Capacity Building Learning Module PDF

Capacity Building Learning Module Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) Webinar for Covered Persons Fundamentals of Money Laundering and Terrorism Financing and Preventive Measures and Overview of Risk Management System CBCS Session XX (18022021) V1  Discuss...

Capacity Building Learning Module Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) Webinar for Covered Persons Fundamentals of Money Laundering and Terrorism Financing and Preventive Measures and Overview of Risk Management System CBCS Session XX (18022021) V1  Discussion Points 1. What is money laundering and how is it committed? 2. Why do criminals need to launder proceeds of crime? 3. How may Covered Persons be abused for ML/TF? 4. How can we detect and prevent money launderers? What are the preventive measures? Money Laundering Defined Money a) Transacts said monetary instrument or property; b) Converts, transfers, disposes of, moves, acquires, Laundering possesses or uses said monetary instrument or property; c) Conceals or disguises the true nature, source, location, – disposition, movement or ownership of or rights with is committed by any person respect to said monetary instrument or property; who, knowing that any d) Attempts or conspires to commit money laundering monetary instrument or offenses referred to in paragraphs (a), (b) or (c); property represents, involves, e) Aids, abets, assists in or counsels the commission of the or relates to the proceeds of money laundering offenses referred to in paragraphs (a), (b) or (c) above; and any unlawful activity: f) Performs or fails to perform any act as a result of which he (Sec. 4, AMLA, as amended) facilitates the offenses of money laundering referred to in paragraphs (a), (b) or (c) above. www.amlc.gov.ph | [email protected] Money Laundering Defined Money Laundering Money laundering is also committed by any – covered person who, knowing that a covered or suspicious transaction is is committed by any person required under this Act to be reported to who, knowing that any the Anti-Money Laundering Council monetary instrument or (AMLC), fails to do so. property represents, involves, or relates to the proceeds of any unlawful activity: (Sec. 4, AMLA, as amended) www.amlc.gov.ph | [email protected] Elements of Money Laundering Unlawful Activity Dirty Money Must be related to any of Should always be the the 36 enumerated related to the proceeds of predicate offenses under an unlawful activity the AMLA, as amended Money Laundering Circumstances Knowledge related to ML If there is no knowledge, there is only civil liability Usually related to the grounds for CTR/STR www.amlc.gov.ph | [email protected]  Simple Money Laundering Scenario Predicate Offense (Unlawful Activity) Jack kidnapped the Criminal Proceeds (Monetary Instrument/Property) daughter of Jill Jack demanded and received Php5 Million as ransom money Jack remitted ML Act the money in smaller parts to his cohorts Knowledge that the MI/P represents, involves, or relates to the proceeds of the unlawful activity 6 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,…” 7 Stages of Money Laundering Placement Layering Integration The physical disposal of cash or The separation of illicit Supplying apparent legitimacy other assets derived from proceeds from their source by to illicit wealth through the criminal activity. During this layers of financial transactions reentry of the funds into the phase, the money launderer intended to conceal the origin economy in what appears to introduces the illicit proceeds of the proceeds. This second be normal business or personal into the financial system. stage involves converting the transactions. This stage entails Often, this is accomplished by proceeds of the crime into using laundered proceeds in placing the funds into another form and creating seemingly normal transactions circulation through formal complex layers of financial to create the perception of financial institutions, casinos transactions to obfuscate the legitimacy. The launderer, for and other legitimate source and ownership of funds. instance, might choose to businesses, both domestic and invest the funds in real estate, international. financial ventures or luxury assets. www.amlc.gov.ph | [email protected] Common Methods of Money Laundering Structuring and Smurfing Bulk Cash Smuggling Cash-intensive Businesses Shell or Shelf Corporations Credit Card Laundering Gambling in Casinos www.amlc.gov.ph | [email protected] What about Terrorist Financing? 