AMLA (Updated) PDF

ANTI-MONEY LAUNDERING ACT (AMLA) Money Laundering Offenses (As amended by RA (RA 9160) 10365) A crime committed by any person who knowing that As Amended by:...

ANTI-MONEY LAUNDERING ACT (AMLA) Money Laundering Offenses (As amended by RA (RA 9160) 10365) A crime committed by any person who knowing that As Amended by: any instrument or property represents, involves, or RA 9194 (2003) relates to the proceeds of any unlawful activity: RA 10167 (2012) (1) transacts said monetary instrument or RA 10365 (2013) property; RA 10927 (2018) (2) converts or transfers, disposes of, moves, RA 11521 (2021) acquires, possess or uses said monetary instrument or property; Important Points/Items (3) conceals or disguises the true nature, source, How is money laundering 7 Ways to Commit location, disposition, movement or ownership of committed? Money Laundering or rights with respect to said monetary What are covered instrument; 4 Covered Transactions (4) attempts or conspires to commit money transactions? Who are the covered 8 Covered laundering offenses referred to in (1), (2) or (3); persons/institutions? Persons/Institutions (5) aids, abets, assists in or counsels the What are the obligations of commission of money laundering offenses 3 Obligations referred to in (1), (2), or (3) a covered institutions? What are suspicious 7 Suspicious (6) performs or fails to perform any act as a result transactions? Transactions of which he facilitates the offense of money What are the unlawful laundering referred to in (1), (2), or (3); 36 Unlawful Activities (7) committed also by failure to report to the activities? AMLC by any covered person knowing that Money Laundering covered or suspicious transactions is required is a crime whereby the proceeds of an unlawful under the law (RA 9160, as amended by RA activity are transacted, thereby making them 10365 approved on February 15, 2013). appear to have originated from legitimate sources (Section 4, RA 9160, as amended). Monetary Instruments (IRR 2018) (1) Coins or currency of legal tender of the Philippines, or State Policy on Money Laundering: of any other country; The law aims to: (2) Credit instruments, including bank deposits, financial (1) to protect and preserve the integrity and interest, royalties, commissions, and other intangible confidentiality of bank accounts and property; (2) to ensure that the Philippines shall NOT be used (3) Drafts, checks, and notes; as money laundering site for the proceeds of (4) Stocks or shares, participation or interest in a any unlawful activity. corporation or in a commercial enterprise or profit- - AMLA seeks to prevent money-laundering activities making venture and evidenced by a certificate, by providing more transparency in the Philippine contract, instrument, whether written or electronic in financial system. character, including those enumerated in Section 3 of the Securities Regulation Code; Latest Amendment – RA 11521 (5) A participation or interest in any non-stock, non-profit 1. Expanded the Guidelines to include offshore corporation; gaming operators (OGO), their service providers, (6) Securities or negotiable instruments, bonds, and real estate brokers (REB) and developers commercial papers, deposit certificates, trust (RED) as covered persons. certificates, custodial receipts, or deposit substitute 2. Amended the definition of "covered transaction" instruments, trading orders, transaction tickets, and to include cash transactions over ₱7.5 million confirmations of sale investments and money or (or equivalent) with real estate developers or market instruments; brokers. (7) Contracts or policies of insurance, life or non-life, 3. Updated relevant terminologies in the Definition contracts of suretyship, preneed plans, and member of Terms. certificates issued by mutual benefit association; and 4. Added a section on implementing Targeted (8) Other similar instruments where title thereto passes Financial Sanctions. to another by endorsement, assignment, or delivery. 5. Provided guidance on suspicious activity indicators for real estate brokers and developers. Monetary Instrument or Property Related to an 6. Included a provision on AMLC registration and Unlawful Activity (IRR 2018) issuance of the Provisional Certificate of (1) All proceeds of an unlawful activity; Registration. (2) All instrumentalities of an unlawful activity, 7. Required newly covered persons and unregistered including all moneys, expenditures, payments, DNFBPs to register with the AMLC within six disbursements, costs, outlays, charges, accounts, months of the Guidelines' effectivity. refunds, and other similar items for the financing, 8. Mandated newly established DNFBPs to register with operations, and maintenance of any unlawful activity; the AMLC before starting operations, with the AMLC (3) All monetary instruments or property, including posting a list of registered DNFBPs on its website. monetary, financial or economic means, devices, accounts, documents, papers, items, objects or things, used in or having any relation to any unlawful activity or money laundering, regardless of the current owner or possessor, and circumstances of ownership or acquisition; and @SoraCPAOct2024 @studywithrachel (4) For purposes of freeze order and bank inquiry order: Covered Persons Supervised or Regulated By IC related and materially linked accounts. Insurance companies, pre-need companies and all other institutions supervised or regulated by the Insurance Covered Transactions Commission. RA 9160 (Amended) RA 9194 (New) (a) Insurance companies; - A series, or GR: (b) Pre-need companies; combination of - It is a transaction (c) Insurance agents; transactions (single) in cash or other (d) Insurance brokers; - in excess of equivalent monetary (e) Professional reinsurers ₱4,000,000 or an instrument involving a (f) Reinsurance brokers; equivalent amount in total amount (g) Holding companies; foreign currency based - in excess of ₱500,000 (h) Holding company systems; on the prevailing - within one (1) banking (i) Mutual benefit associations; and exchange rate day (j) All other persons and their subsidiaries and affiliates - within five (5) supervised or regulated by the IC. consecutive banking In effect, Section 3 of the RA days except those 9160 is amended by between a covered Section 1 of RA 9194. Covered Persons Supervised or Regulated By SEC institution and a person (a) Securities dealers, brokers, salesmen, investment who, at the time of the XPN: houses and other similar persons managing securities or transaction was a Jewelry Dealers – in excess rendering services as investment agent, advisor, or properly identified client of ₱1,000,000 consultant; and the amount is Casino Operations – in (b) Mutual funds, close-end investment companies, common commensurate