr. President.

FD: Session is resumed.

CHIZ: The point of Senator Lacson, Mr. President, is well taken we'll review the provision and come up with a proposed amendment.

LDL: Standard.

CHIZ: In order to provide a standard by which any such proposed ex-parte freeze order given to the AMLC may be issued.

FD: Mr. Sponsor, under the Constitution a freeze order, a seizure order must be issued only upon the issuance of a seizure warrant on a probable cause to be determined personally by a judge.

CHIZ: Mr. President your Honor, this is in the nature of a provision or remedy. It is not a seizure order, it's simply seeks to provide a provision or remedy before the courts can actually intervene and issue a natural forfeiture order.

FD: No at this point when you freeze an account for thirty days that is a temporary deprivation of your property for thirty days and that is therefore under how really a constitution you need a seizure order to be issued only after a judge personally examined the applicant.

CHIZ: Actually Mr. President, if you still remember the provision the right of the people to be secure in their person's house and papers in effects against unreasonable search and seizure shall be enviable and no search warrant and warrant for arrest shall issue except found probable cause to be determined personally by the judge. After examination under oath or affirmation of the complainant and the witness may produce and particularly examine the place to be searched and the person and things to be seized. We will look into it, Mr. President.

FD: Yes, thank you Mr. Sponsor.

LDL: Perhaps maybe know from AMLC if there are actual cases where?

CHIZ: In the past under the oath no they don't have that power that was removed in the amendment, Mr. President.

LDL: An actual case of you know, 'yung it was too late before the court could issue a freeze order.

CHIZ: 'Yung mga big investments scam Mr. President, your honor. Yung mga pyramiding would be one, yung Aman would be a good example according to them. They still saw it when it was there but by the time they could do something about it, the money was already spirited away.

LDL: Perhaps we can ask AMLC to submit to us the list.

CHIZ: We will do that Mr. President, your Honor. And we will also comply with the request of Senator Drilon and Senator Lacson.

LDL: So, we can consider all those in.

CHIZ: Yes, Mr. President.

LDL: First, do we need to provide for this administrative freeze order? If so, if the majority of the members of the Senate would agree that there is a need for an administrative order then at least we put the right standard.

CHIZ: I agree, Mr. President.

LDL: And the right conditions to be able to address the constitutional question being raised by the Senate President Pro Temp.

FD: Senator Gordon is recognized. What is the pleasure of the gentleman from Zamboanga?

RG: Mr. President, I would just like to join in your observation and I laud the gentleman from Bicol for offering the study the measure especially in the light of the fact that I think it is an undue deprivation of property without due process of law even if it is for thirty days. But also the fact that it could (inaudible) the AMLC very reckless because down the line of line 16 of page 13, it says the members of the AMLC and the secretary shall be immune from any civil, criminal, administrative liability in the exercise of the foregoing functions bereft of all these guidelines that we've talked about. You may have an AMLA running rampant on civil rights and can also be used to harass individuals. Now, we are not in support of anybody hiding wealth, but certainly we are also in support of making sure that the rights of Filipinos will not be stamped on very liberally. I wonder whether instructions from the FATF will be sufficient to try and eradicate that right of Filipinos. So, I just want to caution everyone particularly the gentleman from Bicol to really take a look and study this matter. Thank you, Mr. President.

CHIZ: Mr. President, may we have a brief reply to the manifestation. We thank the distinguished Senator for his suggestion and observation. Mr. President, it is indeed a difficult balancing act but just to clarify it's not an FATF imposition. It is a recommendation emanating from our own AMLC so that they would have enough, be given enough teeth, so to speak, in order to actually do something when an Aman situation arises. But at the same time we do recognize Mr. President your honor that we have Constitution and a Bill of Rights and we will try to strike a compliant balance with our constitution in so far as this provision is concerned.

RG: I thank the gentleman, Mr. President but even more so that the AMLC itself made its proposition, obviously they are really aware that they can be held liable down the line and that is why we should really try to put in all the necessary precautionary measures that must be taken because it is coming from them. Because he who makes the rules shall be immune from the prosecution in case they make a mistake in the rules. Thank you, Mr. President.

CHIZ: Point well taken Mr. President, your Honor.

LDL: Thank you, Mr. President. We go to a different point now. In the proposed new section of the bill in cross boarder declaration, section 20, the bill allows the restraint to the currency or bearer negotiable instrument not declared or falsely or erroneously declared. There is reasonable ground to suspect and now we can change this to reasonable ground to believe that currency or bearer, negotiable instrument is related to money laundering or terrorism financing. May we know from the good sponsor what the phrase related to money laundering mean? And why is it different from related to a predicate offense, because in some other provisions that's the phrased used related to a predicate offense but here in this particular proposed new section 20, it is related to money laundering.

