 Good afternoon, everyone. I think we're going to start the last portion of our program or next to last portion of our program. Hope you enjoyed your lunch break. Looking at the data from the five countries that are included in the book, you see not only very significant levels of outflows, but significant levels of inflows as well. Philippines, which is the subject of our next panel, certainly bears out that fact, double the amount of inflows, or inflows are twice the amount of the outflows. So quite a significant amount there and maybe something that gets addressed during the conversation. When my former colleague and I, Clark Gasko, went to the Philippines when this report originally came out, we got very supportive comments from the President on the report, which was quite encouraging that the government is focusing on these issues. They've done a fair amount of reform in the customs department, and perhaps we'll hear some of those activities as well. I'd like to invite the panelists to the front, please. We have His Excellency, the Ambassador from the Philippines to the U.S., Ambassador Quecia, Hector Colón, and Matt Solomon, our moderator. Welcome back, everyone. We've been talking about illicit flows for nearly two days. So I thought we'd begin with a little good news here. As we begin our conversation on the Philippines. And there's a personal part of this, and that's part of the good news. So if you've been following economic growth recently, you'll know that the Philippine economy has been fairly resilient. Even as global growth prospects have dimmed, and certainly for a lot of countries in Asia, while the Philippines economy has slowed a bit, it's still holding its own in a fairly impressive way. In the latest Article IV consultation of the IMF, the IMF presents a relatively upbeat prognosis for the Philippine economy. Even though El Niño is presenting problems for the Philippine agricultural sector, growth is expected to remain strong, inflation low, and in fact both national saving and national investment are expected to go up this year. Good news. What I also want to close with is a little phrase from the consultation, or the synopsis of the consultation. The fund credits some of the Philippines economic resilience to favorable policy, commending both monetary and fiscal policy makers in the Philippines for their, quote, prudent macroeconomic management. So it's good news. For someone as old as I am who began following economies in the late 70s, it's good news in another sense because I do remember a time when the phrase prudent macroeconomic management would not ever occur in the same sentence as the word Philippines. So there's something else happening here that ought to be held out and perhaps give us hope as things are going. That's kind of where I would like to focus some of our discussions later if we will. I want to stress just at the outset, because illicit financial flows are a threat to a country's fiscal capacity, that's basically what a country is there to do to govern and to raise revenue when it needs to, expend on things the society needs, and if that mechanism is impeded, no country can do what it needs to very easily. Prudent macroeconomic management is not an accident, and I think in every case where we see it, where we see a development over time, and the Philippines story is very complicated, fortunately I don't have to tell it, part of the story is right here. It ought to be pointed out that it's like capital, you invest, you persist, and you accumulate over time. It's too early to declare victory, I think we would all agree. But I think it may be worth thinking about the task of curtailing illicit flows as part of the process by which the institutions of macroeconomic policy in the Philippines are further strengthened and more inclusive economic growth can be realized, which is the end of activity. GFI's recent report on illicit flows to and from the Philippines as summarized in chapter seven of the volume is one of the most, one of GFI's most ambitious undertakings for a number of reasons. Dev Kar is the author, he's right here. The report finds that illicit flows are significant and predominantly reflect trade misinvoicing. Just to give you an idea how significant, just over the past ten years, trade misinvoicing has amounted to just under 17% of Philippine GDP. That's inflows and outflows, and that's a huge number. That's a huge number. Certainly a higher share than for other developing Asian economies, and the global average for developing countries really is just under 11%, and this is 17, so it's a very large number. The bulk of those flows with over 70%, the bulk of the misinvoicing is inflows with over 70% of the total misinvoicing accounted for by import under invoicing and export over invoicing. GFI study also demonstrated in a robust way and in a kind of new way how illicit flows are likely affecting the Philippines economy. The statistical analysis indicated that illicit inflows were linked to the illicit outflows and suggested the possibility of those outflows were in fact possibly financing inflows. This result of two angles of statistical analysis brought to bear in the same data. The illicit inflows were found to correlate with the level of underground economic activity in the Philippines, hampering growth of tax receipts, domestic savings, and ultimately growth in Philippine living standards. So even as we celebrate progress, we know there's more to be done, and there's more that has been done that we can take up with our distinguished guests today. And to help us understand the scope of the work that remains in the Philippines and learn from it for other countries as well, we welcome the two distinguished guests to our panel discussion. First we say welcome to His Excellency Jose Cuisia, who was appointed ambassador to the United States by President Aquino, the current President Aquino in late 2010, and formally assumed his post at the Philippine Embassy here in Washington during the spring of 2011, I believe. With a long and distinguished career in business and public service, Ambassador Cuisia contributed significantly to the credibility of monetary policy in the Philippines, serving as governor of the central bank from 1990 to 