10 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 or other related services, by any means 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 Section 4, R.A. No. 10168 (a) to carry out or facilitate the commission of any terrorist act; (TFPSA of 2012) (b) by a terrorist organization, association or group; or (c) by an individual terrorist www.amlc.gov.ph | [email protected] Terrorism Financing Defined Committed by any person Section 4, TFPSA of 2012 who organizes or directs others to commit financing of terrorism under the immediately preceding paragraph (of Section 4) www.amlc.gov.ph | [email protected] Terrorist Financing – Differences and Similarities Between Terrorist Financing and Money Laundering Money Laundering Terrorism Financing Definition The process of making large amounts of money generated by The financial support, in any a criminal activity, such as drug trafficking or terrorist form, of terrorism or of those funding, appear to have come from a legitimate source who encourage, plan, or ✓ Placement engage in terrorism ✓ Layering ✓ Integration Objective To avoid detection To avoid detection Motivation Lifestyle Politics, religion, ideology Amount of Usually large amounts Does not usually involve large funds amounts Sources of Criminal activities Criminal activities and funds legitimate sources Uses of funds To gain wealth and assets To execute terrorist activities www.amlc.gov.ph | [email protected] Terrorist Financing – How Terrorists Raise, Move and Store Funds Use of Hawala and Other Informal Value Transfer Systems Legal sources Breakdown of Funding Fundraising Funds through donors 10% on operations Family businesses 90% on organizational infrastructure Illegal sources (recruitment, communications, training, Purchasing/providing goods or procurement, travel and transportation, services for terrorism acts facilities, support networks, protection, Procuring restricted fundraising schemes) materials/goods Funding from other terrorist groups Committing criminal acts www.amlc.gov.ph | [email protected] Financial Action Task Force (FATF) The Financial Action Task Force (FATF) is an independent inter- governmental body that 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. The FATF Recommendations are recognized as the global anti- money laundering (AML) and counter-terrorist financing (CFT) standard. www.amlc.gov.ph | [email protected] Financial Action Task Force (FATF) In its Forty (40) Recommendations, the Financial Action Task Force (FATF) requires countries to identify, assess, and understand ML/TF risks, and to take action in mitigating those risks. FATF, an international standard-setting body, 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. The 40 FATF Recommendations set out a comprehensive framework of measures which countries should then implement. www.amlc.gov.ph | [email protected] Financial Action Task Force (FATF) – Non-Cooperative Countries and Territories Since its inception, FATF has had a The NCCT list was replaced by a new process practice of “naming and shaming” when FATF started identifying jurisdictions countries that it determines maintain with deficiencies in their AML/CFT regimes. inadequate anti-money laundering This new FATF process was in response to the controls or are not cooperating in the G-20 countries’ efforts to publicly identify global AML/ CFT efforts. For years, high-risk jurisdictions and to issue regular FATF was engaged in an initiative to updates on jurisdictions with strategic identify non-cooperative countries deficiencies. Today, FATF identifies these and territories (NCCTs) in the global jurisdictions in two public documents issued fight against money laundering. It three times a year. developed a process to seek out critical weaknesses in specific 1. FATF’s Public Statement jurisdictions’ anti-money laundering 2. Improving Global AML/CFT Compliance: systems that obstruct international Ongoing Process cooperation in this area. www.amlc.gov.ph | [email protected] Evolution of the Anti-Money Laundering Act (AMLA) 17 Oct 2001 23 Mar 2003 06 Jul 2012 RA 9160 RA 9194 RA 10167 Only threshold reporting, AMLC’s Freezing power given to courts, Ex-parte petitions executive freeze STR now required 29 Jan 2021 29 Jul 2017 07 Mar 2013 RA 11521 RA 10927 RA 10365 Inclusion of OGOs, Real Estate Inclusion of casinos (internet and Expanded Covered Persons (CPs), Developer and Brokers. Inclusion ship-based); single casino cash additional predicate crimes of tax crimes as a predicate transaction in excess of Php5 offense million www.amlc.gov.ph | [email protected] Amendments under RA 11521 SEC. 2. Declaration of Policy. – It is hereby declared the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed, as well as in the implementation of targeted financial sanctions related to the financing of the proliferation of weapons of mass destruction terrorism, and financing of terrorism, pursuant to the resolutions of the United Nations Council. www.amlc.gov.ph | [email protected] Amendments under RA 11521 SEC. 3. Definitions. – For purposes of this Act, the following terms are hereby defined as follows: (a) “Covered Persons”, natural or juridical, refer to: 9) Real estate developers and brokers; and 10) Offshore gaming operators, as well as their service providers, supervised, accredited or regulated by the Philippine Amusement and Gaming Corporation (PAGCOR) or any government agency. www.amlc.gov.ph | [email protected] Amendments under RA 11521 Real Estate Developer (RED) Real Estate Broker (REB) refers to any natural or juridical person refers to a duly registered and licensed natural engaged in the business of developing real person who, for a professional fee, estate development project for the account of commission or other valuable consideration, the developer and offering them for sale or acts as an agent of a party in a real estate lease. transaction to offer, advertise, solicit, list, promote, mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture