Source: NWDA via Getty Images

Art World May Get Anti-Money Laundering Scrutiny in Philippines

  • Financial-crime regulator says dealer activity warrants review
  • Regulator is probing one of world's biggest laundering cases

A Philippine regulator plans to recommend that art dealer transactions come under an anti-money laundering law and get the same scrutiny as proposed for financial activity in casinos and real estate.

The official, Julia Bacay-Abad, executive director of the nation’s Anti-Money Laundering Council, is part of an investigation into an $81 million cyber theft of foreign reserves from Bangladesh’s central bank. The money slipped through the Philippines banking system last month in one of the world’s biggest cases of money laundering, putting a spotlight on the country’s regulatory controls.

“All dealers in valuable objects should be covered under the Anti-Money Laundering Law,” Bacay-Abad said March 22 in an interview in Manila. Just like casino junket operators and property agents, dealers of valuable objects other than precious metals and stones, which are already covered under existing law, must be required to report suspicious transactions to the watchdog, she said.

While the initial probe of the theft from Bangladesh Bank shows that the money, most of which has disappeared, was moved through through the casinos, authorities point out that art and other precious objects are also within the reach of money launderers. 

Central Role

A weak anti-laundering law and very strict deposit secrecy rules have made the Philippines a hotbed for illicit funds, said Senator Serge Osmena, one of the lawmakers who had supported wider coverage of anti-money laundering rules.

The Anti-Money Laundering Council’s resources are limited, Bacay-Abad said in the interview. The agency’s secretariat has a staff of 109, including 28 employees in an information management and analysis group. Only nine members of that unit are financial analysts, tasked with sifting through 3 million reports a month. 

The Philippines has seen an increase in the number of reported transactions to more than 36 million in 2015, Bacay-Abad said. She attributed the rise to higher levels of crime and greater compliance by covered institutions. Transactions of 500,000 pesos ($10,800) or more are reported electronically to the council.

“The fight against money laundering is an ongoing initiative -- not just in the region but worldwide,” Bacay-Abad said. “Standards are being set.”

Before it's here, it's on the Bloomberg Terminal.