93, spearheading institutional changes that have advanced the credibility and stability of monetary policy in the Philippines. No small feat. My boy, Ambassador, my boy, welcome. Our second guest is Mr. Hector Colon. We welcome him. And he's coming with a different perspective. With more than 18 years of federal law enforcement experience already under his belt, Mr. Colon is still going strong as the unit chief for trade transparency unit operations at the Homeland Security Investigations within the U.S. Department of Homeland Security. I am convinced after a day or two listening to colleagues of Mr. Colon that in my next life I would like to be a fly in the wall, near the water cooler in these offices, because what I've heard has gone beyond my imagination. So we're very grateful for your service. Mr. Colon is responsible for developing domestic and international initiatives to disrupt and dismantle terrorist groups and cross-border criminal organizations engaged in trade-based money laundering. Mr. Colon has represented HSI around the world, including the Philippines, and he has served as a member of the U.S. delegation of the Financial Action Task Force. Finally, he's a fellow alum of Johns Hopkins. There we go. So I want to thank you both, Ambassador Cuisia and Mr. Colon, for participating in our panel today. Each of our panelists will speak and following that. We'll have some minutes of discussion. We'll then take questions from the audience. Mr. Ambassador, please. Thank you. Thank you, Matt, for that very kind introduction. Excellencies, friends, and partners from the development community. Ladies and gentlemen, good afternoon to all of you. I want to thank Global Financial Integrity, or GFI, especially its president, Sir Raymond Baker, for organizing this event. I have the honor to speak on behalf of the Philippine experience in ameliorating illicit financial flows through policy reforms, including successful efforts to institutionalize good governance and transparency. GFI defines illicit financial flows as illegal movements of money or capital from one country to another. Illicit financial flows refers to unlawful or unauthorized circulation, both in flow and out flow of financial resources, particularly money. Illicit flows comprise unrecorded bonds of payments, misinvoicing, and leakages of external trade. It's worth noting that large discrepancies in trade statistics between and among trading partners have been observed not only in the Philippines but also in other countries. Some of the possible sources include smuggling of merchandise goods, differences in valuation practices between the exporting and importing countries, misdeclaration of value of goods reported by forwarders, logistic companies, and for the non-validation of entries in the imports and exports, declaration or ED forms against the bill of lading, manifest for inward and outward, and other supporting documents submitted by the companies. In GFI's 2014 report, illicit financial flows to and from the Philippines, a study in dynamic simulation for the period 1960 to 2011, authored by Deb Carr, who's here with us today, and Brian LeBlanc, concluded that, and I quote, both illicit financial inflows and illicit financial outflows are harmful to economic growth in the Philippines. And quote, they added that illicit financial flows contribute to the reduction of the mass, again, quote, reduction of domestic savings, driving the underground economy and facilitating crime and corruption, unquote. The Philippines undertaken a number of initiatives to manage the issue of illicit flows and short of the government's efforts to monitor financial flows both coming in and out of the country. The Philippines Monetary Agency and Central Bank, the Banco Central of the Philippines, or BSP, maintains a robust and effective regime in addressing unrecorded financial flows. The BSP also considers in its evaluation of illicit flows the magnitude of the import of the proportion of illicit inflows and outflows vis-a-vis the domestic underground economy or the informal sector. I'm somewhat familiar with these initiatives. I was governor of the Central Bank in the 1990s. These initiatives are categorized as contributing to one of the two main thrusts. First, a strong and legal regulatory framework for anti-money laundering. And second, collaborative partnerships with industries. On the first thrust, the Philippines has a strong legal and regulatory framework on anti-money laundering or AML and counter-financing of terrorism or CFT that is in line with international standards. In 2013, the Philippines was recognized for its significant progress in addressing all or nearly all of the AML CFT deficiencies and was thus removed from the Financial Action Task Force or FATF's listing and monitoring process. Since then, the Philippines has been accepted as a member to FATF's International Cooperation Review Group, or CRG, AML CFT efforts. This is of particular significance to the Philippines because of the robust remittances from overseas Filipinos or OFs which reached $24.35 billion in 2014. The improvements in formal remittance mechanisms have seen a decline in the use of informal payment channels to 3% to 5% from previous estimates of as much as 30%. This is a marked improvement resulting greater regulatory coverage of the concerned amounts. The BSP continues to strengthen the AML CFT regime for financial institutions to maintain relevance and effectiveness through increased documentary requirements for activities registered outside of the Philippines, the implementation of risk-based customer acceptance policy processes for banks and financial institutions, among others. On the subject of overseas remittances from Filipinos working abroad, which I mentioned very total, $34 billion in 2014, the improvements in the formal remittances mechanisms. On the second thrust are the initiatives for collaborative partnership with industry. The BSP recognizes that the evolving risk environment requires proactive and collective actions among all stakeholders. In this regard, it proactively engages supervisory agencies, financial institutions, and industry players on key issues and developments. In addition to the efforts of the BSP, the Philippine government