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

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

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

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

For Sen. Franklin Drilon, real estate developers and brokers should not be burdened with reporting to AMLC when real estate transaction reports can be obtained with the Land Registration Authority (LRA).

“Let the government agency who are being paid by taxpayers money, including taxes paid by the developers, the brokers and the sales agents do the job of reporting because that way you achieve the same purpose. I can’t understand why we will impose the burden on the private sector,” he said.

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

“It’s quite intrusive on their part and they might lose customers and clients if they would impose those types of information gathering,” he said.

For her part, Sen. Cynthia Villar sought a higher cap on covered transactions because money launderers "don’t deal with small amounts."

“If you are a money launderer, you don't deal with P5 million. Money launderer deals with millions of dollars… The cap should be higher,” she added.

The Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP), a national association of mass housing developers, also opposed such amendment that would only prejudice the real estate industry.

“We register our objection to the proposed amendments to the Anti-Money Laundering Act, particularly within the context of the growing housing backlog, existing constraints to production, which refused the necessity to regulate some more, an already overly regulated sector,” its general-counsel, lawyer Christopher Ryan Tan, said during the hearing.

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

STRATEGIC DEFICIENCIES

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

The real estate sector, which is not captured under the AMLA, has become a vehicle to launder funds, he said.

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

“To date, the AMLC was able to confiscate through civil forfeiture P27 million worth of real estate used in unlawful activities. There are also several real estate assets found to be related to terrorism financing which are subject of existing freeze order,” he said.

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

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

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

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

• Inclusion of tax crimes and violation of the Strategic Trade Management Act, which indirectly includes proliferation of weapons of mass destruction as predicate offenses to money laundering;
• Enhancement of the investigative powers of the Anti-Money Laundering Council (AMLC);
• Authorization of the AMLC to implement "targeted financial sanctions" on proliferation financing;
• Prohibition on the issuance of injunctive relief against freeze orders and forfeiture proceedings; and
• Authorization of the AMLC to preserve, manage or dispose assets subject of asset preservation order and judgment forfeiture.

Failure to improve regulations could lead the Philippines to being included in the “gray list,” which means higher cost of remittance for overseas Filipino workers (OFWs), Racela said.

The Philippines could be included in the European Union’s list of high-risk third jurisdiction, and being "gray-listed" could also result in reduced investor and lender confidence.

• Duterte certifies as urgent bills boosting anti-money laundering law, financial resiliency amid COVID-19 crisis

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

“Such compliance will avoid adverse findings against the country which could lead, among others, to increased costs of doing financial transactions, to the prejudice of the business sector and our overseas Filipino workers,” he also said.