Transcript Slide 1

AUDIT TO DETECT FRAUD AND CORRUPTION:
EVALUATION OF THE FIGHT AGAINST CORRUPTION AND MONEY
LAUNDERING
The 10th ASOSAI Research Project
Atty. ALEXANDER B. JULIANO
Director – Fraud Audit Office
Commission on Audit - Philippines
Assessment of Current Situation of AntiCorruption in the Philippines
The Philippines Anti-corruption Strategy
Stand-alone anti-corruption program or anticorruption strategy
The Philippines Anti-corruption Strategy
Umbrella document with separate
programs for sectors or ministries
Inter-agency Anti-Graft Coordinating Council
The Philippines Anti-corruption Strategy
• Section in another policy document, e.g.
national development or investment
program
• Strategies are embodied in Anticorruption Laws
• Specific laws, courts, and prosecutors
dedicated to government anticorruption
CHAPTERS INTHEANTI-CORRUPTION DOCUMENT
Background chapters
Level of implementation of previous strategy
Objectives and priority areas
Chapters on prevention and criminalisation /
law-enforcement measures
• Public participation/education
• Monitoring and assessment mechanism and
criteria
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•
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•
ACTION PLAN
The anti-corruption strategy has an action
plan embodied in the Anti-Corruption Laws
ELEMENTS OF THE ANTI-CORRUPTION
ACTION PLAN
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•
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•
•
•
•
General objectives
Specific measures
Specific institutions
Time-frame
Criteria for assessing implementation
Budget specially allocated
Institution responsible
PUBLICATION
The anti-corruption documents and action
plans are published
MEASURES EMPLOYED IN FIGHTING CORRUPTION
• Open and transparency in the operation of agencies
• Development and implementation of entitlements, norms and
standards
• Administrative reform
• Development and enforcement of the code of conduct and the
code of professional ethics
• Penalty forms to heads of the agencies in case of occurrence of
corruption
• Salary payment via bank account
• Declaration of assets and income
• Regulation of returning gift by the public officials
• Whistle blowing and prohibition of acceptance of gift/donation
ANTI-CORRUPTION AGENCIES
• The Office of the Ombudsman
• Department of Justice
• The National Bureau of Investigation
• The Commission on Audit
MAIN RESPONSIBILITIES/FUNCTIONS OF THE ACA
• Monitor and evaluate the implementation of the anti-corruption
strategy
• Collect, centralize and exploit the denunciations
• Conduct investigations
• Disseminate knowledge on anti-corruption activities
• Raise public awareness about the fight against corruption
• Identify the causes of corruption and to propose to the competent
authorities of measures to help eliminate it
• Draw a risk map of corruption in the country
• Anti-corruption screening of legal acts
• Research and analysis on corruption
• Keep a database on the statistics regarding cases of corruption
year by years
• Research and analysis on conflict of interest in the public
management
RE-EVALUATION OF BODIES/ AREAS/ ACTIVITIES
HAVING HIGH RISK OF CORRUPTION
The ACAs regularly re-evaluate the bodies,
areas and activities with high risk of
corruption in order to employ appropriate
measures to mitigate corruption
The ACAs have a hotline and website in order to
facilitate citizens’ complaint on corruption.
CRIMINALIZATION OF DIFFERENT TYPES OF
CORRUPTION
• Special Law
• Criminal Law
NEED TO ENACT NEW LEGISLATION
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Abuse of position/power
Influence peddling
Kickback
Nepotism
Political dynasty
RANKING OF CORRUPTION MEASURES
1
2
3
Preventive policies and measure
Detective actions
Punitive measure
LAWS AND REGULATIONS GOVERNING THE
FINANCING OF POLITICAL PARTIES
The Omnibus Election Code
The
Philippines
have
laws
and
regulations governing code of ethics of
and declaration of assets by public
officials
The Philippines has “accounting and
auditing standards” for both public
and private sectors
Our public officials have legal obligation
to report corruption-related offence
IMPLEMENTATION RATE OF THE
RULES/REGULATION IN COMBATING
CORRUPTIONS
Very poor
Poor
Fair
1
2
1
THE PHILIPPINES HAS RATIFIED UNITED
NATIONS CONVENTION AGAINST
CORRUPTION (UNCAC)
Memorandum of Implementation signed on
June 14, 2013
The Philippines has begun the UNCAC
peer review process
The Philippines is a member of anti-corruption
conventions, initiatives or international project
(OECD Convention on Combating Bribery of Foreign
Public
Officials
in
International
Business
Transactions; GRECO etc.)