has been implementing rollouts of reforms to improve the performance of the two main revenue-collecting agencies, the Bureau of Internal Revenue, or BIR, and the Bureau of Customs, or BOC. On Philippines' tax administration, due to a more effective tax administration, collection of taxes under the Aquino administration has increased to 15.1% of GDP in 2014 versus 13.4% in 2010. During the Arroy administration, it was as low as 10% of GDP. Due to a more effective tax administration, taxes on net income profits are expected to increase by 25% from $21.3 billion in 2014 to $26.62 billion by next year. In the first year of the Aquino administration, income tax returns filed increased 7% from 2010 to 2011. Tax evasion cases filed have also risen to 352 with total tax dues of 67.03 billion pesos, or roughly $1.5 billion, as of April 2015. I also wish to add that the, or there were, this is 350, compared to 27 in 2010. I also wish to add that of the 27 cases filed in 2010, 23 were filed during the Aquino administration. And please note that President Aquino took over only in June 30, 2010. BIR is continuing to further roll out reforms in order to increase government revenues to 17.5% of GDP in 2016. This is more in line with, I guess, the levels that have been attained by our ASEAN neighbors. So we've really been coming from behind. For the Bureau of Customs, it has implemented reforms to improve the processing and valuation systems to ensure proper invoicing, valuation, and reporting. This is important in a culture that mis-declars or undervalues cargo. For example, a 2014 study reveals that only 18% of all declarations were, in fact, truthful. The Philippine Congress is also reviewing a bill that would amend 1987, Tariff and Customs Code of the Philippines. Such a change would establish tax exemptions, strengthen BOC's risk management system, and promote appropriate behavior by establishing incentives such as deferments of duties and taxes to highly compliant exporters and importers, among others. Another key issue for a Bureau of Customs is smuggling. In 2005, the BOC established the appropriately named RATS program, which stands for Run After the Smugglers, which is mandated to detect and prosecute smugglers and other customs and tariff law violators. As of October 2014, 182 smuggling-related cases have been filed. With the administration's intensive crackdown against smugglers, cases filed rose tenfold since 2010. Oil smuggling is a key focus for Bureau of Customs. In 2014, oil companies estimated approximately $430 to $644 million in losses due to oil smuggling each year. At the same time, the government loses approximately $706 million. The government is estimated to lose approximately $100 million or about $2 million in foreign revenues due to oil smuggling. So it has come down considerably. Based on the Philippines experience, I have the following recommendations to address unrecorded financial flows. These are enhanced supervision, strengthened cross-border cooperation, enhanced vigilance against suspicious flows, and immediate issuance of customs administrative order, enhanced efficacy of the supervisory regime. A strong regulatory framework has to be backed by effective supervision. While banks have adopted controls to monitor money laundering and terrorist financing risk, there is hope to strengthen the control process, especially in the areas of trade finance and correspondent banking, international best practices. In these two areas, we'll be looked into to strengthen cross-border cooperation, the importance of cooperation in having coordinated policies among trading partners, particularly in enforcing reporting standards, i.e. invoicing of trade transactions and automation and computerization of processes towards improvement of trade data should be emphasized. Three, enhanced vigilance against suspicious flows. The Philippines must remain cautious against potential spillovers of illicit funds triggered by external developments, such as those arising from bilateral treaties between countries on tax-related matters. Financial institutions should continue to comply with anti-money laundering regulations to preserve the integrity of the country's financial system and safeguard it from being used as a haven for illegitimate funds or as a conduit to disguise the flow of such funds. Lastly, support efficacy of the customs bureau. All stakeholders should collectively work towards ensuring the customs, the Bureau of Customs, and implement appropriate measures to ensure the accurate reporting of trade statistics. Thank you and good afternoon. Good afternoon. I will guess, Mr. Baker, thank you for the invitation. It's my pleasure to be here today to give some remarks here on what HSI, Homeland Security Investigations, Department of Homeland Security is doing in support of the Philippines and other partners throughout the world. As they said in the introduction, I'm the unit chief for the Trade Transparency Unit. I'll have another title as the director of the National Targeting Center Investigations. One of the more recent things that we've done at Homeland Security is enhanced collaboration within our own Department of Homeland Security. So we moved the Trade Transparency Unit over to CBP's National Targeting Center to be able to do that. It has improved efficiencies for the TTU as well as the capabilities that we have in combating TBML. So what is the Trade Transparency Unit? Basically, the Trade Transparency Unit was created back in 2004. It was a result of all the trade-based money laundering that was occurring in the United States, particularly between Columbia drugs narcotics from Columbia coming to the United States. There was a lot of cash being collected in the United States. You all remember the Miami Vice-Days and if you'd seen that movie or Scarface, all that cash needed to go somewhere and needed to get back to the drug dealers. Problem was that in Columbia there's restrictions against the U.S. dollars. So how do we pay the drug dealers in Columbia for the narcotics that are coming north? Well, that money basically entered the financial system and what's been, what occurred back then was that it would enter the financial system and would then be returned to Columbia via