Philippine Anti-Money Laundering Act of 2001

Anti-Money Laundering Council (AMLC)

• Receives and analyzes covered and suspicious transaction reports
• Oversees the implementation of the Anti-Money Laundering Act

Covered Institutions

• Banks, offshore banking units, quasi-banks, trust entities, non-stock savings and loan associations, pawnshops, and all other institutions supervised and/or regulated by the Bangko Sentral ng Pilipinas (BSP)
• Insurance companies, holding companies, and all other institutions supervised or regulated by the Insurance Commission (IC)
• Securities dealers, brokers, pre-need companies, foreign exchange corporations, investment houses, trading advisers, and other entities supervised or regulated by the Securities and Exchange Commission (SEC)

Customer Identification Requirements – KYC (Know Your Customer Rule)

• Establish and record the true identity of clients based on official documents
• Verify the true identity of individual clients
• Verify the legal existence and organizational structure of corporate clients, as well as the authority and identification of all persons purporting to act in their behalf
• Establish appropriate systems and methods based on internationally compliant standards and adequate internal controls for verifying and recording the true and full identity of clients

Anti-Money Laundering Act (AMLA)

• Criminalizes money laundering, provides penalties for its commission, including hefty fines and imprisonment
• States the determination of the government to prevent the Philippines from becoming a haven for money laundering, while ensuring to preserve the integrity and confidentiality of good bank accounts
• Creates an Anti-Money Laundering Council (AMLC) that oversees the implementation of the law and acts as a financial intelligence unit
• Relaxes the bank deposit secrecy laws, authorizing the AMLC and the Bangko Sentral ng Pilipinas access to deposit and investment accounts in specific circumstances
• Requires covered institutions to report covered and suspicious transactions and to cooperate with the government in prosecuting offenders

Covered Transactions

• Transactions in cash or other equivalent monetary instruments involving a total amount in excess of P500,000.00 within one (1) business day

Suspicious Transactions

• Transactions with no underlying legal or trade obligation, purpose, or economic justification
• Transactions where the client is not properly identified
• Transactions where the amount involved is not commensurate with the business or financial capacity of the client
• Transactions structured to avoid being the subject of reporting requirements under the Act
• Transactions that deviate from the profile of the client and/or the client's past transactions with the covered institution
• Transactions that pose a threat to national security

Money Laundering Process

• Placement: initial introduction of illegal funds into the financial system
• Layering: series of financial transactions to conceal the origin of the funds
• Integration: money is made available to the criminal with the occupational and geographic origin obscured or concealed

Unlawful Activities under the AMLA

• Kidnapping for ransom
• Drug offenses
• Graft and corrupt practices
• Plunder
• Robbery and extortion
• Jueteng and masiao
• Piracy on the high seas
• Qualified theft
• Swindling
• Smuggling
• Electronic Commerce crimes
• Securities fraud
• Hijacking, destructive arson, and murder (including those perpetrated against non-combatant persons)

Relevant Dates/Periods

• 5 years: number of years covered institutions are required to keep records
• Within 5 days: submission of covered and suspicious transactions to the AMLC

Sanctions for Failure to Report Covered or Suspicious Transactions

• 6 months to 4 years imprisonment or a fine of not less than P100,000.00 but not more than P500,000.00, or both

Other Offenses Punishable by AMLA

• Failure to keep records: 6 months to 1 year imprisonment or a fine of not less than P100,000.00 but not more than P500,000.00, or both
• Malicious reporting: 6 months to 4 years imprisonment and a fine of not less than P100,000.00 but not more than P500,000.00