HOME    geronimo@ tax Articles    Today Articles     Lectures & Presentations    News & Views     Law and Jurisprudence

Admistrative Issuance    Trust Products and Practice    About the Guru     Links    Email Feedback

Questionable exclusions
Oct 16, 2001

"Predicate offense" is the term used in the literature on anti-money laundering to refer to the unlawful activity that gives rise to the money being laundered. Assume that the money being deposited was in reality the ransom paid for the release of kidnapped hostages. Seeking to disguise the true nature of the ransom is the money laundering and kidnapping for ransom is the predicate offense.

Initially, illegal drug related crimes constituted the major bulk of predicate offenses. Over the years, however, the trend was to include a myriad of other crimes and punishable offenses as crime syndicates, like legitimate businessmen, found virtue in diversification. In the United States, for instance, dozens of federal crimes are listed in its money laundering statutes and it is on account of this great number that money laundering laws have become powerful tools for attacking organized crime in that country.

That was why our experts expressed concern when, during the middle of the last week of September, it seemed that Congress was bent on reducing the predicate offenses to about five. Such a limited number of predicate offenses would severely limit the usefulness of an anti-money laundering statute in going after dirty money. Fortunately, both houses ended up with an expanded list, and the present law contains 14 categories of predicate offenses, ranging from swindling to smuggling, from robbery and extortion to plunder and practices in violation of the Securities Regulation Code of 2000.

Still, the list of predicate offenses in R.A. No. 9160, raises some questions, not so much on what is enumerated as on what is excluded. A quick survey of the Section 3(i) of the law is sufficient to bring this out.

The list has generally two methods of specifying the predicate offense. The first is to give the name of the crime and the law which punishes it. Thus, among the predicate offenses are (1) "jueteng and masiao punished as illegal gambling under Presidential Decree No. 1602" and (2) "qualified theft under Article 310 of the Revised Penal Code as amended."

The other method is to refer to all the violations of a certain law. Thus, also predicate offenses are (1) "hijacking and other violations under Republic Act No. 6235" and (2) "violations under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000."

Section 3(i)(2) and Section 3(i)(3), however, stand out as curiosities. They both specifically include some but not all of the crimes punished in the cited law. Thus, Section 3(i)(2) refers only to "Sections 3,4,5,7, 8 and 9 of Article Two of Republic Act No. 6425, as amended, otherwise known as the Dangerous Drugs Act of 1972, failing to include Section 6. Section 3(i)(3), on the other hand, includes only "paragraphs B,C,E,G, H and I" of Section 3 of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act. Omitted are paragraphs A, D, F, J and K of the same section.

It is easy to see why Section 6 of Article II of the Dangerous Drugs Act was not made a predicate offense. The omitted section punishes employees and visitors of any prohibited drug den, dive or resort. Clearly being employed or visiting a prohibited drug den, dive or resort is unlikely to have any proceeds to be laundered.

But it is not so clear why there were omissions in the listing of crimes in Section 3 of the Anti-Graft and Corrupt Practices Act. Not made a predicate offense is inducing a public officer to perform an act constituting a violation of rules and regulations and allowing oneself to be so persuaded or induced. Money is the usual motivation for inducing or being induced to violate regulations. Why should hiding the bribe money not be considered money laundering?

Or take paragraph D which proscribes accepting employment in a private enterprise which has pending official business with him during the pendency thereof or within one year after its termination. Salaries are paid in those cases and surely hiding those salaries should be a crime.

Inaction on the part of a public official without justification and for the purpose of favoring his own interest or any person interested in the matter some pecuniary or material benefit or advantage, punished under paragraph F of Section 3, surely will involve money, yet hiding that money is not money laundering?

Granting a permit to an unqualified person, punished under paragraph J, and divulging valuable information, covered by paragraph k, almost always are done in the context of money given for the license or the information. So, why is neither a predicate offense?

To the credit of their sponsors, the early versions of the money laundering bill included all the offenses listed in Section 3 of the Anti-Graft and Corrupt Practices Law. But some were eventually excluded in the final versions that passed the Senate and the House of Representatives the question "why?" should be answered by our legislators themselves.

As for me, I find it hard to resist the temptation of thinking that it is too much of a coincidence that some of the crimes which were not made predicate offenses are the very same offenses which some people in the previous administration are now facing.

HOME    geronimo@ tax Articles    Today Articles     Lectures & Presentations    News & Views     Law and Jurisprudence

Admistrative Issuance    Trust Products and Practice    About the Guru     Links    Email Feedback