with the excess of ₱5,000,000 trust funds, and other similar persons; and REB & RED – in excess of business or financial (c) Other entities administering or otherwise dealing in ₱7,500,000 capacity of the client; or currency, commodities or financial derivatives based those with an underlying thereon, valuable objects, cash substitutes and other legal or trade obligation similar monetary instruments or property supervised, or purpose, origin or regulated by the SEC. economic justification. Designated Non-Financial Businesses And RA 10365 (Amended) RA 11521 (New) Professions (DNFBPs) Real Estate Transactions: A cash transaction with or These are business or profession, NOT under the - involving an amount in involving real estate supervision or regulation by the BSP, SEC and IC but excess ₱500,000.00 developers or brokers designated as covered person under the AMLA. - within fifteen (15) - exceeding days from the date of ₱7,500,000 or its (1) Jewelry dealers in precious metals, who, as a the registration of the equivalent in any: other business trade in precious metals, for transactions in transaction and submit currency. excess of ₱1,000,000 all other relevant (2) Jewelry dealers in precious stones, who as a documents of all real business trade in precious stones for transactions in estate transactions. excess of ₱1,000,000 (3) Company Service providers which, as a business, RA 10927 (2018 Amendment) provide any of the following services to third parties: - Casino operations, including internet and ship-based i. acting as formation agent of juridical persons; casinos are now covered persons. ii. acting as (or arranging for another person to act - Single cash transactions of casinos in excess of ₱5 as) a director or corporate secretary of a million or its equivalent in any other currency, must be company, a partnership, or a similar position in reported to the Anti- Money Laundering Council relation to other juridical persons; (AMLC). iii. providing a registered office, business address or - The Court of Appeals can issue a 20-day freeze accommodation, correspondences or order on any monetary instrument or property linked to administrative address for a company, a unlawful activities. Within the period, the Court of partnership' or any other legal person or Appeals "shall conduct a summary hearing...to arrangement; and determine whether or not to modify or lift the freeze iv. acting as (or arranging for another person to act order." The freeze order may also be extended up to as) a nominee shareholder for another person; six months. Covered Persons, including lawyers, accountants and Covered Institutions / Covered Persons – other professionals, who provide any of the BISDPCRO following services Managing of client money, securities or other assets; Covered Persons Supervised or Regulated By BSP Management of bank, savings or securities accounts; (a) Banks; Organization of contributions for the creation, operation (b) Quasi-banks; or management of companies; (c) Trust entities; Creation, operation or management of juridical persons (d) Pawnshops; or arrangement, and buying and selling business entities. (e) Non-stock savings and loan associations Casinos Including Internet and Ship-Based (f) Other non-bank financial institutions which under special Casinos are now considered "covered persons" under laws are subject to BSP supervision and/or regulation; AMLA. The law defines casino as a business authorized (g) Electronic money issuers by the appropriate government agency to engage in (h) Foreign exchange dealers, money changers, and gaming operations. (RA 10927) remittance and transfer companies Real Estate Broker (REB) refers to a duly registered and licensed natural person who, for a professional fee, commission or other valuable consideration, acts as an agent of a party in a real estate transaction to offer, advertise, solicit, list, promote, mediate, negotiate or @SoraCPAOct2024 @studywithrachel  effect the meeting of the minds on the sale, purchase, (3) Reporting of Covered and Suspicious exchange, mortgage, lease or joint venture, or other Transactions — covered persons shall report to similar transactions on real estate or any interest therein. the AMLC all covered transactions and suspicious (RA 11521) Real Estate Developer (RED) refers to any natural or transactions within five (5) working days from juridical person engaged in the business of developing the occurrence thereof, unless the AMLC real estate development project for his/her or its own prescribes a different period of NOT exceeding account and offering them for sale or lease. (RA 11521) fifteen (15) working days. Offshore Gaming Operator (OGO) refers to an entity Note: engaged in offering online games of chance or sporting STRs shall be promptly filed within the next events via the internet using a network and software working day from occurrence thereof, which for program, by themselves or through local service purposes of this Rule, shall be the date of providers. (RA 11521) establishment of suspicion or determination of Offshore Gaming Operator Service Provider (OGO-SP) refers to a duly constituted business the suspicious nature of the transaction corporation who provides components of offshore (Should a transaction be determined to be both a gaming operations to offshore gaming operators. (RA covered and a suspicious transaction, the same 11521) shall be reported as a suspicious transaction.) Covered persons shall file all CTRS and STRS in Duty of Covered Persons: accordance with the registration and reporting - Covered persons shall report to the ALMC all guidelines of the AMLC. (STRs shall cover all covered transactions and suspicious transactions transactions, whether completed or attempted.) within five (5) working days from the occurrence thereof, unless the AMLC prescribes Suspicious Transactions: a different period of not exceeding fifteen (15) - refers to a transaction, regardless of amount, where working days, which thereby shall not be a any of the suspicious circumstances, as herein violation of the Secrecy of Bank Deposit Act, FCDU, defined, is determined, based on suspicion or, if and the General Banking Law of 2000. available, reasonable grounds, to be existing (IRR - Lawyers and accountants acting as independent 2018). legal professionals are NOT required to report - means a transaction whether or not made in cash covered and suspicious transactions if the which, to a person acting in good faith and gives rise information was obtained in relevant circumstances to a reasonable ground of suspicion that it may where they are subject to professional secrecy or involve the proceeds or crime or appears to be made legal professional in privilege. in circumstances of unusual or unjustified complexity. - Lawyers and