Anti-money laundering amendment passed in a nick of time
A new law on anti-money laundering saved the Philippines from sanctions that threatened to delay worker remittances into the country.

President Arroyo signed Republic Act 9140 (AMLA II) into law last 7 March to address the deficiencies of the Anti-Money Laundering Act of 2001 AMLA II not only lowers the threshold amount for covered transactions to P500,000 from P4 million but also establishes a system for reporting suspicious transactions or those transactions without underlying legal or trade obligation or economic justification.

While legislators have now allowed examiners from the Bangko Sentral to complement the work of the Anti-Money Laundering Council, the solons have removed AMLC’s power to freeze accounts and left them to the Court of Appeals.

Notwithstanding bank secrecy provisions, AMLC is no longer required to secure a court order before inquiring into any particular deposit or investment related to kidnapping with ransom; violations of the Comprehensive Dangerous Drugs Act of 2002; and hijacking, destructive arson, murder and those perpetrated by terrorists.

To strengthen the confidentiality of bank deposits, AMLA II provides penalties for media persons who publish or report any money laundering transaction. As of 13 March, AMLC has reportedly frozen 450 bank deposits involving a total amount of P1 billion and filed 34 criminal cases in court.

The Philippines has been on the FATF list of non-cooperative countries and territories (NCCT) since June 2000, but will be removed when the implementing rules and regulations to the new law are released. The FATF is scheduled to assess progress on the implementation of AMLA II in June.

war has been quietly brewing between Philippine telephone companies and their US counterparts. Philippine Long Distance Telephone Company (PLDT) and five other carriers are pitted against United States-based carriers – MCI-WorldCom (WorldCom) and AT&T – in a debacle that already has both countries’ regulatory agencies firing off directives that favor their respective carriers.

Both AT&T and WorldCom filed separate petitions on 7 February requesting the US Federal Communications Commission (FCC) to protect US consumers and international carriers from acts of “whipsawing” on the US-Philippines route. The FCC terms “whipsawing” as anticom-petitive behavior on the part of foreign carriers that involves playing US carriers against each other to gain unduly favorable terms and conditions.

Both US carriers allege that several Philippine carriers have blocked the traffic of US carriers for their refusal to agree to unilateral rate increases. According to the International Bureau’s report, on 1 February Philippine carriers began to disrupt the U.S.-Philippines networks of AT&T and WorldCom. It claimed that the Philippine carriers’ actions were taken in retaliation for the two US telecom firms’ refusal to give in to rate increases demanded by local telephone companies. The termination rates were raised from between eight and nine cents per minute for calls made to Philippine landlines to 12 cents and calls made to local cellular calls from 12 cents to 16. To date, at least 15 US carriers and 90 telecom companies of other countries have already agreed to the rate hikes.

On 10 March, the International Bureau of the FCC issued an order favoring AT&T and WorldCom’s petition. The bureau instructed all U.S. carriers providing facilities-based service on the U.S.-Philippines route to suspend all payments for termination services to the six carriers pending restoration of all circuits and service on the U.S.-Philippines route.

For its part, the National Telecommunications Commission (NTC) on 12 March instructed Philippine telecom carriers to reject calls from major US carriers and for local companies to collect payments due them despite the FCC’s order.

The NTC is mandated to protect the local telecom industry from unfair trade practices imposed upon it by other carriers under Republic Act 7925 or the Philippine Telecommunications Act.

Since then, WorldCom has inked an interim agreement with PLDT and its cellular phone subsidiary while AT&T is still trying to renegotiate the rate hikes with the six Philippine carriers. PLDT is currently in negotiation with the US carrier with the intention of siding with the NTC order. The other five have opted to pursue other means of contesting the FCC decision and are of the same opinion with the local regulatory agency that the order of the FCC’s international bureau was made beyond its authority.