or other similar transactions on real estate of any interest therein. www.amlc.gov.ph | [email protected] Amendments under RA 11521 (i) “Unlawful activity” refers to any act or omission or series or combination thereof involving or having relation to the following: (34) Violation of Section 19 (a)(3) 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 pursuant to United Nations Security Council Resolution Numbers 1718 of 2006 and 2231 of 2015; (35) Violation of Section 254 of Chapter II, Title X of the National Internal Revenue Code of 1997, as amended, where the deficiency basic tax due in the final assessment is in excess of Twenty-five million pesos (P25,000,000.00) per taxable year, for each tax type covered and there has been a finding of probable cause by the competent authority: Provided, further That there must be a finding of fraud, willful misrepresentation or malicious intent on the part of the taxpayer: Provided, finally, That in no case shall the AMLC institute forfeiture proceedings to recover monetary instruments, property or proceeds representing, involving, or relating to a tax crime, if the same has already been recovered or collected by the Bureau of Internal Revenue (BIR) in a separate proceeding; www.amlc.gov.ph | [email protected] The Anti-Money Laundering Council (AMLC) VISION To be a world-class financial intelligence unit that will help establish and maintain an internationally compliant and effective anti-money laundering regime which will provide the Filipino people with a sound, dynamic, and strong financial system in an environment conducive to the promotion of social justice, political stability, and sustainable economic growth. Towards this goal, the AMLC shall, without fear or favor, investigate and cause the prosecution of money laundering offenses. MISSION To protect and preserve the integrity and confidentiality of bank accounts To ensure that the Philippines shall not be used as a money laundering site for proceeds of any unlawful activity To extend cooperation in transnational investigation and prosecution of persons involved in money laundering activities, wherever committed www.amlc.gov.ph | [email protected] The Anti-Money Laundering Council (AMLC) GOVERNOR FELIPE M. MEDALLA Chairman CHAIRMAN EMILIO B. AQUINO Member COMMISSIONER DENNIS B. FUNA Member www.amlc.gov.ph | [email protected] The Anti-Money Laundering Council (AMLC) Secretariat Office of the Executive Director In organizing the Secretariat, Commitments and Policy Group Enterprise Security Staff the Council shall appoint from those who have served, Administrative, Financial, Counseling and Legal continuously or cumulatively, and IT Services Group Assistance Staff for, at least, five (5) years Detection and Prevention Investigation and either in the BSP, the SEC or Department Enforcement Department the IC. Data Collection and Adjudication and Quality Staff Enforcement Staff All members of the Secretariat shall be considered full-time, Compliance and Litigation and Evaluation Supervision Group Group permanent employees of the Financial Intelligence and Financial Crimes BSP. Analysis Group Investigation Group I Financial Crimes Investigation Group II www.amlc.gov.ph | [email protected]  Covered Persons (a) Banks; (a) Insurance companies; (a) Securities dealers, brokers, salesmen, (b) Quasi-banks; (b) Pre-need companies; investment houses, and other similar persons (c) Trust entities (c) Insurance agents; managing securities or rendering services, (d) Pawnshops; (d) Insurance brokers; such as investment agents, advisors, or (e) Non-stock savings and loan associations; (e) Professional reinsurers; consultants; (f) Other Non-bank financial institutions (f) Reinsurance brokers; which under special laws are subject to BSP (g) Holding companies; (b) mutual funds or open-end investment supervision and/or regulation; (h) Holding company systems; companies, close-end investment companies (g) Electronic money issuers; and (i) Mutual benefit associations; and or issuers, and other similar entities; and (h) Foreign exchange dealers, money (j) All other persons and their subsidiaries changers, and remittance and transfer and affiliates supervised or regulated by the (c) other entities, administering or otherwise companies. IC. dealing in commodities, or financial derivatives based thereon, valuable objects, cash substitutes, and other similar monetary instruments or properties, supervised or regulated by the SEC. www.amlc.gov.ph | [email protected] Covered Persons - DNFBPs Jewelry Dealers Dealers in Precious Metals and Precious Stones Trust and Company Service Providers Lawyers, accountants, and other professionals Casinos Real Estate Brokers and Developers Offshore Gaming Operators, as well as their Service Providers www.amlc.gov.ph | [email protected] WHAT MONEY LAUNDERERS ARE LOOKING FOR? 1. Anonymity 2. “Paperless 3. Non-reporting Transaction” requirement 28 Preventive Measures (PH setting) CUSTOMER DUE DILIGENCE RECORD-KEEPING TRANSACTION REPORTING www.amlc.gov.ph | [email protected] Risk Management R-O-C-S-T-R Risk profiling/scoring Ongoing monitoring of customers CTR STR Training programs Record-keeping www.amlc.gov.ph | [email protected]  CUSTOMER DUE DILIGENCE (CDD) “Know-Your-Customer” CDD Measures [Section 2.1, Rule 18, 2018 IRR] (a) Customer Identification Process (CIP) (b) Customer Verification Process (CVP) (c) Identification and Verification of Agents (IVA) (d) Beneficial Ownership Verification (BOV) (e) Determination of the Purpose of Relationship (DPR) (f) Ongoing Monitoring Process (OMP) Timing [Section 2.2, Rule 18, 2018 IRR] May be conducted simultaneously, consecutively, or at such timing and frequency as the covered person may determine to be appropriate, depending on the risks involved. www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) Existing Customers [Section 1.3, Rule 18, 2018 IRR] Apply CDD requirements to existing customers on the basis of materiality and risk, taking into account whether and when CDD measures have previously been undertaken and the adequacy of information and document obtained. Customer Acceptance Policies [Section 2.4, Rule 18, 2018 IRR] Have clear, written and graduated customer acceptance policies that will seek to prevent suspicious individuals or entities from transacting with, or establishing or maintaining business relationship. Develop guidelines to assist their responsible officers in assessing whether a customer’s profile warrants acceptance or refusal of service to protect the security and integrity of the business. www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) CIP: To identify and record the true identity of their customers. [Section 3, Rule 18, 2018 IRR] First Time Transactions: [Section 3.2, Rule 18, 2018 IRR] First time customers shall be required to present the original and submit a clear copy of, at least, one (1) ID. If the ID presented does not bear any photo of the customer, or the photo-bearing ID or a copy thereof does not clearly show the face of the customer, a covered person may utilize ICT or any other technology to take the photo of the customer. www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Required Identification Information (Natural Persons) (Section 3.4, Rule 18, 2018 IRR) (1) Full name; (2) Date of birth; (3) Place of birth; (4) Sex; (5) Citizenship or nationality; (6) Address; (7) Contact number or information, if any; and (8) Specimen signatures or biometric information. www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) “Identification Document” [Section 1(qq), Rule 2, 2018 IRR] (1) For Filipino citizens: (a) PhilID; (b) other IDs issued by the government; and (c) other IDs that can be verified using reliable, independent source documents, data or information. (2) For foreign nationals: (a) PhilID, for resident aliens; (b) Passport; (c) Alien Certificate of Registration; and (d) other IDs issued by the government. (3) For Filipino students: (a) PhilID; (b) School ID signed by the school principal or head of the educational institution; and (c) Birth Certificate issued by the Philippine Statistics Authority; and (4) For low risk customers: Any document or information reduced in writing which the covered person deems sufficient to establish the client’s identity. www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Required Identification Information Required Identification Documents (Juridical Persons) (Juridical Persons) (Section 3.4, Rule 18, 2018 IRR) (Section 3.4, Rule 18, 2018 IRR) (1) Full name; (1) DTI/BSP/AMLC Certificates of (2) Name of authorized Registration, or Certificate of representative, transactor or signer; Incorporation or Partnership. (3) Current office address; (2) Articles of (4) Contact number or information, if Incorporation/Partnership; any; (3) Registration Data Sheet/Latest (5) Nature of business; and General Information Sheet; (6) Specimen signatures or biometric (4) Secretary’s Certificate (Re: Signing information of the authorized Authority); and representative/transactor/signer. (5) For entities registered outside of the Philippines, similar documents and/or information www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) RISK-BASED APPROACH (RBA) TO CDD. [Section 9.1, Rule 18, 2018 IRR] In conducting CDD, a risk-based approach shall be undertaken. To assess customers to determine who are likely to pose low, normal, or high risk To set the standards in applying RDD, ADD, and EDD, including a set of conditions for continuance or discontinuance of service, or business relationship. www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) Politically-Exposed Persons (PEPs) An individual who is or has been entrusted with prominent public position in (a) the Philippines with substantial authority over policy, operations or the use or allocation of government-owned resources; (b) a foreign State; or (c) an international organization. [Section 1(xxx), Rule 2, 2018 IRR] Covered persons shall establish and record the true and full identity of PEPs, as well as their immediate family members and close relationships /associates. [Section 1, Rule 19, 2018 IRR] “Not all PEPs are high risk.” www.amlc.gov.ph | [email protected] Warning! Do Not Deal with a Designated Person or Entity (liable for criminal prosecution under Section 8 of the Terrorism Financing Suppression and Prevention Act) 39 Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 1 - Designation by the Anti-Terrorism Council (ATC) Legal Basis (Anti-Terrorism Act or ATA) SEC. 25. Designation