Anti-Terrorism Laws and Councils Quiz

Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) Webinar

• AML/CTF webinar for covered persons
• Fundamentals of money laundering and terrorism financing
• Preventive measures and overview of risk management system
• Topics covered in the webinar includes what is money laundering and how is it committed, why criminals need to launder proceeds of crime, how covered persons may be abused for ML/TF, how to detect and prevent money launderers, and preventive measures.

Money Laundering Defined

• Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity.
• This includes transacting, converting, transferring, disposing of, moving, acquiring, possessing, or using said monetary instrument or property.
• Also includes concealing or disguising the true nature, source, location, disposition, movement, or ownership of or rights with respect to said monetary instrument or property.
• It includes attempts or conspiracies to commit money laundering offenses.
• It also includes aiding, abetting, assisting in, or counseling the commission of money laundering offenses.
• Money laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under this Act to be reported to the Anti-Money Laundering Council(AMLC), fails to do so

Elements of Money Laundering

• Unlawful activity: Must be related to any of the 36 enumerated predicate offenses under the AMLA, as amended.
• Circumstances related to ML: Usually related to grounds for CTR/STR.
• Knowledge: If there is no knowledge, there is only civil liability.
• Dirty Money: Should always be related to the proceeds of an unlawful activity.

Simple Money Laundering Scenario

• Jack kidnapped the daughter of Jill.
• Criminal proceeds: Jack demanded and received Php5 Million as ransom money
• ML Act: Jack remitted the money in smaller parts to his cohorts.
• Knowledge that the MI/P represents, involves, or relates to the proceeds of the unlawful activity.

Why do criminals need to launder money?

• Article 45, Revised Penal Code of the Philippines: Proceeds and instruments or tools (for the commission of a felony or crime) shall be confiscated and forfeited in favor of the Government.

Stages of Money Laundering

• Placement: The physical disposal of cash or other assets derived from criminal activity.
• Layering: The separation of illicit proceeds from their source by layers of financial transactions.
• Integration: Supplying apparent legitimacy to illicit wealth through reentry of the funds into the economy.

Common Methods of Money Laundering

• Structuring and Smurfing
• Bulk Cash Smuggling
• Cash-intensive Businesses
• Shell or Shelf Corporations
• Credit Card Laundering
• Gambling in Casinos

Terrorism Financing Defined

• Committed by any person who directly or indirectly, willfully and without lawful excuse, possesses, provides, collects, or uses property or funds, or makes available property, funds, or financial service.
• With the unlawful and willful intention that they should be used or with the knowledge that they are to be used, in full or in part
• To carry out or facilitate the commission of any terrorist act.
• By a terrorist organization, association or group; or
• By an individual terrorist.

Terrorist Financing - Differences and Similarities

• Definition: The process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding (money laundering), appear to legitimate sources, while Terrorism financing is the financial support for terrorism.
• Objective: To avoid detection in money laundering, and to avoid detection in terrorism financing.
• Motivation: Lifestyle in money laundering, and politics, religion, ideology in terrorism financing.
• Amount of funds: Usually large amounts in money laundering, and does not usually involve large amounts in terrorism financing.
• Sources of funds: Criminal activities in money laundering, and criminal activities and legitimate sources in terrorism financing.
• Uses of funds: To gain wealth and assets in money laundering, and to execute terrorist activities in terrorism financing.

Terrorist Financing- How Terrorists Raise, Move, and Store Funds

• Legal Sources: Fundraising, funds through donors, family businesses
• Illegal Sources: Purchasing/providing goods or services for terrorism acts, procuring restricted materials/goods, funding from other terrorist groups, and committing criminal acts.
• Breakdown of Funding: Organizational infrastructure (recruitment, training, activities), operations (maintenance, protection, etc)

Financial Action Task Force (FATF)

• FATF is an independent intergovernmental body that develops and promotes policies to protect the global financial system.
• It develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction.
• FATF Recommendations are recognized as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.
• FATF requires countries to identify, assess, and understand money laundering/terrorism financing (ML/TF) risks, and take action to mitigate those risks.

Non-Cooperative Countries and Territories (NCCTs)

• FATF has a practice of "naming and shaming" countries that maintain inadequate anti-money laundering controls or are not cooperating in global AML/CFT efforts.
• It developed a process to identify critical weaknesses in specific jurisdictions' anti-money laundering systems that obstruct international cooperation.
• A new process when FATF started identifying jurisdictions with deficiencies.

Evolution of the Anti-Money Laundering Act (AMLA)

• Various amendments occurred over the years (Oct 2001, Mar 2003, Jul 2012, Jan 2021, Jul 2017, Mar 2013)
• Added new obligations and expanded coverage.
• Covered more offenses.

Amendments under RA 11521

• Declaration of Policy: The state protects and preserves bank accounts' integrity and confidentiality, and extends cooperation in transnational investigations.
• Definitions:
  • Real estate developers and brokers
  • Offshore gaming operators, their service providers, supervised/accredited by the Philippine Amusement and Gaming Corporation (PAGCOR) or government agency.
• Unlawful activity (Violation): Section 19, of Republic Act No. 10697, otherwise known as the "Strategic Trade Management Act", in relation to the proliferation of weapons of mass destruction and its financing.