accountants, however, are NOT PRECLUDED from submitting STRs to the AMLC What are Suspicious Transactions? (PCA-SDUS) with regard to any transaction of their clients that is These are transactions with covered institutions, in any way related to ML/TF or related unlawful regardless of the amount involved, where any of the activity that is about to be committed, is being or has following exist: been committed. - There is no underlying legal or trade obligation, - Covered persons and their officers and employees purpose or economic justification; must NOT disclose directly or indirectly any details - The client is not properly identified; about a reported or pending suspicious transaction. - The amount involved is not commensurate with This includes information to any person, entity, or the business or financial capacity of the client; the media. Violations will result in criminal liability - Considering all known circumstances, it may be for the concerned individuals and media. perceived that the client's transaction is - In case of breach of confidentiality that is published structured in order to avoid being the subject of or reported by media, the responsible reporter, reporting requirements under the Act; writer, president, publisher, manager and editor-in- - Any circumstance relating to the transaction which chief shall be liable under the Act. observed to deviate from the profile of the client and/or the client's past transactions with the covered Obligations of Covered Persons: institution; (1) Customer identification — it must record the true - The transaction is in any way related to an identity of its clients and all persons purporting to unlawful activity or offense under this Act that is act on their behalf based on official documents and about to be, is being or has been committed; or keep a system of verifying their true identity as - Any transaction that is similar or analogous to any a system of verifying their legal and existence of the foregoing. organizational structure. Note: Any unsuccessful attempt to transact with a (2) Record Keeping - all records of all transactions of covered person, the denial of which is based on any of covered institutions shall be maintained and safely the foregoing circumstances, shall likewise be stored for five (5) years from the date of considered as suspicious transaction. transactions. With respect to closed accounts, the records on customer identification, account files and Occurrence of Suspicious Transactions (IRR 2016) business correspondences, shall be preserved and - For suspicious transactions, "occurrence" refers to the safely stored for at least five (5) years from the date of determination of the suspicious nature of the date when they were closed. transaction, which determination should be made not @SoraCPAOct2024 @studywithrachel  exceeding ten (10) calendar days from the date Qualified Theft – A domestic person or of transaction. servant whom you trust abuses that - However, if the transaction is in any way related to, confidence or the person transacting is involved in or connected (9) Swindling and other forms of swindling of RPC; to, an unlawful activity or money laundering offense, (Estafa) the 10-day period for determination shall be (10) Smuggling under RA Nos. 455 and 1937; reckoned from the date the covered person (11) Violations of RA 8792 or the E-Commerce Act knew or should have known the suspicious (Hacking/Cracking and Piracy); transaction indicator. (12) Hijacking and other violations under RA 6235 and Destructive arson and murder of RPC; How to Identify a Suspicion? (Hong Kong Systematic (13) Terrorism and conspiracy to commit terrorism of Approach) RA 9372; Screen the account for suspicious indicators: (14) Financing of Terrorism of RA 10168 or Terrorism Recognition of a suspicious activity indicator/s Financing Prevention and Suppression Act of Ask the customer appropriate questions 2012; Find out the customer's records: Review of (15) Bribery of RPC; information already known when deciding if the Bribery – Committed by the one giving the apparently suspicious activity is to be expected. money Evaluate all the above information: Is the Extortion – Committed by the person Transaction suspicious? demanding the money (16) Frauds and Illegal exactions and Transactions of Suspicious Transactions Abroad RPC (In his official capacity, in dealing with any - Businesses that are required Suspicious Activity person with regard to furnishing supplies, the Reports (SAR) include: making of contracts, or the adjustment or (1) Depository Institutions (i.e. Banks, Credit settlement of accounts relating to public property Unions, or funds, shall enter into an agreement with any (2) US Branches of Offshore Banks and Savings and interested party or speculator or make use of any Loans) other scheme, to defraud the Government.), (3) Precious metals dealers and dealer in gems (17) Malversation of Public Funds and Property of RPC; (4) Insurance companies Misappropriation – Private Funds (5) Mortgage companies and brokers Malversation – Public Funds (6) Mutual fund brokers (18) Forgeries and counterfeiting of RPC; (7) Money service Businesses (19) Violations of Sections 4-6 of RA 9208 or Anti- (8) Casinos and Card Clubs Trafficking in Persons Act of 2003; Committed when you transport huge Suspicious amounts of persons from one border to Covered Transaction Transactions another, especially persons not properly In the Philippines, any bank A suspicious transaction is, documented transactions in excess of regardless of amount, a (20) Violation of Sections 78-79 of PD 705 or the ₱500,000 is automatically transaction where there is Revised Forestry Code of the Philippines; (Illegal reported to the AMLC based NO underlying legal or on the provisions of AMLA. trade obligation, purpose Logging) This is the “covered or economic justification. (21) Violations of Sections 86-106 of RA 8550 or the transaction” Fisheries Code of 1998; (Illegal Fishing) (22) Violations of RA 7942 or the Philippine Mining Act Unlawful Activities (36) of 1995; (Illegal Mining) - refers to any act or omission or series or combination (23) Violations of RA 9147 or the Wildlife Resources thereof involving or having direct relation to the Conservation and Protection Act; following: Animals protected under the law (1) Kidnapping for ransom under Article 267 of RPC; (24) Violation of Section 7 (b) of RA 9072 or the (2) Sections in RA 9165 or Comprehensive Dangerous National Caves and Cave Resources Management Drugs Act of 2002; Protection Act; (3) Section 3 of RA 3019 Anti-Graft and Corrupt (25) Violation of RA 6539 or the Anti-Carnapping Act Practices Act; of 2002; (4) Plunder (at least ₱50 Million) under RA 7080; (26) Violations of PD 1866 or the Laws on Illegal (5) Robbery and