trade, via trade. What's basically what we refer to as the black market peso exchange. Now, we have seen that the trade and trade-based money laundering has evolved, has evolved not just in the United States but throughout the world. The financial institutions are becoming more compliant and are becoming more strict in their AML programs and are doing enhanced reporting and enhanced due diligence where they have to report suspicious activity. So suspicious activity reports is what feeds law enforcement. That's what we use to identify individuals or companies that we then go out and investigate. And through the trade transparency unit, we take that a step further where what we do is establish partnerships with other countries. The methodology behind the TTU is simple. Basically through the Customs Mutual Assistance Agreement, which is an international agreement with other countries that the United States has. In this case, we have one with the Philippines. That allowed us and gave us the legal framework to be able to establish an agreement with the Philippine Custom Service where we would be able to exchange trade data. We would provide them with US trade data. They would provide us with Philippine trade data. And through a system that we created that allows for the analytical process to take place for that data to be compared and analyzed. And we're talking about large volumes of data. The United States trade data alone is so large that you can imagine how long it would take to do this manually. So the system that we created called DARTS. And I think you heard from John Kasera yesterday, one of the, I call him one of the Godfathers of the TTU. That system has gone a long way. It's gone through three or four different changes. The most recent change was putting it on a Palantir platform. It's basically a data mining tool that allows us to ingest lots of big data and analyze it. Now that analysis of the data is what allows us to compare anomalies that are indicative of trade-based money laundering. Those anomalies are also indicative of other types of crimes such as tax evasion or trying to circumvent duties and those sorts of violations. It's a very powerful tool when it comes to that type of violation. And I'm pleased to hear that and seeing from the report that GFI prepared, I didn't realize how large of of 19.3 billion since 1990 in tax revenue due to customs duties evasions that through under-reporting of under-envoicing alone. So under-envoicing, over-envoicing, those are schemes that, yeah, they hurt the governments. They hurt, create other compounding problems for governments and for the custom service in general. And the TTU is a powerful tool that's gonna help improve that, at least with the information from the US to the Philippines. Obviously the Philippines also is involved with trade with other countries. Hopefully in the future, one of the things that we can do in the trade transparency unit is expand to regional partners where those regional partners are then sharing information amongst themselves and being able to compare not only data, but being able to compare trends and being able to support other investigations. Transnational criminal organizations have no boundaries. They operate as corporations, as million, billion dollar corporations. Only a transnational criminal organization such as the Sinaloa Cartel has a powerful means to get their leader out of jail out of a maximum security prison without detection. And no one knows this word about since. And this is the second time that that's occurred. That's how powerful these organizations are, knowing that everyone in the world is looking at these individuals, but they still have the means and they still have the money and the resources to make these things happen. So basically the trade transparency unit, that's what we focus on, trade-based money laundering. It has become, and we feel it's gonna continue to become the means by which not only transnational criminal organizations, but also terrorist groups. And we have had cases involving terrorist groups, yes, either furthering and moving their funds, but also in material support to their needs. They still need vehicles, they still need weapons, they still need all those things that they need to carry out their illicit acts. And how do they get those things? They get it through trade. And that's what we try to do in the TTU is focus on those criminal organizations and the means and the methods that they use to move and launder money. And our international partnerships are pretty much the key to allowing us to do that. As far as the Philippines is concerned, I just wanna add that in the Philippines, we did establish a trade transparency unit partnership with them in June, 2013 with the Bureau of Customs. In July of 2015, it took us about two years to make it operational. It is operational and we are actively exchanging information. And since that time in July, we have worked very closely with the Philippine TTU in identifying lots of under-invoicing and over-invoicing schemes. Some of these are currently being supported by HSI investigations and HSI offices in the United States involving commodities such as ATVs. And also another thing that was of concern that we were able to identify with the Philippine TTU was the movement of narcotics precursors through the Philippines to Mexico. And that's something that we have under investigation at this time as well. So just having this partnership and having this exchange of information is what's allowed us to be able to identify some of these trends and some of these threats. And in the long-term, we expect that as they continue to evolve and stand up on their own, they will become more effective in combating trade-based money laundering, which is what really what the Financial Action Task Force and the World Customs Organizations encourage and that's how they measure effectiveness. So it's not just having the legal framework, but it's also how that legal framework is being applied in those countries to be able to do money laundering investigations and be able to prosecute and dismantle transnational criminal organizations. So thank you very much. It's my pleasure to be here and I guess we'll take some questions or have some