To avoid cash smuggling, the central bank-led Anti Money Laundering Council (AMLC) is proposing for increased monitoring of travellers’ foreign currencies (FX) declarations that enter and exit the country.
AMLC said the Philippines is at a higher risk of becoming a source of illicit funds unless FX declarations are made more granular and the reporting process is improved.
Despite that both the Bangko Sentral ng Pilipinas (BSP) and the Bureau of Customs (BOC) already work hand in hand in detecting money laundering/terrorist financing (ML/TF) activities for the inbound and outbound FX flows, there are still concerns about bulk-cash smuggling.
In an April 2022 study conducted by the AMLC which is a review of FX and other foreign-denominated monetary instruments that enter the country via international gateways such as airports and seaports, it said that money “transported into and out of the country as well as the frequency of these large-value transactions magnify the need to examine the prominent trends and patterns that may aid in the early detection of ML/TF threats originating overseas.”
The AMLC gets monthly reports from the BOC of FX declarations which are voluntarily disclosed by travelers carrying cash in excess of $10,000.
The April study is one of AMLC’s efforts to have a macro-level analysis of the FX declarations data. The study is actually a three-part study on FX declarations from accumulated data for the period first quarter 2015 until the third quarter of 2021. The data involves trends and patterns such as sources, destination, frequency, amounts declared, nationalities, among others.
In the six-year data, a granular breakdown of transaction flows for inbound and outbound showed some usefulness of FX declarations in detecting illegal funds.
Based on the study which was released only on June 10, it was the casino gamblers that usually bring in the large FX as physical cash to and from the Philippines while there were no reports about corporate passengers bringing in, in a single trip, FX amounting more than $10,000.
From the first quarter 2015 until the third quarter 2021, individual passengers physically transported $1.46 billion in FX while the outbound flows of corporate passengers amounted to $27.1 billion.
The AMLC study pinpointed casino-related transactions, unusually frequent trips, inconsistent disclosures and even pilgrimage-related transactions as all suspicious activities and indicators.
There are indications that the transactions of individual passengers which are hard to identify and verify, for example, are possible sources of illicit funds, compared to big banks whose international transactions are monitored by the BSP.
As such, the AMLC is proposing that it works more closely with the BOC in this case to be able to “effectively identify important trends and typologies” based on AMLC’s observations on the ground and BOC’s data-driven analyses, it noted.
“For individual passengers, frequent inbound flows of foreign currencies to be used for casino gambling breeds suspicion that warrants further examination,” said AMLC. This is mostly physical transfers of foreign currencies.
The AMLC also wants closer cooperation with the Philippine Amusement and Gaming Corp. or PAGCOR to “avoid foreign currency-denominated funds declared for casino gambling to be used to finance unlawful activities.”
“The AMLC and PAGCOR may consider building a joint framework to trace and monitor the ultimate destination of said funds,” it added.
The AMLC noted that one of the challenges in analyzing foreign currency declaration forms is the lack of a standardized format for certain fields, such as address, occupation, and purpose of transaction.
“To facilitate faster and more efficient processing of available data, enhancements in the reporting process may be considered. Perhaps, the BOC and the AMLC can explore the possibility of having an electronic form, where pre-determined values or codes can be inputted. This development may not only ease the validation process but also improve analysts’ access to FX declarations,” said AMLC.
At the moment, the BSP allows a person to “freely bring into or take out” of the country or electronically transfer up to P50,000.
The BSP also allows a person to carry up to $10,000 or its equivalent in other foreign currencies as travelers’ checks, other checks, drafts, notes, money orders, or bonds.
In excess of the P50,000 limit, an individual will have to get the BSP’s written authorization first to bring into or take out cash or other forms of cash out of the country.
Meantime, more than $10,000 are allowed but it requires a foreign currency declaration form from the BOC desks in all of the international airports and seaports in the country.
If a person has to have an amount that is more than P50,000, it should only be because of these reasons: testing/calibration of money counting/sorting machines; numismatics (collectors of currency); and educational purposes.