of Terrorist Individual, Groups of Persons, Organizations or Associations. – Pursuant to our obligations under United Nations Security Council Resolution (UNSCR) No. 1373, the ATC shall automatically adopt the United Nations Security Council Consolidated List of designated individuals, group of persons, organizations, or associations designated and/or identified as a terrorist, one who finances terrorism, or a terrorist organization or group. Request for designations by other jurisdictions or supranational jurisdictions may be adopted by the ATC after determination that the proposed designee meets the criteria for designation of UNSCR No.1373. The ATC may designate an individual, groups of persons, organization, or association, whether domestic or foreign, upon a finding of probable cause that the individual, groups of persons, organization, or association commit, or attempt to commit, or conspire in the commission of the acts defined and penalized under Sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 of this Act. xxx www.amlc.gov.ph | [email protected] Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 2 - Anti-Money Laundering Council (AMLC) Sanctions Freeze Order Legal Basis (Anti-Terrorism Act or ATA) SEC. 25. Designation of Terrorist Individual, Groups of Persons, Organizations or Associations.– xxx The assets of the designated individual, groups of persons, organization or association above-mentioned shall be subject to the authority of the Anti-Money Laundering Council (AMLC) to freeze pursuant to Section 11 of Republic Act No. 10168. Section 36.Freeze Order (par. 3) Notwithstanding the preceding paragraphs, the AMLC, consistent with the Philippines’ international obligations, shall be authorized to issue a freeze order with respect to property or funds of a designated organization, association, group or any individual to comply with binding terrorism-related resolutions, including UNSCR No. 1373 pursuant to Article 41 of the charter of the UN. Said freeze order shall be effective until the basis for the issuance thereof shall have been lifted. During the effectivity of the freeze order, an aggrieved party may, within twenty (20) days from issuance, file with the Court of Appeals a petition to determine the basis of the freeze order according to the principle of effective judicial protection: Provided, That the person whose property or funds have been frozen may withdraw such sums as the AMLC determines to be reasonably needed for monthly family needs and sustenance including the services of counsel and the family medical needs of such person. xxx www.amlc.gov.ph | [email protected] Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 3 - Publication of the Designation and Notice of Freeze Order Legal Basis (Legal Basis (ATA IRR) Rule 6.5. Posting, publication, dissemination, and notice of designation All ATC resolutions of designation shall be published/posted in a newspaper of general circulation, on the online official gazette, and on the official website of the ATC. xxx Rule 6.6. Effectivity of designation The designations made under Rule 6.2 and Rule 6.3 shall be immediately executory and shall be valid from the date of publication of the corresponding ATC resolution in the online official gazette and the official website of the ATC. Rule 8.8. Sanctions freeze order or targeted financial sanctions based on international obligations The AMLC shall adopt a mechanism for immediately communicating the sanctions freeze order to the public, the financial sector, and designated non-financial businesses and professions. xxx www.amlc.gov.ph | [email protected] Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 4 - AMLC Advisory Contents: xxx ATC Resolution on Designation Names of designated individuals and entities AMLC Resolution with a directive to all covered persons and stakeholders to freeze/submit returns Reminder/Warning against Dealing with a Designation Person or entity (liable for criminal prosecution under Section 8 of the Terrorism Financing Suppression and Prevention Act) www.amlc.gov.ph | [email protected] Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 5 - Implementation of the Freeze Order Freeze without delay The Glossary of the FATF Recommendations defines without delay, with respect to the Al-Qaida/Taliban sanctions regimes, as ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, or the 1988 Committee). For the purposes of resolution 1373(2001), the term without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the term without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, and those who finance terrorism, and the need for global, concerted action to interdict and disrupt their flow swiftly. (2013 FATF International Best Practices [Recommendation 6], page 9) www.amlc.gov.ph | [email protected] Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 6 - Potential Target Matches Freeze of Target and Potential Target Matches “Name Match” refers to an individual or entity whose name matches with a name in the UNSC Consolidated List and any list of designations made by the ATC under Section 25 of the ATA. “Potential Target Match” refers to an individual or entity whose identity matches most, but not all, of the identifier information provided in the