discussion. Thank you. Thank you. Thank you both. Thank you both. We will, the goal is to get questions from the audience. I want to start it off as we wander with a question for each of you. It's a similar kind of question, but I want to take advantage of your different perspectives on the same thing. Let me begin with you, Mr. Abassader. We just had a panel on institution building and the importance that was raised in the context of Mexico. I want to follow this track again, given your experience, it seemed very appropriate to ask you about this. You've, for example, you've outlined four approaches here that certainly, what do you regard to be the biggest challenges facing the Philippines in achieving these goals? If. Well, as the biggest challenge, I have to be very honest and say that it is a Bureau of Customs. We've had, what, five commissioners over the last five years. And I have to say that the commissioner who just stepped down about a few months ago must have been so overwhelmed. Because he was doing an excellent job and we were so surprised why he stepped down. We'd never seen the kind of revenue increase under his stewardship in the past years. So I was particularly very, because he was a very, undersecretary in the finance department, but the president singled him out, put him as a commissioner of the Bureau of Customs and well, I think he just gave up because I guess the system is so embedded. I mean, the corruption in the, it's just so bad that finally gave. Now, I don't know, I hope this is not on the record. I'm just saying, if you ask, the Bureau of Internal Revenue has done a great job from the start of the administration as a keynote. We recorded double digit revenue collections in the Bureau of Internal Revenue. We have a very feisty lady commissioner who I think has done an excellent job. And unfortunately, we could not say the same for the customs bureau until commissioner Sevilla took over about two years ago. And for about 18 months, he was doing a great job. 18% increase in one year. And this was going on. But I guess, I think the president faces a very tough, I guess the session, what to do with the Bureau of Customs. And at one time, well, I said jokingly, but sometimes I think maybe it's the only way. He says, do like what Indonesia did, fire everyone from the custom, from top to bottom and really start anew. Queen house. So the current commissioner was also a commissioner at, well, but he had a very brief stint and he's back. Hopefully he's going to be able to do something about it. But as I said, I think the system just so embedded it's probably takes more than just one guy to be able to make significant changes. And really changing the culture. The culture is very difficult. So I said, probably that's the biggest shot. But the fact that it was done in the Bureau of Internal Revenue. Yeah, I wouldn't say it's not possible. They put, and I don't know whether you've read about our feisty BIR commissioner. They put her on the cover page with a gun because she does target shooting. And she says, something to defend. Well, why don't you try me? And then, you know, there was something like that on the front page of the largest newspaper in circle. And I guess she's driven the message across collection, as I said, every. And that's one major reason I think that we got our investment grade rating because for many years the Philippines had very weak revenue collections. I said our tax ratio, tax effort ratio was down to 10% during the time of President Arroyo. Now it's at about 15, but we're targeting 17.5%. But when we look at the cost of revenue in relation to the GDP, very, very small. So we still have to really make tremendous, undertake tremendous reforms in the Bureau of Customs. Persistence. Mr. Colon, let me. To a sense, I also agree with one of the challenges that have existed for us, particularly in the Philippines, was the change in leadership. That's why it took so long from the time we signed the TTU partnership in 2013 to the time we actually made it operational in July. You know, working with our attaché office at the embassy. That was a lot of what was being reported back that they just haven't been able to meet with the right people to do the things that needed to get done to be able to make it operational. The big challenge that he's alluding to his excellencies mentioning with regards to the fact that the corruption and the, or the way the system is, that type of culture that exists where undervaluation or overvaluation schemes are rampant in the economy. That's also concerning because that type of, the people that do this are also professionals. And these are the people that criminal organizations and terrorists will then go to so that they could facilitate the movement of money because they've got the infrastructure in place. They've got the contacts that they need to make things move, to make things, to make merchandise move or to make money move throughout the world. And that's what gets exploited by criminal organizations. And we look at that, you know, there's different levels of them. Treasury calls them third-party money launderers. The president's transnational criminal organization refers to them as facilitators. We call them what they may. Individuals and the people that are involved that do this kind of thing, that expose the officials to, or pay off officials or file false paperwork to be able to move merchandise are the same types of people that then are exploited by criminal organizations and terrorists for their illicit beings, for their gain. And that's why it's kind of concerning to the point that something's gotta be done and I think they are doing something. There's a lot of good things that are being done. There's a lot of great people in the Custom Service as well that are trying to do the right thing. And I would hope to say that, you know, the partnership that we've been able to establish with them is a step forward in that direction and something that's gonna reap benefits, hopefully, sooner rather than later. Very good. Terrence? Depp? What do I ask Ambassador Accusio? To what extent is a decline in the tariff rates responsible for the decline in customs revenues? Do you think that is not just under invoicing but also the decline