Money laundering 101

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Late to the party since I just started watching Netflix’s hit series Ozark a couple of weeks ago. Now with two seasons, this series is about a conflicted financial adviser and his seemingly typical American family based in Chicago, forced to settle in Lake Ozark, Missouri, a resort weekend destination for Midwesterners, where tourist money come-and-go: A perfect place to launder money illegally acquired by the second biggest drug cartel in Mexico.

The show follows how Marty Byrde (comedian Jason Bateman) and his wife Wendy (veteran actress Laura Linney) dabble in a wide variety of businesses — from a bar, strip club, funeral home, real estate and a casino — and get out of the hairs of local police, gangs, drug lords and FBI agents, so they don’t get gutted by the cartel’s henchmen. Pretty exciting stuff!
It can be said this show rode on the popularity of cult-favorite Breaking Bad, whose lead was a conflicted chemistry teacher that also had a seemingly typical American family based in Albuquerque, New Mexico, then forced to manufacture and distribute illegal drugs for a cartel; Ozark is more on the financial side of the narcotics business. And unlike Narcos that was more on the viewpoint of the police enforcers and actual drug war, this show is seen from the eyes of a self-confessed “numbers guy” obsessed with details, earning a profit and laundering as much money as they can in the soonest possible time.

Unfortunately, this show draws strong comparison with the Bangladesh cyber-heist debacle that ended up in the Philippines to an unsuspecting RCBC branch located along Jupiter St., Makati City, on the lap of branch manager Maia Deguito, who was recently convicted for eight counts of money laundering by the Makati Regional Trial Court. She was sentenced to four to seven years in prison for each count and fined $109 million.

The scheme employed by Deguito and her cohorts is similar to Hollywood scripts. Bank accounts were fraudulently opened to which the money was siphoned to and from which huge withdrawals were made and transferred to foreign exchange companies, converted into gambling chips and played in a local casino. Soft spoiler alert here: In the show Ozark, Marty proposed to put up a casino where all money would be laundered and his wife, Wendy, lobbied (and corrupted) with State senators to obtain votes to allow it to break ground.

It is humiliating and frustrating to recall how the cyber-heist was pulled off three years ago as this highlighted the infirmities in the Philippine banking system and our anti-money laundering laws. Likewise, it is highly possible that this is not the first time it happened for the Philippines has long been known as a country where laundering can be easily done considering that our bank secrecy laws are among the strictest in the world.

By reason of this controversy, our Anti-Money Laundering Act was revised to include casinos under its coverage, but only for transactions amounting to P5 million and above — a very high amount! This was said to be set by gambling regulator Philippine Amusement and Gaming Corporation itself, upon the request of the casino owners in the Philippines. This is not enough.

Verily, much more has to be done to detect and prosecute money laundering. It is my humble take that the bigger problem is money laundering committed by our local officials, not the foreigners who bring in dirty money from abroad. More teeth have to be given to the Bangko Sentral ng Pilipinas, Anti-Money Laundering Council and the Bureau of Internal Revenue, in detecting where the money is going. However, we need to be careful in granting too much power since it may facilitate more corruption. Imagine how easy it would be for violators to pay shush money to corrupt BIR officials.

In Ozark, albeit fictional, but based on existing US laws and regulations, the show’s characters were careful in spending huge amounts of money because these would alert the IRS, which would be compelled to question them on how they came about with the money. In the Philippines, this does not happen at all. All we can do is conduct lifestyle checks after they have already spent and enjoyed most of their dirty money. Look at how we dealt with the case of Janet Lim Napoles — she even got to purchase a hotel in Los Angeles for crying out loud.

Perhaps the best way to deal with money laundering is to couple legislation loosening bank secrecy law with the introduction of technology to facilitate the recording of transactions made by each individual. In fact, under the TRAIN Law, there is a provision requiring the real-time updating of VAT transactions, but has not yet been implemented. We can have other similar technologies to ensure that spending patterns of individuals are within their financial capacities, without violating our data privacy laws.

Email: darren.dejesus@dejesuslegal.com

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