Extortion under RPC; Possession, Manufacture, Dealing in, Acquisition (6) Jueteng and Masiao punished as illegal gambling of Firearms; under PD 1602; (27) Violations of PD 1612 or the Anti-Fencing Law; (7) Piracy on high seas under RPC; (Buying of Stolen goods) (8) Qualified theft under Art. 310 of RPC (is (28) Violation of Section 6 of RA 8042 or the Migrant committed when a domestic servant or a person Workers and Overseas Filipino Act of 1995, as who abuses the confidence entrusted to him amended by RA 10022; commits theft) Illegal Recruitment - can be committed, Theft – There is no force and violence licensed or not, when you were not able to Robbery – There is force and violence deploy the OFW @SoraCPAOct2024 @studywithrachel  (29) Violation of RA 8293 or the Intellectual Property checking, and national risk management and Code (Infringement and Unfair Competition); assessment. (30) Violation of Section 4 of RA 9995 or the Anti- The AMLC had also approved guidelines on digitizing Photo and Video Voyeurism Act of 2009; customer records, registration and reporting, and (31) Violation of Section 4 of RA 9775 or the Anti-Child equivalent rules and regulations for casinos, among Pornography Act of 2009; others. Adoption of these measures, including the (32) Violations of RA 7610 or the Special Protection of 2018 IRRI would enable the AMLC to catalyze Children Against Abuse, Exploitation and observance of a compliance culture in the financial Discrimination; and business sectors. (33) Fraudulent practices and other violations of RA 8799 or the Securities Regulation Code of 2000; Definition of Terms: (Wash Sales, Insider Trading, Short Swing Asset Preservation Order (APO) refers to a Transactions) provisional remedy aimed at preserving monetary (34) Felonies or offenses of a similar nature are instruments or properties in any way related to an punishable under the penal laws of other unlawful activity or money laundering offense defined countries. herein, during the pendency of civil forfeiture Addition Under RA 11521: proceedings. (35) Violation of Section 19 (A)(3) of Republic Act No. Intermediary Financial Institution refers to a 10697, otherwise known as "The Strategic financial institution in a serial payment or cover Trade Management Act", in relation to payment chain that receives and transmits a wire Proliferation of Weapons of Mass Destruction transfer on behalf of the ordering financial institution (WMD) and PF pursuant to UNSC Resolution Nos. and the beneficiary financial institution, or another 1718 of 2006 and 2231 of 2015; intermediary financial institution. (36) Violations of Section 254 of Chapter II, Title X of Money Laundering/ Terrorism Financing the "National Internal Revenue Code of 1997", as Prevention Program" (MTPP) refers to a covered amended, where the Deficiency Basic Tax Due person's comprehensive, risk-based, and written in the Final Assessment is in excess Of internal policies, controls and procedures to ₱25,000,000 per Taxable Year for each tax implement the relevant laws, rules and regulations, type covered and there has been a finding of and best practices to prevent and combat ML/TF and probable cause by the competent authority. associated unlawful activities in the operational level. Politically Exposed Person (PEP) refers to an Steps in Money Laundering: individual who is or has been entrusted with Placement — at this stage the launderer inserts the prominent public position in: dirty money into a legitimate financial institution, (a) the Philippines with substantial authority over usually in the form of cash deposits. policy, operations or the use or allocation of Layering — involves sending money through various government-owned resources; financial transactions to change its form and make it (b) a foreign State; or more difficult to follow. It may consist of bank-to- (c) an international organization. bank transfers, changing currency, or purchasing high Shell Bank refers to a bank that has no physical value items. presence in the country in which it is incorporated and Integration — The money re-enters mainstream licensed, and which is unaffiliated with a regulated economy in legitimate-looking form, appearing to financial group that is subject to effective have come from some legitimate transaction. It may consolidated supervision. involve a final bank transfer into the account of a local Ship-Based Casino refers to casinos, the operation business in which the launderer is "investing" in of which is undertaken on board a vessel, ship, boat exchange for a cut of the profits or the sale of high or any other water- based craft wholly or partly value items bought during the layering stage (IRR, RA intended for gambling 9160 Rule 4, Sec. 1) Virtual Asset refers to a digital representation of Note: Layering Stage is where money laundering is value that can be digitally traded, or transferred, and most difficult to detect. It breaks the funds into small can be used for payment or investment purposes. transactions and makes it difficult to detect and find out Customer/Client refers to any person who keeps or about the laundering activity. It usually entails maintains an account with a covered person. It international money movement, so the law enforcement includes the following: agencies won't be able to track the financial gains from (1) Beneficial owner, or any natural person who illegal proceedings so easily. ultimately owns or controls a customer and/or on whose behalf an account is maintained or a IRR 2018 transaction is conducted; Salient Points: (2) Transactors, agents and other authorized The 2018 IRR incorporates the amendments under representatives of beneficial owners; Republic Act No. 10927, which included casinos as (3) Beneficiaries of trusts, investment and pension covered persons. funds, insurance policies, and remittance The 2018 IRR features new rules on the AMLC's transactions; cooperation and coordination with law enforcement (4) Persons whose assets are managed by an asset agencies, beneficial ownership, customer due manager; diligence, AMLC supervision and compliance (5) Trustors/grantors/settlors of a trust; @SoraCPAOct2024 @studywithrachel  (6) Insurance policy holders, whether actual or Customer Due Diligence (CDD) refers to the prospective; and procedure of identifying and verifying the true (7) Juridical Person (Newly Added) identity of customers, and their agents and beneficial owners, including understanding and monitoring of Definition of Terms (RA 11521): their transactions and activities. Proliferation of Weapons of Mass Destruction a risk-based approach shall be undertaken (WMD) refers to the manufacture, acquisition, depending on the type of customer, business possession, development, export, trans-shipment, relationship, or nature of