in the rate or? I think there probably is some truth to that that the decline in tariff rate in certain product lines has result. Take, for example, oil prices have gone down so much. So in terms of the revenues that we make from oil has gone down considerably, but not because of lower tariffs. But on the other hand, there have been reductions on tariffs. Take, for example, goods coming from Astian because of the Astian pre-trade agreement. There's been a big drop in tariffs. So that, to some extent, has contributed to the lowering of revenues from customs. But, you know, when we look at, the Bureau of Customs itself will say, it will tell you that there are very large disparities in terms of revenues from companies within the same sector. So why is it, once I take, for example, the cigarette sector, why is it that one particular company pays so much in revenues and same company or another company within that same sector would pay much, much less in terms of, let's say, if they were to sell the same kind of volume. So they make this analysis. And, well, again, there's a case that's being, I guess in papers for some time, a major company that's being accused of precisely under the clearing, its imports. What we did was we checked with the suppliers in the US and, at least to instances, we confirmed that there was a very significant under declaration of the imported material from the US. We submitted all the information to the Bureau of Customs. But so far, that company has not yet been, there's no case against that company. Oh, you know, we've given them the all the information they need. Thank you. Can I add something to that? One of the challenges also that, at least HSI has particularly noticed with some of our partnerships, not just the Philippines, but some of the other ones is that the Custom Service doesn't necessarily have had the authority to investigate if a violation is occurring. They would have to go to the police or the national police or some kind of law enforcement entity or prosecutor to conduct an investigation. And that in itself, that's where a problem then lies because, even here in the US, probably half the agents that are signed HSI don't truly understand customs. Just the way that half of us, myself included, don't truly understand the immigration work or specialize in certain areas. Not having that authority though, not having the authority to do an investigation, to bring a case forward is challenging because what police entity do I go and have to explain all this customs jargon and all this customs laws and demonstrate to these individuals, hey, this is not only violation of customs, but it's also you perhaps have some money laundering, you perhaps have some other violations here as well. And then get a prosecutor to also understand that and be willing to take that to a court or to a judge. And that's a huge challenge that a lot of the countries have. I'm not sure if it's the case in the Philippines, but they don't have the authority to do those types of investigations. And I think that one of our panelists yesterday former colleague from the Custom Service was mentioning something to that extent that a lot of the customs agencies, some are looking to give that authority to the customs agencies so that they can conduct their own criminal investigations, just like we do here in the US. Rob. You have a question for Mr. Ambassador Queza. You mentioned John Philip Sevilla. And you mentioned, you spoke to a former customs commissioner, John Philip Sevilla. Yes. And those of us that follow international money laundering, trade based, money laundering and customs matters, what was it almost two years ago now, were thrilled when we saw him appointed to that position. And we were very deeply troubled when we saw that he resigned. Yeah. And we, reading from open source articles, it showed that he was overwhelmed by the corruption just by, as you had conveyed. Taking from that, what lessons have been learned from Sevilla's experience? Should it become necessary to terminate, just shut down the entire Custom Service and create a new one? Or short of that making changes, what lessons have been or can be learned that perhaps other countries that are gonna start up a Custom Service and specifically a criminal investigative division can learn from? That's a tough question because I've not had a chance to talk to Commissioner Sevilla. I'm sorry that he left because I thought if there was anyone who could do it that he could be the one to do it. In the same way that Commissioner Kim Hinaris has done a great job in cleaning up the Bureau of Internal Revenue. But it just probably was just too big a problem for him to tackle. I hope he has given a report to the President for him to, well, I guess learn the valuable lessons. I don't know whether he has done that, but I hope he has. So at least we can learn some valuable experience from his own experience there. But John is, I think he's a patriot and somehow he will probably come back to make, to contribute to trying to make reforms in the Customs, maybe not as custom for me, in some other capacity. That's my hope anyway. You can achieve Columne as well. And I apologize, I failed to identify myself before I asked the first question. My name is Rob Sabersky. And as Mr. Columne had mentioned, I'm a retired US Customs Special Agent. My last year was Homeland Security Investigations. And my question to Unit Chief Columne is that, or let me first state also that as a special agent I used, at that time it was called LeanMinder, the special tool in order to deal with the amount, the enormous amount of trade data that you have to look at in order to affect trade-based money laundering. That has been very effective, extremely effective. And one of the results of that is that the criminals have now expanded from using in black market peso operations from merchandise being purchased here in the United States and heading south, whether it be to Mexico or Columbia. Can you tell us what other countries now are being employed by black market peso exchange brokers to funnel merchandise, money's being sent outbound and merchandise being sent into either Mexico or Columbia or Asia, Europe or whatever? Lots of countries. The example that you just, or