By Luz Wendy T. Noble, Reporter
THE government further tightened its anti-money laundering rules, particularly in monitoring real estate transactions. This comes after the Financial Action Task Force (FATF) on June 25 placed the Philippines on its so-called “gray list,” reflecting the deficiencies in its anti-money laundering and counter-terrorism financing (AML/CTF) framework.
Under the new registration and reporting guidelines issued by the Anti-Money Laundering Council (AMLC), covered real estate brokers and developers are told to watch out for transactions where there is certainty or a sign that parties seem to be hiding the identity of the real customer buying the property. One of the telling signs is if there is a change in ownership when the property has not yet even been handed to an owner.
The AMLC also flagged those transactions done in behalf of third parties of intermediaries should be scrutinized, particularly when these are done in behalf of family or business ties, shared nationality or someone living in the same residence.
The “dirty money” watchdog also warned that transactions done through foreign intermediaries for tax purposes could be considered suspicious.
Red flags should also be raised if the payment for real estate transactions comes from high-risk jurisdictions that are considered tax havens, regardless of whether the customer is a resident of the specific country or territory.
Covered entities should also be suspicious if buyers appear to be interested in forming a private contract and seemingly not interested to notarize a contract or when they fail to have it notarized.
The AMLC warned that rapid succession or immediate sale of a property after purchasing, with prices that have a significant increase or decrease from the initial value of a property is another red flag.
Signed into law on Jan. 29, Republic Act 11521 further strengthens the Anti-Money Laundering Act (AMLA) of 2001. It expanded covered transactions to include cash deals involving real estate developers and brokers exceeding P7.5 million.
The move was done to increase monitoring of the real estate industry due to earlier findings that criminals are using property deals to launder dirty money.
Chamber of Real Estate and Builders’ Association National Chairman Charlie V. Gorayeb questioned the implementation of tighter rules following the amendments to the AMLA, saying it should have been done alongside the relaxation of the Bank Secrecy Law.
“We have so many laws and implementation has become a big challenge specifically given the corruption issues in our country,” Mr. Gorayeb said in a text message.
House Bill 8991 seeks to ease the Bank Secrecy Law by allowing the central bank to look into the accounts of bank officials and employees when there are sufficient grounds for fraud, subject to approval from the Monetary Board. It is still pending at the House committee level.
Authorities have said easing the Bank Secrecy Law will be a “welcome development” but is not among the key indicators being monitored by the FATF.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said the country has already addressed its technical deficiencies through the passage of Republic Act 11479 or the Anti-Terrorism Act and the AMLA amendments.
The AMLC’s new rules also expanded the types of designated nonfinancial businesses and professions. It has also authorized AMLC Executive Director Mel Georgie B. Racela to require submission of all, including low-risk covered transactions subject to AMLC investigation, among others. The rules likewise include provisions on compliance checking and new administrative sanctions.
Guidelines on suspicious transaction reporting on per account basis as well as requiring covered institutions to cite trigger events that led to the report are also included in the implementing rules and regulations. It likewise clarified rules regarding timing of submission for suspicious transaction reports.
The country will submit its first progress report to the FATF in September. Mr. Diokno expressed hope the Philippines will be able to effectively address the action plans monitored by the FATF to be able to exit the gray list by January 2023.