Real Estate Developer (RED) and Real Estate Broker (REB)

• RED refers to any natural or juridical person engaged in real estate development offering sales and lease.
• REB refers to a duly registered and licensed natural person acting as an agent of a party in a real estate transaction.

AMLC Vision and Mission

• Vision: To be a world-class financial intelligence unit.
• Mission: To protect and preserve the integrity and confidentiality of bank accounts; to ensure the Philippines shall not be used as money laundering site; to extend cooperation in transnational investigations.

AMLC's Executive/Director Office

• Organizing the AMLC Secretariat.
• Appointing staff.
• Full-time, permanent employees of the BSP.

Covered Persons (including examples)

• Banks, quasi-banks, trust entities, pawnshops, insurance companies.
• Pre-need companies, insurance agents/brokers, professional reinsurers, holding companies, holding company systems, mutual benefit associations, and other persons supervised/regulated by IC.
• Securities dealers, brokers, salesmen, investment houses.
• Mutual funds, open-end investment companies, and other similar entities.
• Other entities (Jewelry Dealers, Dealers in Precious Metals and Precious Stones, Trust and Company Service Providers, Lawyers, accountants, and other professionals, Casinos, Offshore Gaming Operators, and Real Estate Brokers and Developers.)

What Money Launderers Are Looking For

• Anonymity
• "Paperless Transaction"
• Non-reporting requirement

Preventive Measures (PH setting)

• Customer Due Diligence (CDD): "Know Your Customer," Customer identification process (CIP), Customer Verification process (CVP), Identification, and Verification of Agents (IVA), Beneficial Ownership Verification (BOV), Determination of Purpose of Relationship (DPR), and Ongoing Monitoring Process (OMP).
• Record-Keeping, Transaction Reporting, Risk-based approach, Politically Exposed Persons (PEPs).
• Required Identification Information (Natural Persons): Full Name, Date of birth, Place of birth, Sex, Citizenship/Nationality, Contact number, Specimen signatures.
• Required Identification Information (Juridical Persons): Full name, Authorized representative (Name, Address, Contact, Nature of business, Signature/Biometric Information)

Sanctions Freeze Orders (SFO)

• Designation by the Anti-Terrorism Council (ATC) - legal basis of acts.
• Legal Basis (Anti-Terrorism Act or ATA)
• Publication of Designation, notice of freeze order, and implementation of freeze order.
• Potential Target Matches ("Name Match," "Potential Target Match," "Target Match”).
• AMLC Action (steps & procedures)

Risk Management (PH setting)

• Institutional Risk Management: board of directors will actively supervise institutional risk management (to comply).
• MTPP: Continuing education & training programs (for compliance).

Legal Remedies

• Prosecution of ML: charges and consequences (for Money Laundering) and unlawful activity.
• Bank Inquiry: legal basis and process. Ex Parte Application, court order (unlawful activities).
• Duties of covered persons regarding Bank Inquiry, freezing of accounts or related accounts.
• Civil forfeiture: tool for recovering assets; Non-Conviction based Asset Forfeiture (preponderance of evidence); Judgment of Forfeiture, turnover to the national government;
• Provisional Asset Preservation Order (PAΡΟ), Asset Preservation Order (APO).
• Reminder: compliance to the 2018 Implementing Rules and Regulations (IRRs) (sanctions under RPAC).

Transaction Reporting (CTR)

• A transaction, Amount in excess of threshold, Timing of Reporting (within 5 working days).
• Covered Transactions: General Rule; Specific Thresholds.
• Suspicious Transaction Report (STR): Underlying Legal/Purpose, Client Identification, Monetary Amount, Timing of Reporting, Structuring, and Related to an Unlawful Activity (for reporting).
• Form and Quality of Report(Complete, Accurate, & Timely).

Confidentiality of Reports

• Confidentiality of reports is relevant/applies to covered persons.
• Covered persons and their officers/employees are prohibited from communicating.
• Any information about such reporting shall not be published or aired by mass media.

Registration for purposes of reporting

• Covered persons and existing DNFBPs must register with the AMLC.
• Registration must be done prior to commencement of operation.

AMLC Advisory

• Posted on AMLC Website in May 19 2019 - details and purpose.
• Purpose: to remind Covered Persons to present Provisional Certificate of Registration (PCOR), or any Certificate of Registration (COR).

Risk Management (PH setting)

• MTPP (Money Laundering/Terrorism Financing Prevention Program): to set internal policies and procedures, risk management, compliance procedures setup, screening procedures.
• Continuing education and training programs, Independent audit function, details of implementation of preventive measures, compliance with freeze orders, asset preservation, confidentiality and information exchange, and cooperation with AMLC and SAS.

Record-Keeping

• Maintaining records for five (5) years, containing reports on customer records and transaction documents.
• Steps in addressing the records/account files, business correspondence, and analysis results.

Digitization of Customer Records (DIGICUR)

• Implementation period and the deadlines.
• Guidelines, compliance, and necessary quality control measures to ensure relevant information is accurate, complete, and can be timely.
• Penalties for non-compliance.

Test your knowledge on the roles and responsibilities of the Anti-Terrorism Council (ATC) and the Anti-Money Laundering Council (AMLC) in dealing with designated terrorist organizations. Explore legal frameworks, asset freezing, and international sanctions related to terrorism. This quiz will challenge your understanding of Republic Act No. 10168 and its implications.