CHIZ: We will clarify that Mr. President. I agree with the distinguished sponsor, we should only use one phrase for each and every section of the proposed amendment. But may I also place on the record that I'm partly responsible for this provision because I asked a simple question of our resource persons when we first met. Kapag may nahulihan ng cash in excess of $10,000 na hindi niya idineclare, what happens to it? In fact, I remember we had a discussion with respect to the surrendered money of the BI officials amounting to Php29,999,000. We have no rules with respect to where the SOJ secretary will keep such money. Sabi niya nilagay daw niya sa safety deposit box but we don't even have rules if indeed that is legal, because one time somehow may nakalimot nakalimutan na at sino ang may hawak ng susi? The same is true for monies confiscated of persons who fail to declare any amount in excess of $10,000 when they arrive in the Philippines. So, I ask them anong rules? Will be ceased? Actually, what is penalized is the non-declaration not the actual bringing in of cash in excess of $10,000 or Php500,000.

LDL: Non-declaration or false declaration?

CHIZ: It's the false declaration that is being penalized. The actual cash actually they have no right, Customs says, they have no right to technically keep it unless it is for an unlawful purpose. But the Bureau of Customs might not be competent to determine whether or not it will be used for unlawful purpose but technically too, they cannot hold that money because if at all a crime has been committed, it is the crime of not declaring, not the crime of bringing in $10,000 or more. Hence, the proposed provision which seeks to provide some rhyme and reason into how the money will be treated and for an authority or an office to be given the actual duty and responsibility to make that determination, should the money be allowed to be kept by the person who did not declare or should it be withheld or kept by government.

LDL: Thank you for the very clear explanation. So, this is really when there is reasonable ground to believe that the currency or the bearer negotiable instrument which was not declared or falsely declared or erroneously declared is related to money laundering for a predicate offense.

CHIZ: Or a predicate offense, in fact Mr. President, we made inquiries before the Bureau of Customs, magkano na ba 'yung so far kung meron man na kanilang nawi-withhold dun sa mga hindi nagde-deklara. Wala hong makasagot kung magkano because again they have no rules where to keep it, how it will be transferred to the next person who takes his office or job, wala pong ganoon. And we thought that it would be an opportune time to provide some rhyme and reason with respect to those monies confiscated or kept by the Bureau of Customs whenever someone makes a false declaration of the amount of cash he's bringing to the country.

LDL: Thank you. Section 9 of the bill on AMLC's authority to inquire interbank accounts authorizes AMLC to make an expire to application to look into bank accounts in various reasonable grounds to suspect that the deposits or investments including related accounts involved are related to a predicate offense. Is there a reason why the qualifier for the cross boarder restraint of money is different from the investigatory power of AMLC on bank accounts? Because I think this was actually answered already since there seems no difference between the used of the phrase related to the money laundering and related to a predicate offense.

CHIZ: We will make it uniform Mr. President, your Honor.

LDL: This is going to be a matter of making it uniform. Next point, on the definition of suspicious transactions, Section 3, amending Section 3-1, suspicious transactions or transactions regardless of the amounts involved where the covered person suspects or reasonable ground to suspect that the monetary instrumental property is the proceeds of whereas anyway related to a predicate offense or the circumstances determined to be suspicious by the Anti-Money Laundering Council. Can we have a further elucidation on this? What could be an example of circumstances determined to be suspicious by the AMLC?

CHIZ: Those were the words used according to them Mr. President your Honor by the FATF and their recommendation which seems to be the standard applied by other countries in their respective jurisdictions.

LDL: For the guidance of the implementors of the law if enacted.

CHIZ: For example, Mr. President, your Honor, if it is not consistent with the financial capacity of the person involved in this case the depositor. For example Mr. President, in his or her regular transactions with a banking institution, a particular transaction all of a sudden spiked and it's not completely in accordance with his behavior in the previous years that the person is transacting with the bank.

LDL: Doon naman po tayo doon sa mga violations, the penalty process of this, the proposed amendments. Now I know this is already, that the malicious reporting. Does in the current law?

CHIZ: Yes, Mr. President.

LDL: I am referring to Section 11, page 16. Mr. President, page 16, section 11, section 14 C. Malicious reporting, any person who is in malice or in bad faith reports, files a completely unwarranted opposed information relative to money laundering transaction against any person. I would assume this contemplates falls in malicious reporting by any individual, by any institution, covered or not, by the law to the AMLC, reporting to the AMLC.