Yes
3
SUCCESS LEVEL OF INTERNATIONAL
COOPERATION
Extradition
Mutual legal
assistance
Asset
recovery
Cooperation
with law
enforcement
authorities
Moderate
Moderate
Low
High
Cooperation
between
national
authorities
Moderate
EFFECT OF MEDIA IN FIGHTING CORRUPTION
• To some extent, media have helped public
to recognize the real situation of
corruption, however the provided
information are sometimes inaccurate and
subjective
SOCIETY’S PARTICIPATION IN
TACKLING CORRUPTION
Actively but not effectively
PRESENT LEVEL OF ANTI-CORRUPTION
EFFORTS COMPARED TO PAST YEARS
EXPERIENCE
About the same as past years
PARTICIPANTS TO ANTI-CORRUPTION
EDUCATIONAL AND TRAINING PROGRAMS
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•
•
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Public officials
Non-governmental organizations
Businessmen
Media
FACTORS THAT INHIBIT THE RESULT OF THE FIGHT
AGAINST CORRUPTION
• Corrupt people are not severely punished
• The collusion between law enforcers and corrupt people
• Authorized officials lack commitment
• Some superiors cover up for their subordinates
• Afraid of retaliation and victimization
• Have not mobilized well people’s and media’s participation
• Lack of competent and experienced staff
• Lack of capacity and financial resources
• Insufficient pay and benefits to government employees
• Public officials lack political will
• Corruption too ingrained in government institution
THE RESULT OF THE CURRENT FIGHT
AGAINST CORRUPTION
Have had positive impact
ROLE OF CITIZENS IN FIGHTING CORRUPTION
• The citizens help to promote public sector
transparency and accountability
• Complaint system/ Whistle Blower, and
Denunciation
Assessment of Current Situation of AntiMoney Laundering in the Philippines
Money laundering is a criminal
offence in the Philippines
LAW GOVERNING ANTI-MONEY
LAUNDERING
Republic Act 9160 - Anti-Money
Laundering Act of 2001
R.A. 9160 could not cover all money
laundering aspects to deal with this
phenomenon
RATE OF IMPLEMENTATION OF
ANTI-MONEY LAUNDERING LAW
Fair
Good
2
2
The Philippines has a national Financial
Intelligent Unit (FIU) functioning as national
center for the collection, analysis, and
dissemination of information regarding
potential money laundering offences
The Anti-Money Laundering Council
(AMLC) is the
official authority in-charge of anti-money
laundering
ANTI-MONEY LAUNDERING MEASURES WHICH
HAVE BEEN APPLIED EFFECTIVELY
• Identify customer and update customer information
• Report, provide and save information
• Gather, treat and transform information
• Apply temporary measures to adjudge violations
• Investigation of predicate crimes to money laundering
• Institute civil forfeiture proceedings against proceeds of
crime
• Cause the filing of complaints for the prosecution of
money laundering offenses
OUR AMLC ENJOYS INDEPENDENCE
• Legal
• Functional
• Financial
• Recruitment of employees
OUR AMLC PERFORMS
THE FOLLOWING FUNCTIONS
• Developing policies and improving legislation
• Data collection, analysis and evaluation
• Supervision and coordination
• Investigation of the cases
• Raising awareness in the public
• Carry out researches
• Carrying out examination of the cases
• Requesting any kind of information
• Prosecution of money laundering and related cases
RANK OF THE EFFECTIVENESS
OF ANTI-MONEY LAUNDERING MEASURES
1
Preventive policies and measures
2
Detective actions
3
Punitive measure
The citizens may inform (denounce) the
country’s AML Board about a suspected case of
money laundering via website of the AML Board