UNSC Consolidated List and any list of designations made by the ATC under Section 25 of the ATA. “Target Match” refers to an individual or entity whose identity matches all the identifier information and is identified to be the designated person in the UNSC Consolidated List and any list of designations made by the ATC under Section 25 of the ATA. (ARI No. 2, s. 2021) The obligation is to freeze the assets of target and potential target matches. If having consulted the consolidated list/ATC designation CPs are still unsure on whether there is a target match, CPs can contact the AMLC for assistance. (2021 Sanctions Guidelines). www.amlc.gov.ph | [email protected] Sanctions Freeze Orders (SFO) Pursuant to ATC Designations Step 7 – AMLC Action Potential Target Matches and Request for Assistance Apart from filing an STR, covered persons should, inform the AMLC on the same day the freeze is implemented, through email to the [email protected], copy furnish the Executive Director, that a freeze has been implemented pursuant to these guidelines. The AMLC, within 36 hours from receipt of the information, shall confirm the propriety of the freeze. If no confirmation is received within the said 36-hour period, the freeze shall be automatically lifted. CPs and stakeholders may contact the AMLC for assistance. Upon receipt of the request, the AMLC will provide the requested information while it investigates. In the meantime, the freeze will continue until the AMLC determines that there is NO MATCH. www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) TRANSACTION REPORTING Covered Transaction Report (CTR) A transaction Timing of Reporting: (in cash or equivalent monetary instrument) Within five (5) working days CTR from the date of occurrence (unless the AMLC prescribes a Amount in excess of different period not Threshold exceeding 15 working days) www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Covered Transactions General Rule Specific Thresholds Transaction in cash or other equivalent Transaction involving jewelry dealers and dealers in monetary instrument precious metals and precious stones in cash or other exceeding Php500,000.00 equivalent monetary instrument exceeding Php1,000,000.00. A casino cash transaction exceeding Php5,000,000.00 or its equivalent in other currency. A cash transaction involving REDs/REBs exceeding Php7,500,000.00 or its equivalent in any other currency. www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Suspicious Transaction Report (STR) No underlying legal or Timing of Reporting: Structuring trade obligation, purpose or economic Within the next working justification. day from date of Deviates from client’s occurrence (discovery) profile and/or the past transactions Client not properly identified STR Related to an unlawful activity, or any money Amount not laundering activity or commensurate with offense is about to be, is client’s business or being or has been financial capacity Similar or analogous committed circumstances www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) Covered Transaction also a Suspicious Transaction [Section 1.2, Rule 22, 2018 IRR] MALICIOUS REPORTING IS A CRIMINAL OFFENSE! [6 months – 4 years imprisonment, In cases where the transaction breached the P100,000 – P500,000 PHP500,000.00 threshold and there are suspicious No probation] circumstances, report first as a CTR, subject to updating if it is finally confirmed to be reportable as STR. Form and Quality of Report [Section 3, Rule 22, 2018 IRR] Complete Accurate Timely www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Safe Harbor Provision No administrative, criminal or civil proceedings shall lie against any person for having made a CTR or an STR in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution under the AMLA or any other Philippine law. DO NOT BE AFRAID TO FILE CTR AND STR! Filing CTRs and STRs is an exception to the Data Privacy Act [Section 4(f)] NON-REPORTING OF CTR and STR are not necessarily proof that the CTR AND STR IS A customer is involved in unlawful activity. CRIMINAL OFFENSE! [6 month – 4 years CTR and STR are mere triggers for possible imprisonment, investigation. P100,000 – P500,000 fine, or both] www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Safe Harbor Provision No administrative, criminal or civil proceedings shall lie against any person for having made a CTR or an STR in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution under the AMLA or any other Philippine law. DO NOT BE AFRAID TO FILE CTR AND STR! NON-REPORTING OF CTR and STR are not necessarily proof that the CTR AND STR IS A customer is involved in unlawful activity. CRIMINAL OFFENSE! CTR and STR are mere triggers for possible [6 month – 4 years imprisonment, investigation. P100,000 – P500,000 fine, or both] www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) Confidentiality of Reports Covered persons, and their officers and employees, are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person or entity, or the media, the fact that a CTR or STR has been or is about to be filed, the contents of the report, or any other information in relation BREACH OF thereto. CONFIDENTIALITY IS A Any information about such reporting shall not be CRIMINAL OFFENSE! published