the scheme that you just mentioned right there, that was a, it's actually what occurred in a recent case that we had in Los Angeles where over a hundred million dollars in cash was seized in the Los Angeles financial district, or I'm sorry, not financial, fashion district in Los Angeles, our agents did not expect when they went to do the search warrants at these locations, this was an investigation that involved trade-based money laundering, merchandise from China going to Mexico and then the funds being sent from the United States to Mexico. What was happening was that they were being collected, they were being collected in the Los Angeles fashion district to then either be deposited into bank accounts commingled with their business to then wire the money to Mexico for the merchandise that was sent from China then being imported into the United States or it was being used to, or it was being prepared for smuggling into bulk cash smuggling into Mexico. So the fact that Mexico had implemented some restrictions on cash deposits made that scenario. I think that black market peso exchange is rampant wherever there's restrictions on US dollars. Wherever it's a drug producing country, that's why right now we're in the process of negotiating a partnership with Peru. Peru's a drug producing country. We have a lot of trade with Peru and we feel that there's a lot there that we're not seeing, that we don't know what, how that funds are going back to Peru because if the drugs being cultivated in Peru and being smuggled into the United States, someone has to get paid in Peru. And how are they getting paid? We feel it's through trade because there is a lot of trade going to Peru from the United States and vice versa. So the fact, any country where there's restriction, Venezuela, Venezuela, there's restrictions on the US dollars. Wherever there's restrictions, you're gonna find some kind of schemes being developed by criminal organizations to move or launder money. And going back to the Los Angeles case, I mean, our agents did not expect that amount of cash to be in the location and those of you that aren't familiar with it, I encourage you to go online and take a look at it. It's a fashion police case that HSI did along with other partners, DEA, IRS, FBI. When our agents went to do search warrants at multiple locations in the fashion district in Los Angeles, they came across like $80 million of cash and cash just put in boxes that was just almost, like if it was filed as paper in some of these businesses. So that's how much money we're talking about. Okay. My name's Robert Sprackland and I'm curious about the, I'm always curious about high stop flows and the enforcement people. There's no question that even on a worldwide basis, along just the one country, you're outnumbered, outgunned and outfinanced, but you also know an awful lot about who's doing what. As you pointed out, sir, their businesses, the multinational corporations, if the guys in Columbia need stuff that they're importing from the Philippines, it must be almost a factory system or a warehouse system, but you know names. What's making it so difficult to get prosecutions? That's a tough question because it's not always the case. I mean, we do have a lot of successful prosecutions, but there are a lot of, it depends on the country. It depends on the cooperation we have in the country. It depends on, sometimes it depends on just the people you're dealing with, the relationships that they can develop to be able to move the case forward. Being able to obtain, get the information that we need and the other country also needs. I've always felt, as you mentioned for the trade transparency, you know when we're sharing information with our foreign partners, and like I said earlier, the trade, our system, identifying under and over invoicing, that's like picking low hanging fruit. They can do that all day long and they can go out and collect revenue all day long and they do that, a lot of them do. What we tell them is, when you identify anomalies, don't just stick to that anomaly. Let's investigate to identify those companies to get the information and the evidence that we need to be able to then bring a case to prosecution because otherwise they're just gonna continue. They'll take the hit, that's part of their business model. They are prepared to take losses where they have to, knowing that they're gonna be able to continue their criminal enterprise by doing it somewhere else or by doing maybe another line of effort that they may have. So they calculate those losses. But having, being able to work those types of cases and particularly with our foreign counterparts, if the violations occurring, let's say in the United States and its imports or exports from Philippines, there should be some violations occurring in the Philippines as well, and vice versa. So we need to work together and I've always indicated that that's, or I've tried to strive to work those types of cases where both countries are working a case together hand in hand and we're bringing it up at the same time and then maybe doing enforcement actions simultaneously in one part of the world and the other. That to me, that's my dream case. If we could do that, that's the wonderful scenario. It doesn't always work out that way, but in a lot of times, whoever's ahead, sometimes people jump ahead of another when they have the evidence that they need and aren't patient enough to allow the other country or to catch up. And then an enforcement action affects everything because then they're gonna change their modus operandi and they're gonna start going to other areas. And so that's another challenge as well because once an enforcement action occurs, like the Los Angeles, you can't replicate that. It's hard to replicate because everybody reads the news and they're like, let's stop doing that. We gotta do something else. Other questions? Philippines is a country with a lot of islands. How do you control smuggling that comes to an island where I assume there may be no customs office? I presume that every island does not necessarily have a customs office. Do you have any estimate of looking at the import side only? What percentage of Philippines consumption of imports actually go through customs