By Louis ‘Barok‘ C. Biraogo

The discovery of billions in suspicious funds within Alice Guo’s bank accounts from 2019 to 2022 has sparked controversy and led to allegations of local banks conspiring with Guo in illicit activities. Senator Sherwin Gatchalian raised these concerns, highlighting potential lapses by the banks involved and questioning their role in possibly facilitating money laundering.

Background of the Controversy

Alice Guo, mayor of Bamban, Tarlac,  has come under scrutiny due to 36 bank accounts containing unjustified billions of pesos. The bulk of these funds were transferred within a span of three years, from 2019 to 2022. Gatchalian suspects that the banks, particularly their branches, may have conspired with Guo by failing to report these suspicious transactions to the Anti-Money Laundering Council (AMLC) as required by law.

Senator Sherwin Gatchalian has been vocal in calling out the banks’ potential complicity, referencing a similar case involving the illegal transfer of funds from the Bangladesh Bank to the Philippines. Gatchalian asserts that such lapses are precisely why the AMLC exists — to ensure swift reporting and investigation of suspicious transactions.

Making the Case for Gatchalian

Gatchalian’s arguments center around the banks’ alleged failure to comply with the Anti-Money Laundering Act (AMLA) of 2001 (Republic Act No. 9160, as amended). Under Section 9 of the AMLA, covered institutions are mandated to report covered and suspicious transactions to the AMLC. A suspicious transaction is defined under Section 3(b-1) as a transaction, regardless of the amounts involved, where any of the following circumstances exist: there is no underlying legal or trade obligation, purpose, or economic justification; the client is not properly identified; or the amount involved is not commensurate with the business or financial capacity of the client.

Philippine Supreme Court Precedents:

• Philippine National Bank vs. Office of the Ombudsman (G.R. No. 201791, October 2, 2013): This case established that banks have a fiduciary duty to report suspicious transactions to the AMLC promptly.
• Bangko Sentral ng Pilipinas vs. Anti-Money Laundering Council (G.R. No. 186717, March 27, 2012): The Court emphasized that the failure to report such transactions could lead to administrative sanctions and penalties.

Gatchalian’s allegations are further supported by the fact that AMLC has already secured a freeze order from the Court of Appeals (CA), indicating that there is prima facie evidence of illicit activities associated with Guo’s accounts.

Counterarguments for the Banks and Guo

Banks and Guo could argue that there was no intentional conspiracy to launder money and that any lapses were due to procedural shortcomings or misunderstandings rather than malfeasance. The banks might contend that they followed the standard due diligence procedures and that the sheer volume of transactions in the banking system makes it challenging to identify all suspicious activities promptly.

Philippine Provisions of Law:

• Due Diligence Requirement: Banks are required to perform customer due diligence under the AMLA. They may argue that they conducted these procedures in good faith and that the suspicious transactions were complex and difficult to detect.
• Good Faith Defense: Under the Civil Code of the Philippines, specifically Article 19, every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. The banks and Guo may invoke this provision to argue that they acted without malice or intent to defraud.

Philippine Supreme Court Precedents:

• Banco Filipino Savings and Mortgage Bank vs. Monetary Board (G.R. No. 170942, October 17, 2006): This case underscores that financial institutions are liable for lapses only if there is clear evidence of gross negligence or bad faith.

Assessing the Strength of the Cases

Against the Banks:

• The case against the banks hinges on whether they failed to comply with the AMLA’s reporting requirements. If proven, this could lead to significant penalties and sanctions. However, if the banks can demonstrate that they followed due diligence procedures and any lapses were unintentional, they may mitigate their liability.

Against Guo:

• The strength of the case against Guo appears strong given the substantial evidence of suspicious transactions and the AMLC’s successful request for a freeze order. If Guo cannot justify the source and legality of the funds, she may face severe legal consequences, including charges of money laundering.

Recommendations

For the Banks:

• Conduct a thorough internal investigation to identify any procedural weaknesses.
• Enhance compliance training and systems to ensure prompt reporting of suspicious transactions.
• Cooperate fully with the AMLC’s investigation to demonstrate transparency and good faith.

For Guo:

• Provide clear documentation and explanations for the source of the funds in question.
• Engage legal counsel specializing in AMLA cases to build a robust defense.
• Cooperate with authorities to mitigate potential penalties and negotiate any possible settlements.

The unfolding controversy underscores the critical importance of rigorous compliance with anti-money laundering laws. Both banks and individuals must remain vigilant and proactive in ensuring that the integrity of the financial system is maintained.