or aired, in any manner or form, by the [3 – 8 year imprisonment, mass media, or through electronic mail, or other P500,000 – P1,000,000] similar devices. www.amlc.gov.ph | [email protected] Registration for purposes of reporting Section 52. Period of Registration with the AMLC. – For new covered persons and existing DNFBPs, as defined herein, who have not yet registered, they shall register with the AMLC within six (6) months from effectivity of these Guidelines. In the case of newly-established DNFBPs, registration must be done prior to commencement of its operation as a DNFBP. For more information visit: www.amlc.gov.ph Effectivity- 21 June 2021 Deadline – 21 December 2021 www.amlc.gov.ph | [email protected] 54  Purpose: To remind Covered Persons (CPs) dealing with customers who are DNFBPs*, to require the presentation of the Provisional Certificate of Registration (PCOR) and/or Certificate of Registration (COR) with the AMLC as part of its Customer Due Diligence (CDD) measures. *CPs considered as DNFBPs are enumerated under Rule 4, Section 1 (b) of the 2018 Implementing Rules and Regulations (IRRs) of the Anti-Money Laundering Act, as amended. 55 Risk Management (PH setting) MTPP: Continuing Education and Training Program Develop, or create opportunities for, continuing education and training programs to promote AML/CTF awareness and strong compliance culture. [Rule 16, Section 4.1, 2018 IRR] Refresher programs, at least, every three (3) years. [Rule 16, Section 4.4, 2018 IRR] MTPP: Updating At least, once every two years. www.amlc.gov.ph | [email protected] Preventive Measures (PH setting) RECORD-KEEPING To maintain and safely store for five (5) years from the dates of transactions all customer records and transaction documents. [Section 1, Rule 20, 2018 IRR] To keep all records obtained through CDD, account files and business correspondence, and the results of any analysis undertaken, for, at least, five (5) years following the closure of account, termination of the business or professional relationship or after the date of the occasional transaction. [Section 2, Rule 20, 2018 IRR] FAILURE TO KEEP If a case has been filed in court involving the account, to RECORDS IS A CRIMINAL retain and safely keep beyond the five (5)-year period, until OFFENSE! it is officially confirmed by the AMLC that the case has been (6 months – 1 year imprisonment, resolved, decided or terminated with finality. [Section 3, Rule P100,000 – 500,000 fine, or both) 20, 2018 IRR] www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) Guidelines on the Digitization of Customer Records (DIGICUR) Digitize all customer records – including “look back” to records prior to implementation period – exclude closed accounts beyond the 5-year retention period; does not apply to Money Service Business (MSB) operations, except when the business model allows electronic wallet. Maintain a central database – maintained in head offices; compliance officer given direct and immediate access Submissions to AMLC – via AMLC’s File Transfer and Reporting Facility Purpose: To prevent covered (FTRF), or in such other forms as required (i.e. certified true copy) persons from tipping off clients about AMLC investigations, by limiting the covered person’s Quality – complete, accurate, timely, and secured so as to be of use in AMLC investigations. personnel who knows about such investigations, and through swift provision of required Implementation – start within 6 months from effectivity (13 October 2018); within 2 years after the end of the 6-month period to implement, documents to AMLC. all customer records should be completely digitized. www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) Guidelines on the Digitization of Customer Records (DIGICUR) Quality – complete, accurate, timely, and secured so as to be of use in AMLC investigations. Final Deadline – 30 September 2022 covers all prior and subsequent requests for extensions. Quarterly DIGICUR Status Report of Compliance (QUADSREC) – to be submitted within 15 calendar days after each quarter, except the first report shall be submitted on or before 31 October 2021. Failure to submit QUADSREC - Serious Violation under the Rules of Procedure in Administrative Cases (RPAC) with penalties from Php15,000 to Php150,000 per customer Non-Compliance with DIGICUR – Grave Violation under the RPAC with penalties from Php37,500 to Php375,000 per customer www.amlc.gov.ph | [email protected]  Preventive Measures (PH setting) Guidelines on the Digitization of Customer Records (DIGICUR) AMLC advisory The Executive Director may impose non-monetary penalties for failure to comply with requirements of the DIGICUR by the 30 September 2022 deadline, subject to the following dated 20 conditions: September 2022 (Reminder on the Updated its MTPP to incorporate the provisions of the DIGICUR; Established a central database for customer records; Deadline for the Digitized at least 50% of the records of new customers prior to the effectivity of the DIGICUR (13 October 2018); DIGICUR) Digitized at least 50% of the records of new customers opened after effectivity of the DIGICUR; and Scheduled to complete digitization of customer records by 31 December 2023. www.amlc.gov.ph | [email protected] Risk Management (PH