Illicit money flow took off in the 1990s, watchdog says

by Ria De Fiesta,

Posted at Feb 05 2014 12:21 AM | Updated as of Feb 05 2014 09:38 AM

MANILA – Illicit financial inflow and outflow in the Philippines took off in the 1990s, according to Global Financial Integrity (GFI), a non-profit organization based in the United States.

The illegal movement of money became a severe problem in the last 10 years, said Tom Cardamone, managing director of GFI.

Cardamone, in an interview on ANC Prime Time on Tuesday, said smuggling has been a problem in the Philippines since the 1960s, but not nearly as severe as now.

“It had to do with the change in government which happened a few years prior to 1990. I think what happened was international trade became more prevalent here, globalization became more prevalent and with the ease in trade, it became a lot easier to conduct smuggling and the illicit movement of money in and out of the country,” Cardamone said.

He said GFI chose the Philippines as subject of a special report because the country has always been in the top 10 of annual studies done by the group.

“We understood from past work… that the Philippines had a consistent problem here,” he said. “That’s why we decided to take a look here and really drill down see what we might find, and that is how we came up with the $410 billion illicit inflow and outflow in country in the last 52 years.”

“What we aim is to put some rigorous economic research on the illicit flow of money, as a way to help inform policymakers, the media, civil society groups about the extent of the problem of illicit money on the economy,” he added.

He said in other countries, governments passed new laws to address some of the issues raised in GFI's studies.

“We see a quick turnaround and reactions to the work,” he said.

When asked if their studies led to the prosecution of individuals involved in smuggling, Cardamone said “that’s always up to local authorities.”

“It comes down to the political will of the government and of the prosecuting authorities if they want to go after individuals or companies that they believe may have been perpetrating these kinds of activities. It also comes down to the quality of evidence put together to prosecute these individuals,” he said.

Cardamone said reducing trade barriers might have an effect on smuggling.

“When you lower the barriers, make it easier to trade, which is in itself a good thing because it drives the economy and creates jobs, but if you do it in a context in a country that has difficulty enforcing rules and regulations like the Bureau of Customs here, it may drive illicit flows even more,” he said.