the transaction or activity. brokering, transport, transfer, stockpiling or use of - Covered Persons shall undertake CDD measures weapons of mass destruction, in contravention of when: national laws or, where applicable, international (a) establishing business or professional obligations. relationship; Proliferation of Weapons of Mass Destruction (b) carrying out occasional transactions above Financing/Proliferation Financing (PF) refers (₱100,000.00) or any other threshold as may when a person: be be determined by the relevant SAs, with (a) makes available an asset; or notice to the Council, including situations (b) provides a financial service; or where the transaction is carried out in a (c) conducts a financial transaction; and the person single operation or in several operations that knows that, or is reckless as to whether, the appear to be linked; asset, financial service or financial transaction is (c) carrying out occasional wire transfers in the intended to, in whole or in part, facilitate circumstances under Rule 19, Section 6 proliferation of WMD in relation to UNSC hereof; Resolution Nos. 1718 of 2006 and 2231 of 2015. (d) there is a suspicion of ML/TF, regardless of Targeted Financial Sanctions (TFS) refer to both any exemptions or thresholds that are asset freezing and prohibition to prevent funds or referred to elsewhere under this IRR; or other assets from being made available, directly or (e) the covered person has doubts about the indirectly, for the benefit of any individual, natural or veracity or adequacy of previously obtained legal persons or entity designated pursuant to UNSC identification information and/or data. resolutions and its designation process. - Customer Due Diligence Measures: (a) Customer Identification Process; Prohibitions (IRR 2018): (b) Customer Verification Process; No shell bank shall be allowed to operate or be (c) Identification and Verification of Agents; established in the Philippines. (d) Beneficial Ownership Verification; No case for Money Laundering may be filed against a (e) Determination of the Purpose of candidate for an electoral office during an election Relationship; period. (f) Ongoing Monitoring Process; No prior criminal charge, pendency of a case, or Customer Identification Process (CIP) refers to conviction for an unlawful activity or Money the process of determining the identity of the Laundering offense is necessary for the customer vis-à-vis the valid and acceptable commencement or the resolution of a petition for identification document submitted to, and/or freeze order. presented before, the covered person. No administrative, criminal, or civil proceedings shall Customer Verification Process (CVP) refers to lie against any person or entity for acting in good faith the process of validating the truthfulness of the when implementing the TFS as provided under information, and confirming the authenticity of the pertinent UNSC Resolutions. identification documents, presented, submitted and No asset shall be frozen to the prejudice of a provided by the customer; or other ways of verifying candidate for an electoral office during an election the identity and assessing the risk profile of period. customers, and their agents and beneficial owners, No asset shall be attached or forfeited to the through the use of reliable and independent sources, prejudice of a candidate for an electoral office during documents, data or information an election period. - Covered persons shall independently verify the No court shall issue a temporary restraining order or collected data during CIP, through any of the a writ of injunction against any freeze order, except following: the Supreme Court. (a) face-to-face contact; No prior criminal charge, pendency of a case, or (b) use of ICT (A check that is performed by the conviction for an unlawful activity or Money computer as the data is being entered); Laundering offense is necessary for the (c) by confirming the authenticity of the commencement or the resolution of a petition for civil identification documents to the issuing forfeiture. office; No court shall issue a temporary restraining order or (d) reliance on third parties and service a writ of injunction against any provisional asset. providers; or Preservation order or asset preservation order, except (e) such other methods of validation based on the Court of Appeals or the Supreme Court. reliable and independent sources, documents, data, or information Preventive Measures @SoraCPAOct2024 @studywithrachel  Determination of the Purpose of Relationship applying reduced, average and enhanced due (DPR) refers to the process of identifying the diligence including a set of conditions for the denial purpose and intended nature of the account, of account opening. These policies and procedures transaction, or business or professional relationship. shall ensure that the financially or socially Reduced Due Diligence (RDD) where lower risks disadvantaged are NOT denied access to financial of money laundering and terrorist financing have services while at the same time preventing been identified. suspicious individuals or entities from opening Average Due Diligence (ADD) refers to the an account. normal level of customer due diligence that is Risk Profiling of Customers: appropriate in cases where there is medium risk of - Covered persons shall develop a clear set of money laundering or terrorism financing. criteria for customer risk profiling and Enhanced Due Diligence (EDD) refers to the assessment. Criteria shall include, at least, enhanced level of scrutiny intended to provide a three (3) of the following; Provided, that the more comprehensive understanding of the risks covered person is satisfied that customer's risk associated with the client, as well as confirmation of profile is sufficiently established: factual information provided by the client, to mitigate (a) The nature of the service or product to be risks presented. availed of by the customers; Financial Intelligence refers to the gathering (b) The purpose of the account or transaction; and analysis of information about the transactions (c) The source of fund and source of wealth; and financial activities of persons of interest, to (d) The nature of business and/or employment; understand their nature and capabilities, and predict (e) The country of origin and residence of their future actions. It may also refer to intelligence operations, or the fact that a customer came information, which is the result of the analysis of the from a high-risk jurisdiction or geographical information gathered. area; Financial Investigation refers to an inquiry into (f) Watchlist of individuals and entities engaged the financial affairs of persons related to ML/ TF in illegal activities or terrorist related and associated