Senators oppose proposal to include real estate developers and brokers under the supervision of AMLC

MANILA – A proposal to include developers and real estate brokers on the Anti-Money Laundering Council (AMLC) list of covered institutions and individuals met with opposition on Wednesday, with some senators saying it is placing an additional burden on an overly regulated industry.

During a Senate panel hearing that addressed proposed amendments to the country’s anti-money laundering law, senators and stakeholders suggested instead delegating the task to government agencies and increasing the threshold of covered transactions.

Under Senate Bill 1412, real estate developers and real estate brokers will be included in the persons covered by the Anti-Money Laundering Act for one-time cash transactions involving an excess of P1 million.

Senator Grace Poe’s proposed measure seeks to further strengthen the anti-money laundering law and improve the country’s compliance with global rules.

For Senator Franklin Drilon, developers and real estate brokers should not have the burden of informing AMLC when real estate transaction reports can be obtained with the Land Registration Authority (LRA).

“Let the government agency they pay taxpayer money to, including taxes paid by developers, brokers, and sales agents, do the reporting work because that way the same purpose is served. I cannot understand why we will impose the burden on the private sector, ”he said.

Forcing developers and real estate brokers to ask their clients the source of their income is also intrusive, said Senator Sherwin Gatchalian.

“It’s quite intrusive on their part and they could lose clients and customers if they enforce that kind of information gathering,” he said.

For her part, Senator Cynthia Villar sought a higher limit for covered transactions because money launderers “do not handle small amounts.”

“If you are a money launderer, you don’t deal with P5 million. The money launderer deals with millions of dollars… The limit should be higher, ”he added.

The Organization of Socialized and Affordable Housing Developers of the Philippines (OSHDP), a national association of massive home developers, also opposed such an amendment that would only hurt the real estate industry.

“We register our objection to the proposed amendments to the Anti-Money Laundering Law, particularly in the context of the growing accumulation of housing, the existing limitations to production, which reject the need to regulate a little more, an already over-regulated sector “Your general,” said attorney Christopher Ryan Tan during the hearing.

According to Pilar Torres-Banaag, a board member of the Professional Regulatory Board of Real Estate Service (PRBRES), there are more than 11,000 registered real estate sellers and more than 31,000 accredited real estate brokers in the country.

STRATEGIC DEFICIENCIES

During the Senate hearing, AMLC CEO Mel Georgie Racela said that they were only complying with the recommendations of the Financial Action Task Force (FATF), a Paris-based monitoring body against money laundering and financing. of terrorism.

The real estate sector, which is not included in the AMLA, has become a vehicle for laundering funds, he said.

As of October 2020, the AMLC found that real estate assets with an estimated value of P861 million represent 22 percent of the total assets and properties subject to civil forfeiture proceedings.

“To date, the AMLC has been able to seize P27 million of real property used in illegal activities through civil forfeiture. There are also several real estate assets related to terrorist financing that are subject to an existing freeze order, ”he said.

Racela said that among those properties were a 120-hectare training ground used by the Maute group linked to the Islamic State and a building worth P27 million used for drug trafficking cases.

To minimize the impact of the proposed amendment on the real estate industry, he emphasized that only transactions involving P1 million in cold cash should be covered by it.

3 things are also required of developers and real estate brokers, Racela added. These are the Know Your Customer (KYC) documents, reporting requirements, and record keeping.

To address strategic deficiencies in the AML legal framework, the following are some of the proposed amendments:

• Inclusion of tax crimes and violation of the Law of Strategic Commercial Management, which indirectly includes the proliferation of weapons of mass destruction as predicate offenses for money laundering;
• Strengthening the investigative powers of the Anti-Money Laundering Council (AMLC);
• AMLC Authorization to Implement “Specific Financial Sanctions” on Proliferation Financing;
• Prohibition of the issuance of precautionary measures against freezing orders and confiscation procedures; Y
• Authorization of the AMLC to preserve, manage or dispose of assets subject to order of preservation of assets and forfeiture by judgment.

If regulations are not improved, the Philippines could be included in the “gray list”, which means a higher cost of remittances for Filipino workers abroad (OFW), Racela said.

The Philippines could be included in the European Union’s list of high-risk third jurisdictions, and being “gray-listed” could also reduce investor and lender confidence.

On October 16, President Rodrigo Duterte certified as urgent the approval of the proposed measure to “strengthen financial initiatives towards national economic recovery and maintain the stability of the financial sector amid the COVID-19 pandemic.”

“Such compliance will avoid adverse findings against the country that could lead, among others, to an increase in the costs of financial transactions, to the detriment of the business sector and our Filipino workers abroad,” he also said.