CHIZ: That is correct Mr. President. Covered or not.

LDL: Iyan po ang…

CHIZ: Because it can cover the complainant making a malicious report.

LDL: And there is a penalty. Doon naman po sa nabanggit ninyo po kanina. Iyong junket operators, as against…

CHIZ: Page 6, Mr. President.

LDL: Thank you, yes page 6. Iyong mga definitions po, chief washing or junket operator and as against junket player. So ngayon ko lang po naiintindihan itong mga terms na ito. But I have the impression that when you talked about junket operator, within the contemplation of the law, of this law; this would cover both Filipinos and foreigners.

CHIZ: Yes Mr. President. Mr. President, your Honor, just to put it on the record. My understanding is a junket operator is just like an agent or salesman. He talks to a casino and the casino offers him a percentage on winning. So kung matalo iyong player na dala niya, malaki ang porsyento doon. What are the obligations of the junket operators? They, he brings they in and he guarantees payment and settles payment. So whether it is a win or a loss in the part of the player, players they brought in; he would settle it with his players. He would settle with the casino as well. Depending on the credit or debit he has, he usually offsets it with the casino depending on the credit or debit he has with his players who played in other jurisdictions. He sometimes only also offsets it. So the actual transfer of cash is not known to the casino. But Mr. President, your honor, we provided with a provision on CDD.

LDL: What?

CHIZ: Client Due Diligence.


CHIZ: Customer Due Diligence, rather, which basically requires the casino to know not only the junket operators – tthe prevailing system here – but the actual players themselves. For example, in Singapore they already do it. Players actually to present a government issued document because other Singaporean citizens are allowed to play. They are allowed but they are required to pay a certain amount. But they encourage foreigners to play, kumbaga, kayo magsugal dito, iyong citizens namin papahirapan naming magsugal. So it is a good policy, so kailangan mag-present ng passport to establish among other things, the identity of the person which is part of their CDD.

LDL: So a junket player can only be a foreign passport holding individual?

CHIZ: Yes Mr. President, your Honor, in practice yes. Wala ho akong alam na local junket player because if it is a local player, he would simply walk inside the casino.

LDL: And hindi sakop ng isang junket operator?

CHIZ: That is correct Mr. President, your Honor, because if there is a limit on the amount of cash you can bring in the country of 10,000.

LDL: Not even in a theoretical or hypothetical sentence that we could have a local junket player? Although as you mentioned in practice, but what about theoretically?

CHIZ: Theoretically, yes Mr. President, your honor. But there would be no reason to do so. But in theory if they can find the mutually rewarding financial arrangement but I don't see how. In theory, a player can be under a junket operator. But we do not distinguish in the proposed bill your honor, foreign or local.

LDL: Thank you. One final point, I saw it in a news item several weeks ago, about to two, three months ago about the leading member of the House of the Representatives, toying the idea of proposing the exclusion from the membership or the chairmanship of the AMLC, the BSP governor. Can I ask the view of the good sponsor?

CHIZ: I think that proposal came from former president now Congressman Gloria Macapagal Arroyo and I think she has been ironic Mr. President, your Honor. I think she didn't want the BSP to head or be part of the AMLC, because according to her, it has integrity and it might be affected by the absence or lack of integrity on the part of its other members. But it is illogical Mr. President, your honor because it inhibits the BSP that has integrity; the more reason why he should remain there, in order to ensure or provide according to her needed integrity if the quality is lacking.

LDL: On the proposed amendments do not really proposed or do not really offer to change the composition of the AMLC, because we don't see any problem.

CHIZ: No Mr. President.

LDL: In the composition is, in fact it is ideal set up that we have in the AMLC.

CHIZ: Yes Mr. President, your Honor, for this representation because to my mind, again it is a balancing nga. On the one hand government might want to use it against other its opponents whoever it wants to run after. On the other hand, we also have to protect citizens, members of the opposition for that matter or any other person who might not be in the list of favorite people of any sitting administration. So it is indeed a balancing act that we have to put in our and I think we have a good balance given the current composition of the AMLC.

LDL: I fully agree in the bottom line it is really depends on who the national leader is the character, the sense of integrity, the sense of fairness.

CHIZ: It has a lot to do with it Mr. President, your Honor.

LDL: Thank you and I laud the good sponsor for giving us very clear and responsive answers to the questions. Thank you, Mr. President.

CHIZ: We also thank the lady, Mr. President for insights and for suggestions and all of them were all taken and we will work on those suggestions and make the necessary amendments with the proper time. Thank you Mr. President, thank you your Honor.





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