unlawful activity. activities as circularized by the BSP, AMLC, Institutional Risk Assessment refers to a and other international entities or comprehensive exercise to identify, assess and organizations, such as the Office of Foreign understand a covered person's ML/TF threats, Assets Control (OFAC) of the U.S. vulnerabilities and the consequential risks, with a Department of the Treasury and United view to mitigate illicit flow of funds and transactions. Nations Sanctions List; Ongoing Monitoring Process (OMP) refers to the (g) the existence of suspicious transaction process of conducting continuing due indicators; and diligence, including continually assessing the risks, (h) such other factors as the covered persons understanding the transactions and activities, and may deem reasonable or necessary to updating, based on risk and materiality, the consider in assessing the risk of a customer, identification information and/or identification including the amount of funds to be documents, of customers, their agents and beneficial transacted by a customer or the size of owners. transactions undertaken, regularity or Third Party Reliance — allowed, however covered duration of the transaction, and/or are person is the one responsible included in the negative list. Outsourcing the Conduct of Customer Identification - same as TPR Digitization of Customer Records (DIGICUR Guidelines, Series Of 2018) Risk-Based Identification Process (IRR 2018) Until 13 April 2021, the covered person must In conducting CDD, a risk-based approach shall be completely digitize all existing customer undertaken. Covered persons shall assess their records and establish the required central database customers to determine who are likely to pose low, where these digitized records can be uploaded and normal, or high risk. retrieved (Section 3c). "Risk-Based Approach" refers to the process by Under the DIGICUR Guidelines, customer records which countries, competent authorities, and covered refer to: persons identify, assess, and understand the (a) Customer Due Diligence (CDD) ML/TF risks to which they are exposed, and take the records/documents such as customer appropriate mitigation measures in accordance with information files, copies of official identification the level of risk. This includes prioritization and documents or similar documents that establish efficient allocation of resources by the relevant key the true and full identify of customers; account players and stakeholders in applying AML/CTF files and business correspondences; results of measures in their operations in a way that ensures the covered person's analysis to establish the that they are commensurate with the risks involved. background and purpose of complex and large A covered institution shall develop clear, written transactions; and and graduated customer acceptance policies (b) Account transaction histories or statements of and procedures including a set of criteria for accounts, whether in Philippine pesos or other customers that are likely to pose low, normal or high currency (Section 2). risk to their operations as well as the standards in @SoraCPAOct2024 @studywithrachel  These documents must be digitized because they (5) Updating of Money Laundering and Terrorism form part of the CDD process for high-risk customers, Financing Prevention Program (MLTFPP) whose true and full identities must be determined following enhanced due diligence (EDD). To be more specific, CPs are required to: ✓ Establish and record the true identity of Beneficial Ownership Intended for Financial its clients based on official documents. Transparency (2018) Where an account is opened or a transaction is Money launderers, terrorists, criminal elements and a conducted by any person in behalf of another, number of high-ranking public figures have used CPs shall also establish and record the true and dummies or routinely use the cloak of anonymity full identity, and existence of both the account to prevent the AMLC and law enforcement holder or transactor, and the beneficial owner agencies (LEAs) to track them down. In the case or person on whose behalf the transaction is of the AMLC, they also seek to avoid freezing and being conducted. forfeiture of their assets obtained through criminal ✓ Maintain a system of verifying the true activities. identity of their clients and, in case of legal The Guidelines provide that covered persons must persons, require a system of verifying their legal identify beneficial owners. Covered persons must existence, organizational structure, as well as conduct the risks posed by the customer and the the authority and identification of all persons beneficial owners. If they pose a high risk for money purporting to act on their behalf, and of laundering or terrorism financing, validation of understanding the nature of the clients' information must be performed by the covered business; person. ✓ Establish appropriate systems and As part of customer due diligence (CDD), these methods, and adequate internal controls, standards require banks, other financial institutions compliant with the AMLA, and its and certain professions to identify not only the Implementing Rules and Regulations (IRR); customer with whom the transact but also the resolutions, directives and issuances of the beneficial owners. AMLC; and internationally accepted anti-money Beneficial Owner laundering and counter-terrorism Guidelines on - Refers to any natural person who: Identifying Beneficial Ownership — 10-23-18 (1) Ultimately owns or controls the Page 2 of 14 financing (AML/CTF) standards, for customer and/or on whose behalf a verifying and recording the true and full identity transaction or activity is being conducted; of their customers; and (2) Has ultimate effective control over a ✓ Grant immediate and full access to juridical person or legal arrangement; or authorized personnel of the AMLC the (3) Owns, at least, twenty percent (20%) Supervising Authorities (SAs), and the shares, contributions or equity interest in a Appropriate Secretariat, Government juridical person or legal arrangement. Agencies (AGAs), to all information, Note: Control includes whether the control is exerted documents or objects pertaining to the account, by means of trusts, agreements, arrangements, transaction and/or persons subject of an understandings, or practices, and whether or not the investigation. Provided that transaction individual can exercise control through making documents pertaining to specific deposits and decisions about financial and operating policies investments in banks shall be subject to the Beneficial Ownership Verification (BOV) is the provisions on bank inquiry under the AMLA, its process of taking reasonable measures to identify IRR, and issuances of the AMLC. CPs must and