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Cablegate: Rp Supreme Court Supports Bank Secrecy

VZCZCXRO3408
OO RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHML #0626 0730421
ZNR UUUUU ZZH
O 130421Z MAR 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0101
INFO RUCNARF/ASEAN REGIONAL FORUM PRIORITY
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION PRIORITY
RUEAWJB/DEPT OF JUSTICE WASHINGTON DC PRIORITY
RHMCSUU/FBI WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY

UNCLAS MANILA 000626

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KTFN KCRM EFIN RP
SUBJECT: RP SUPREME COURT SUPPORTS BANK SECRECY

REF: A. MANILA 207
B. MANILA 404

1. (U) Summary: The Philippine Supreme Court has ruled that
a bank account holder must be given prior notification before
inquiry can be made into their bank records during
investigation of money laundering or corruption cases. Both
Philippine and U.S. criminal law enforcement efforts may be
negatively affected by this decision. The Philippine Office
of the Solicitor General is likely to file a motion by March
14 asking that the entire Supreme Court rehear the case. End
summary.

----------------------
Philippines v. Eugenio
----------------------

2. (SBU) Prompted by press reports that the Philippine
Supreme Court had ruled in Republic of the Philippines v.
Eugenio to restrict the Philippine Anti-Money Laundering
Council (AMLC) investigative powers (see
www.manilastandardtoday.com February 18 article "Court Stops
Probe of NAIA Bank Deals"), we asked AMLC officials for an
explanation. In various conversations with AMLC Executive
Director Vicente Aquino, Richard Funk, Arnold Frane, and
other AMLC officials, we found agreement that the decision
has severe negative implications for the investigation of
certain financial crimes, both in the Philippines and in the
United States.

-------------------------------------------
Court Ruling Formally Issued on February 29
-------------------------------------------

3. (SBU) According to AMLC officials, the Supreme Court
decision requires that except in cases of terrorism,
kidnapping, and drug violations bank account holder must be
given prior notification before inquiry can be made into
their bank records during investigation of money laundering
or corruption cases. In financial fraud and corruption
investigations this will require the AMLC to disclose the
fact of its investigation and the evidence uncovered to the
subject of the investigation long before the government is in
a position to file criminal charges. It will also allow the
account holder to prevent effective investigation by tying
the proceedings up with litigation. (In the subject Supreme
Court case, the original request for records was made in
2005.) Giving subjects of investigations notice of the
investigations at an early stage allows opportunity for the
destruction of evidence, the concealment of other assets, and
the obstruction of justice.

------------------------------
Impact on U.S. Law Enforcement
------------------------------

4. (SBU) According to AMLC officials, United States criminal
law enforcement efforts will also be negatively affected by
this decision. Through our Mutual Legal Assistance Treaty
with the Philippines, the United States enjoys an excellent
means to seek financial records to support investigations of
a wide variety of violations of U.S. law including wire
fraud, money laundering, counterfeit products, smuggling, and
computer fraud. In most cases the U.S. investigations are
not at stages where disclosure of the investigation can be
made without severely compromising the investigation. If the
subject ruling is upheld, our ability to obtain necessary
evidence from the Philippines in such cases will be
significantly reduced.

5. (SBU) AMLC officials have assured us that the Philippine
Office of the Solicitor General is likely to file a motion by
March 14 asking that the entire Supreme Court rehear the
case. However, the Supreme Court is unlikely to decide
whether it will rehear the case until the end of May, at the
earliest.
KENNEY

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