or via letter
UPDATED RULES AND INFORMATION
ABOUT ANTI-MONEY LAUNDERING
Recent amendment to RA 9160
The AMLC requires all financial institutions to have
anti-money laundering (AML) & Know Your Customer
(KYC) procedures
FINANCIAL INSTITUTIONS HAVE TO COMPLY WITH
LEGAL OBLIGATIONS CONCERNING ANTI-MONEY
LAUNDERING LAW
• Internal controls
• record-keeping requirements
• Thorough client identification
• Creating and updating list of red flags
• Prohibition of anonymous account
• Employee training programs
• Independent audit/ compliance function
• Monitoring program
• Policies covering relationship with politically exposed persons
• Policy protecting accounts / relations with shell banks
• Policy of protecting employees
FINANCIAL INSTITUTIONS ARE OBLIGED TO
COMPLY WITH LEGAL OBLIGATIONS OR
ADMINISTRATIVE POLICIES IN TERMS OF
CLIENT DUE DILIGENCE PROCEDURES
Implementation
systems for the
identification of its
customer
Collecting information
and assessing its
customer’s AML
policies and practices
Screening its
customer’s
information against
sanction list
Regular updating and
verification /
validation of
customer’s
information
MOST COMMON TYPES OF SUSPICIOUS TRANSACTION
REPORTS (STR) FROM FINANCIAL INSTITUTIONS
• Inconsistencies with the financial profile
• Financial transactions involving the person(s) considered in
the “high risk” category
• Unusually large cash transactions
• Suspicious behaviours
• Unusual use / exchange of cash
• Refusals to show identification
• Avoiding reporting obligations
• Unusual account activities
• Cutting large amount of transaction into pieces
• Clear evidence of illegal activities linked with a transfer
FINANCIAL INSTITUTIONS ARE OBLIGED TO
COMPLY WITH FATF RECOMMENDATIONS
Yes
Although not a FATF Member, Philippine
Laws are substantially compliant with
FATF recommendations
Rate of AMLC’s ability to cooperate and
exchange
financial
information
at
international level
Good
Very Good
2
2
There are cooperation agreements or
protocols among the local institutions in
our country to share financial information
and financial transfers and if it’s involved
with money laundering
ROLE OF CITIZENS IN FIGHTING MONEY
LAUNDERING
The citizens help Civil society is Complaint
to promote public also engaged
system/
sector
in anti-money
Whistle
transparency and laundering
Blower, and
accountability
efforts
Denunciation
The penalties for money
incidents are appropriate
laundering
FACTORS THAT INHIBIT THE FIGHT
AGAINST MONEY LAUNDERING
• Money laundering criminals are not severely punished
• Limited capacity of staff and resources to handle said cases
• The collusion between enforcement officers and money
laundering criminals
• Limitation of citizen’s knowledge about money laundering
criminal
• Lack of competent and experienced staff to handle money
laundering cases
• Inherent difficulty in detecting and investigating money
laundering cases
• Laws protecting the depositors and other privacy issues
PARTICIPANTS TO ANTI-MONEY LAUNDERING
EDUCATIONAL AND TRAINING PROGRAMS
Public officials but
only few /selected
public officials
have been
provided with
training
schools
General
Public
NGOs
Financial
Institutions
(bank etc.)
Business associations
and private companies
Controlling systems are the keystone and
deterrent for fighting against money
laundering
Yes
4
There are high institutions providing training
workshops for the employees of controlling
agencies about methods to detect money
laundering
Yes
4
RESULT OF THE CURRENT FIGHT AGAINSTMONEY LAUNDERING
Have had positive impact