In a startling revelation, the Financial Intelligence Agency (FIA) has uncovered a staggering P62 million in cash involved in diverse transactions across the nation over a three-year period.
FIA’s inaugural annual report, released recently, underscores a significant upswing in both the quantity of transaction reports and their corresponding values between the fiscal years 2021/2022 and 2022/2023.
“The value of cash transactions grew from P25 billion to about P62 billion, with a corresponding increase in the number of transactions from 0.65 million to 1.68 million transactions,” FIA states in the report.
This pattern, FIA says, shows an increasing preference for the use of cash over the years.
“It is important to note that an increase in cash transactions has a significant bearing on the ML vulnerabilities of a jurisdiction as a cash-intensive economy tends to allow for easier laundering of illicit proceeds,” says FIA.
Section 39 of the Financial Intelligence Act requires financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) to file reports on transactions of P10,000 and above or an equivalent amount in foreign currency.
During the period under review (2021 to 2023), the Agency says it received a total of P24,711 reports, 77 percent of which were reported by the banking sector. The report says Money or Value Transfer Services (MVTS) come in second at about 8 percent, followed by Casinos and Bureau de changes at 6 percent and 5 percent, respectively.
It says the number of transactions received have been steadily growing over the years with an average growth rate of 83 percent, 57 percent and 122 percent respectively. However, the number of international funds transfer (IFT) reports has declined by 41.34 percent in the 2022/2023 financial year.
“The banking sector has submitted the highest number of suspicious transact reporting (STRs) during the years 2021/2022 and 2022/2023. The number of STRs submitted by the banking sector increased exponentially from 151 in 2021/2022 to 393 in 2022/2023, denoting an increase of 160 percent,” FIA says. It says this significant increase is attributable to the increased economic activity following the COVID-19 period which was characterized by a stagnation in the economy.
“For the year under review, the banking sector accounted for 70 percent of total STRs received. The number of filed STRs increased every year. Between the years 2021/2022 and 2022/2023, the STRs filled increased by 64 percent,” the report says. It says the increase can be attributed to a number of reasons including the increase in the number of registered reporting entities and the increase in awareness and understanding as a result of the awareness activities undertaken in the past five years.
“During the period under review, the Agency received a total of 24,711 reports, 77 percent of which were reported by the banking sector. MVTS come in second at about 8 percent, followed by Casinos and Bureau de Changes at 6 percent and 5 percent, respectively,” the Agency says.
The report shows an increase in the number of EFTs reports received since 2018/2019. Minimal increase in EFTs was observed from 2019 to 2022 consistent with the reduced economic activity due to the COVID pandemic. The increase in EFTs during the financial year 2022/2023 corresponds to the increase in economic activity post the pandemic.
The report shows a decline in the number of reports received in 2022/2021 compared to the number of Border Cash reports (BCRs) received in 2019/2020 due to COVID-19 cross-border movement restrictions. As expected, the number of reports received in 2022/2023 rose steeply as cross-border movement restrictions were ultimately removed.
“A number of suspected predicate offences were observed during the period under review. The most common were fraud, obtaining by false pretences, corruption, and tax crimes,” the report says.