Philippines: Money laundering liability

Author: | Published: 28 Jun 2017
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In 2016, the Philippine banking system was at the centre of an unprecedented cyberheist where $81 million supposedly stolen from the Bangladesh Bank, the central bank of the country, ended up in the Philippine financial system and was eventually lost in the blossoming casino industry. The natural question would be whether the people who allowed the entry and movement of the funds had any liability under the Anti-Money Laundering Act.

In order for money laundering to occur in the Philippine context, it is necessary that the offender has knowledge that funds are the proceeds of an illegal activity and the offender, among other acts, performs or fails to perform an act that facilitates money laundering. Knowledge is an essential element before any form of liability for money laundering may be incurred.

In jurisdictions such as the US, the concept of wilful blindness is commonly used where the 'knowledge' requirement is deemed satisfied when the offender believes that there is a high probability of illegality involved but takes deliberate actions in order to avoid learning the same. This system grants the prosecution greater leeway to establish the offence by lessening the burden required for knowledge.

The Philippine system is starkly different. While the Anti-Money Laundering Act does not specify the standards needed to establish knowledge, its implementing rules and regulations state that all elements of the offence 'must be proved by evidence beyond reasonable doubt, including the element of knowledge'. During the deliberations of the statute before Congress, it was also recognised that lack of knowledge is a defence against a charge of money laundering.

While the concept of wilful blindness is not a stranger to Philippine jurisprudence, this has only been applied to tax evasion cases where the offender is not allowed to claim lack of knowledge of his/her own books and income. The key differentiator is that a tax evader is in a position to know and should know the true status of his/her income, while in offences involving the facilitation of money laundering, the person may not be in a position to know the circumstances preceding a monetary transaction.

Simply put, in order for liability for money laundering to occur in the Philippines, there are strong grounds to argue that the offender must have actual knowledge that funds were sourced from an illegal activity. In the absence of such actual

  Thea T Daep and Joseph Anthony P Lopez