Press Releases

House tax panel creates working group against bulk cash smuggling; Salceda says measure to lower remittance fees for OFWs

March 7th, 2023

House Ways and Means Committee Chair Joey Sarte Salceda (Albay, 2nd district) says that the enactment of a measure penalizing bulk cash smuggling into or out of the Philippines will “safeguard the country against dirty money” and “improve the credibility of our financial system, lowering remittance costs for OFWs especially in Europe.”

As such, the House tax panel created a technical working group to consolidate House Bills No. 374 by Salceda, and 3254 by Rep. Lex Colada.

“As of February 24, 2023, we are the only ASEAN country in the Financial Action Task Force’s “gray list” or countries under increased observation. That means, in countries especially in Europe, banks take more time to evaluate money transfers to the Philippines because we are considered high-risk for terrorist financing and organized crime.”

“Part of the ecosystem of organized crime in the country is bulk cash smuggling. Smuggled currency is currently not expressly part of the mandate of the Bureau of Customs – since it is not considered “goods,” so they have limited legal means to fight it.”

“This bill assigns the BOC the necessary powers to apprehend the smuggling of foreign currency, which is an action point requested of us by the FATF,” Salceda added.

Salceda warned that “If currency makes it into the country, it can then be laundered through Philippine businesses such as designated non-financial institutions such as real estate brokerage, a series of seemingly innocuous transactions with banks and other financial institutions, or with the Philippines as a transshipment point to countries with “porous” boundaries with the country, such as the Southern Backdoor”

Salceda adds that “due to high penalties for involvement in terrorist financing, foreign banks are hesitant to transact with Philippine banks and citizens. By being a hub for money laundering and cash smuggling through our porous security systems and our inadequate policy framework for cash smuggling, we risk being, yet again, included in the list of countries under observation by FATF. In the United States, the fine for basic money laundering and international money laundering offences is incarceration up to 20 years and a fine of up to US$500,000, or twice the value of the proceeds involved in the violation.”

FATF gray listing hurts OFWs

“Being in the gray list,” Salceda explains, “hurts OFWs. Foreign banks perform more due diligence, or outright reject OFW remittances, or take longer to process them.”

Incidents of OFW remittances being rejected was confirmed by OFW Party List Representative Marissa “del Mar” Magsino.

“The inability of Philippine banks to transact with foreign banks could endanger as much as 13.18 percent of the national GDP. OFWs will be unable to send remittances to the Philippines and investors will be unable to send investments to partners in the country. Philippine banks will be obliged to increase costs on Filipino consumers to sustain operations given the losses due to inability to transact with foreign banks. This will have profound implications on our ability to boost domestic enterprises and create jobs,” Salceda added

The bill seeks to expand the coverage of the Anti-Money Laundering Act of 2001 to include one-time cash transports of more than PHP500,000 at any one time.

It shall also empower the Anti-Money Laundering Council (AMLC) to define a cumulation of closely-related events that would constitute “one-time”.

Likewise, the Bureau of Treasury, through the Treasurer of the Philippines, in the AMLC shall facilitate counterpart-to-counterpart cooperation, as many countries’ anti-money laundering efforts are spearheaded by their Secretaries or Ministries of the Treasury.

The bill proposes to criminalize bulk cash smuggling to ensure that the evasion of a paper trail for cash transfers will not be tolerated.

A person convicted of a currency smuggling offense shall be imprisoned for not less than 7 years and not more than 14 years.

There shall also be a civil forfeiture in favor of the Philippines of assets related to cash smuggling.

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