setting) PRIMARY DUTIES Covered persons shall, comply with all the requirements under the AMLA and TFPSA, their respective IRR, and other AMLC issuances. They shall have the duty to cooperate with the AMLC in the, discharge of the latter’s mandate, and execution of its lawful orders and issuances, to protect their businesses or professions from being used in ML/TF activities. (Rule 4, Section 2.1, 2018 IRR) www.amlc.gov.ph | [email protected]  Risk Management (PH setting) INSTITUTIONAL RISK MANAGEMENT The board of directors of the covered person shall exercise active control and supervision in the formulation and implementation of institutional risk management. They shall be ultimately responsible for the covered person’s compliance with the AMLA and TFPSA, their respective IRR, and other AMLC issuances. [Rule 15, Section 2.1, 2018 IRR] Covered persons shall develop sound risk management policies, controls and procedures (i.e. MTPP), which are approved by the board of directors to enable them to manage and mitigate the risks that have been identified in the NRA, or by the AMLC, SAs or the covered person itself. [Rule 15, Section 2.2(a), 2018 IRR] www.amlc.gov.ph | [email protected] Risk Management (PH setting) Money Laundering/Terrorism Financing Prevention Program (MTPP) The MTPP shall be in writing and shall include, at the minimum, internal policies, controls and procedures on the following: (a) Risk management; (b) Compliance management setup; (c) Screening procedures to ensure high standards when hiring employees; (d) Continuing education and training program; (e) Independent audit function; (f) Details of implementation of preventive measures; (g) Compliance with freeze, bank inquiry and asset preservation orders, and all directives of the AMLC; (h) Adequate safeguards on the confidentiality and use of information exchange; (i) Cooperation with the AMLC and SAs. [Rule 16, Section 1, 2018 IRR] www.amlc.gov.ph | [email protected] Legal Remedies 64  Prosecution of ML Any person may be charged with and convicted of both the offense of money laundering (subject offense) and the unlawful activity (predicate offense) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation under R.A. No. 9160 without prejudice to the freezing and other legal remedies. 65  Bank Inquiry Deposit / Investment Non-Bank Financial Institutions No violation of: RA 1405 – Law on the Secrecy of Bank Deposits RA 6426 – Foreign Currency Deposit Unit (FCDU) Law RA 8791 – General Banking Law 66  Application for Bank Inquiry (W/ Court Order) Order of File Granted Bank Inquiry AMLC files ex parte Application for Bank Inquiry with Court of Appeals (CA) for other Unlawful Activities CA has 24 hours to act on Application CA grants Application if it finds probable cause and issues Order of Bank Inquiry 67  Bank Inquiry (W/O Court Order) Unlawful Activities: Drugs Kidnapping AMLC for Ransom Resolution (KFR) for Bank Inquiry Acts of Terrorism 68 Bank Inquiry Covered person shall: - Immediately give full access to all information and documents - Provide CTCs of the documents within 5 working days - Keep confidentiality of the inquiry 69  Petition to Freeze (W/ Court Order) Freeze File Granted Order AMLC files ex parte Petition to Freeze with CA CA has 24 hours to act on Application CA grants Petition if it finds probable cause and issues Freeze Order effective for 20 days. During 20-day period, CA will conduct a summary hearing to determine whether or not to lift the Freeze Order, or extend it to a total period of 6 months. Freeze Order effective immediately including Related Accounts 70  Related Accounts Funds originated from and/or Materially Linked Related Account Account subject of the Freeze Order Related Account 71  Freeze Order (FO) Period: Total not exceeding six (6) months No case filed = FO deemed ipso facto lifted Remedy of the Owner: File Motion to Lift No Temporary Restraining Order (TRO) Exception: issued by the Supreme Court (For TFS: CA or SC) 72  Duties of Covered Persons 1. Immediately freeze the monetary instrument or property and related accounts; 2. Furnish copy of FO 3. Within 24 hours, submit to the CA and the AMLC a detailed written return on the freeze order – Account numbers Name(s) of account holders Amount Other relevant information Date and Time when order was served 4. File STR/s with the AMLC 73  Civil Forfeiture Tool for Asset Recovery Filed with the Regional Trial Court (RTC) Non-Conviction based Asset Forfeiture Preponderance of Evidence, not Proof Beyond Reasonable Doubt Judgment of Forfeiture Turned over to the National Gov’t; or Returned to the victims 74 Civil Forfeiture – PAPO & APO Provisional Asset Preservation Order (PAPO) Summary hearing within twenty (20) days Respondent may show good cause why PAPO should be lifted RTC shall determine whether PAPO should be modified/lifted or APO should be issued Status-quo until RTC decides Asset Preservation Order (APO) Effective until judgment 75 76  Discussion Points 1. What is money laundering and how is it committed? 2. Why do criminals need to launder proceeds of crime? 3. How may Covered Persons be abused for ML/TF? 4. How can we detect and prevent money launderers? What are the preventive measures? THANK YOU! www.amlc.gov.ph | [email protected]