verify the beneficial owner, including the therefore identify the beneficial owners of determination of the true nature of the beneficial accounts and when requested, immediately give owner's capacities and duties vis-a-vis his agent, relevant beneficial ownership information to the nominee or trustee. AMLC Secretariat. Corporate Vehicles refers to legal persons and legal arrangements, as defined herein. Prohibited Accounts Ultimate Effective Control refers to a situation in IRR 2016 IRR 2018 which ownership/control is exercised through actual or The following accounts shall Section 1. Anonymous be prohibited and may be the Accounts and Accounts a chain of ownership or by means other than direct subject of the Supervising under Fictitious Names. control. Authorities' annual testing Basic Obligations of Covered Persons: for the sole purpose of - Covered persons shall (1) Customer Risk Assessment determining the existence maintain customers' a. CPs shall conduct a risk-based approach in and true identity of their account only in the true owners: and full name of the conducting CDD, depending on the type of account owner or customer. (a) Anonymous Accounts holder. (2) Determination of the identity of the beneficial and Accounts under - Anonymous accounts, owners of corporate vehicles and the existence Fictitious Names. accounts under fictitious of legal arrangements Covered persons shall names, and all other maintain customers' similar accounts shall be (3) Obtaining beneficial ownership information account only in the true absolutely prohibited. (4) Record Keeping and full name of the account owner or holder. @SoraCPAOct2024 @studywithrachel  Anonymous accounts, Section 2. Numbered Terrorism Financing (TF) as an extraditable accounts under fictitious Accounts. Offense - The Philippines may, at its option, subject names, and all other - Numbered accounts, to the principle of reciprocity, consider the similar accounts shall be except non-checking absolutely prohibited numbered accounts, International Convention for the Suppression of the (b) Numbered Accounts shall not be allowed. Financing of Terrorism as a legal basis for requesting except non-checking - CTRs (Covered or granting extradition in respect of any offenses set numbered accounts, Transaction Reports) forth under the TFPSA. shall not be allowed. and STRs (Sus involving non-checking numbered Note: Covered and accounts shall contain Anti-Money Laundering Council (AMLC) suspicious transaction the true name of the What is the composition of the AMLC/Council? reports involving non- account holder. It is composed of: checking numbered accounts - Governor of Bangko Sentral ng Pilipinas as shall contain the true name of the account holder. chairman, - Commissioner of Insurance Commission, and Prosecution of Offenses - Chairman of the Securities and Exchange Regional Trial Court. Commission. - The regional trial courts shall have jurisdiction Note: to try ML cases committed by private The AMLC shall act unanimously in the discharge individuals, and public officers NOT of its functions. covered by the jurisdiction of the AMLC is an Investigatory body, NOT a quasi- Sandiganbayan. judicial body (body that has power to decide). Its findings are merely recommendatory. Sandiganbayan. - The Sandiganbayan shall have jurisdiction to try What are the powers of the AMLC/Council? ML cases committed by public officers under - Under RA 9194, there are eleven powers given to its jurisdiction, and private persons who the AMLC, such as: are in conspiracy with such public officers. (1) To receive and require CTR and STR (2) To issue orders to Supervising Authority or May a person be charged with both the offense of covered institutions money laundering and of unlawful activity? (3) To institute civil/criminal forfeiture proceedings (4) To file complaints with the Department of ✓ Yes. As amended by RA 10365, Sec. 6 (a) provides Justice or Ombudsman for prosecution of that any person may be charged with and money laundering offenses. convicted of both the offense of money laundering (5) To investigate covered transactions, money and unlawful activity. laundering, and other violations of the Act. - It further states that the prosecution of any offense (6) To freeze monetary instruments or property or violation under the law shall proceed suspected of being unlawful proceeds. independently of any proceeding relating to (7) To implement measures to counteract money unlawful activity. laundering. - The elements of ML are separate and distinct from (8) To address requests from foreign states for anti- the elements of the associated unlawful activity. The money laundering assistance. elements of the unlawful activity, including the (9) To develop educational programs on money identity of the perpetrators and the details of the laundering's effects, methods, prevention, and commission of the unlawful activity, need NOT be prosecution. established by proof beyond reasonable doubt in the (10) To engage government entities for anti-money case for ML. laundering operations, including using their resources for prevention, detection, and Safe Harbor Provisions prosecution. No administrative, criminal or civil proceedings (11) To impose administrative sanctions for shall lie against any person for having made a violations of laws, rules, regulations, and related covered transaction report or a suspicious transaction orders and resolutions. report in the regular performance of his duties and in (12) Require LRA and ROD to submit reports good faith, whether or not such reporting results in - AMLC, as the country's financial intelligence any criminal prosecution under this Act or any other unit, is vested with the following powers and Philippine law. (IRR 2018) functions: (a) Central AML/CTF Authority (AML/CTF Extradition Supervisor and Enforcer) Money Laundering (ML) as an extraditable (b) Financial Intelligence Unit (National Center offense - ML is deemed to be included as an for Receipt and Analysis of CTRS and STRs) extraditable offense in any extradition treaty existing (c) ML/ TF Investigator (Financial Investigator) between said state parties, and the Philippines shall (d) Government Representative on ML/ TF include ML as an extraditable offense in every Cases (Initiator of Freeze Order Proceedings, extradition treaty that may be concluded between Initiator of Civil Forfeiture Proceedings, the Philippines and any of said state parties in the Complainant in ML/ TF cases) future. @SoraCPAOct2024 @studywithrachel  (e) Implementor of Targeted Financial - This new rule will not apply to pending cases in Sanctions court. (f) Asset Management Unit (Asset Manager) Only the Court of Appeals has the sole authority to issue the freeze order. Confidentiality and Security of Records and No court