processes and what percentage do not go through customs processes? You're right. We don't have customs offices in every island. We have, of course, in the major islands and the major cities. But that's a tough question because we don't have, the estimates of smuggling, losses through smuggling are quite substantial. And, but again, these are estimates done by the World Bank and IMF. I guess what they do is they look at data from, for example, the US. There's figures of exports to the Philippines. We have figures on import. We compare that and you see that there's a difference. For example, two-way trade between the US and the Philippines. When I look at the data over the last five years, there's a difference of roughly about $6 to $7 billion, almost every year. If we say $13 billion was based on USTR data, our figure would show maybe $7 billion, $7 billion, $8 billion. You look at the latest data that we have, I think it's 2013, $24 billion. According to USTR, our figure is something like $17 billion. You see, it's about $7 billion. So that's just the US. So you can imagine what it is with China or Japan. So it's, now, part of that is probably under invoicing. Part of it is smuggling, part of it is, so where in the past we've had a big smuggling was in the oil. And that oil was coming into Subic Bay and apparently that was the favorite of oil smuggling. Well, the government has clamped down on that and has cut down considerably the oil smuggling. But it's hard to say what is due to smuggling and what's due to under invoicing, because that's what I said, the way they do it, they compare the figures from one country to another and that's how they come up with this estimate. I don't know if there's any better way of making those estimates, but I particularly am troubled either because I keep asking our Department of Trade and Industry, why don't we do something about this? I mean, it's been going on for some time and we have to clamp down on our exporters, our importers and say, well, you know, and I know to some extent the Department of Trade and Industry is doing but I don't think that the efforts are sufficient. We have a question here. Thank you. Out of curiosity, since I haven't heard any comments with regards to illicit flows on trade and services, I wonder if there's any experience in the Philippines with that or the TTU with regards to that. For example, like fake invoicing for companies, for services that did not exist and just the weight of getting the money out of the country and that sort of thing. If you could tell me what's your experience with that and if the TTU is also watching that and if there is any experience in the Philippines. Well, when we report the total trade, that includes trade of goods and services. So the figures I mentioned, 24 billion, is both goods and services. So I don't have a breakdown of what is goods and the bug, of course, would be goods. Part of it is services. Is there missing voicing or under declaration of service? My guess would be yes, it would be. Are all the professional firms reporting all their revenues from abroad? I don't think so. But I can't, of course, I don't have the proof. As I'm just saying, based on all I say, when we look at the aggregate figures, there's such a huge disparity. Part of it is missing voicing. Part of it, I think, is smuggling when it comes to goods. But in the case of service, I might guess would be that there. We do also have an under declaration of services, both in terms of export of services as well as import of services. Because in both cases, there's tax implications. And I'll just add real quick, I know we're almost out of time. We have had cases where that has occurred, false invoicing. As a matter of fact, the fashion police case that I just mentioned, that was one of the schemes that was being used. How do we, that's easily detectable through the access to trade data because you're able to verify whether an import or an export actually occurred. And Mexico is one of our partners, so in that case we were able to verify that there were no imports or exports for those invoices that had been presented to a financial institution as a justification for moving money to Mexico. The second part to that is that we rely a lot on the financial institutions to be able to help us detect that. And in that case, there were lots of suspicious activity reports filed and we do extensive outreach with the financial institutions. We share with them typologies. We do that through the financial action task force, through wherever means that we can. We share typologies on some of the trends that we're seeing, some of the commodities of risk and some of the, just basically the movement of flows that we're seeing, not just in the United States, but throughout the world, so that they can enhance their AML programs to be able to identify those types of trends and report suspicious activity. That's all we're asking them to do. And a financial institution, if they do their due diligence and their job in reporting that suspicious activity, that really helps us when we're looking at a particular company or a particular individual and we're able to see, hey, we're investigating this company. We're looking at lots of trade data and there's anomalies, but then if we have anomalies, but we also have suspicious activity reports or some kind of for the United States, BSA data that's available to us to enhance that investigation. And in the Philippines, I know they have a very robust FIU that does that. And if they're working together, the customs in the FIU and with the prosecutors, that's how those cases get moved along. And that's how you identify the companies and the individuals that are involved in these types of schemes. I'm afraid we're out of time. Please join me in thanking our distinguished guests with Ambassador Cuisia and Mr. Coulombe. Thanks very much, gentlemen. Ambassador Cuisia, Hector Coulombe and our moderator, Matt Solomon. Thanks very much for a very interesting panel. Many challenges, of course, ahead, but with the TT unit being implemented and we have opportunity for success going forward. Thank you all very much. We're gonna take a quick 15-minute coffee break and then we'll reconvene for our final panel on Brazil.