shall issue a temporary restraining Premises order or a writ of injunction against any freeze The Council and the officers and staff of the AMLC order, except the Supreme Court. shall securely protect information received or processed and shall not reveal, in any manner, any Note: DOJ files the case for private individuals & files it in information known to them by reason of their office. the RTC. Ombudsman files the case for public officials & This prohibition shall apply even after their files it in the Sandiganbayan. The Court of Appeals issues separation from the AMLC. the freeze order. The Supreme Courts issues TRO or writ The AMLC shall formulate rules governing of injunction or lifts it. information exchange and dissemination, the - The Court of Appeals shall resolve the petition to security and confidentiality of such information, freeze within twenty-four (24) hours from filing including procedures for handling, storage, and thereof. protection of, as well as access to such information, - The freeze order shall be effectively immediately and office premises, records and information technology shall NOT exceed six (6) months. systems. The AMIC shall establish controls and safeguards to Related Accounts ensure that information exchanged is used only for refer to accounts, the funds and sources of which the purpose for, and by the authorities, for which the originated from and/or are materially linked to information was requested or provided. Any further the monetary instrument(s) or property/properties dissemination of the information by the subject of the freeze order. (RA 10167, Sec. 2) requesting party to other authorities or third parties A court order ex parte must first be obtained before or any use of the information for administrative, the AMLC can inquire into related accounts. investigative, prosecutorial or judicial purposes beyond those originally approved shall be subject Materially Linked Accounts to prior authorization by the AMLC. All accounts or monetary instruments under the The AMLC shall NOT intervene or participate in name of the person whose accounts, monetary the operations of the Bureau of Internal Revenue. instruments, or properties are the subject of the The AMLC may coordinate with the BIR on freeze order or an order of inquiry; investigations in relation to Violations of Section 254 All accounts or monetary instruments held, owned, of the NIRC, as amended, as a predicate offense to or controlled by the owner or holder of the money laundering. accounts, monetary instruments, or properties subject of the freeze order or order of inquiry, Freeze Order whether such accounts are held, owned or controlled Purpose of Freeze Order: singly or jointly with another person; - The purpose of a freeze order is to give the All "In Trust For" accounts where either the government the necessary time to trustee or the trustor pertains to a person whose prepare its case and to file the appropriate accounts, monetary instruments, or properties are charges without having to worry about the the subject of the freeze order or order of inquiry; possible dissipation of the assets that are in any All accounts held for the benefit or in the way related to the suspected illegal activity. interest of the person whose accounts, monetary - It is not dependent on a separate criminal instruments, or properties are the subject of the charge, much less does it depend on a freeze order or order of inquiry; conviction. All accounts of juridical persons or legal - The Rules on freeze orders seek to balance the arrangements that are owned, controlled or State's interest in going after suspected money ultimately effectively controlled by the natural launderers with an individual's constitutionally- person whose accounts, monetary instruments or protected right not to be deprived of his properties are subject of the freeze order or order of property without due process of law, as well as inquiry, or where the latter has ultimate effective to be presumed innocent until proven guilty. control; and Freeze order of monetary instrument or property All other accounts, shares, units, or monetary related to unlawful activity is made: instruments that are similar, analogous, or - Verified ex parte petition by the AMLC, through identical to any of the foregoing. Solicitor General; - If there is probable cause, CA will issue a freeze Numbered Accounts (IRR 2018) order effective immediately; Peso and foreign currency non-checking - The freeze order shall NOT exceed 6 numbered accounts shall be allowed: Provided, months; That the true identity of the customers of all - A case must be filed against the person, if none, peso and foreign currency non-checking numbered the freeze order shall be deemed ipso facto accounts are satisfactorily established based on lifted; official and other reliable documents and records, and that the information and documents required @SoraCPAOct2024 @studywithrachel  under the provisions of these Rules are obtained and - NO court order shall be required for the recorded by the covered institution. No peso and examination of bank deposits by AMLC in cases foreign currency non-checking accounts shall be involving: allowed without the establishment of such identity (a) Kidnapping for ransom and in the manner herein provided. Provided, (b) Comprehensive Dangerous Drugs Act further, that covered and suspicious transaction (c) Hijacking reports involving peso and foreign currency non- (d) Destructive Arson and Murder checking numbered accounts submitted to the AMLC (e) Felonies punishable under penal laws of other pursuant to Rule 7.b.1 of these Rules shall contain countries the true name of the account holder. The BSP may (f) Terrorism and conspiracy to commit terrorism conduct annual testing for the purpose of (g) Financing of Terrorism determining the existence and true identity of the owners of such accounts. The SEC and the Penalties: IC may conduct similar testing more often than once What are the penal provisions under RA 9160? a year and covering such other related purposes as For Crime of Money Laundering: may be allowed under their respective charters. - Imprisonment 7 – 14 years - Fine of not less than ₱3 Million but not more Freeze Order for Related and Materially Linked than twice the value of monetary instrument Accounts involved in the offense Considering the intricate and diverse web of interlocking accounts that a person may create in For aids, abets, assists in or counsels the different covered persons, and the high probability commission of the money laundering that these accounts are utilized to divert, move, offenses” & “performs or fails to perform any conceal, and disguise the monetary instrument or act as a result of which he facilitates the property subject of the freeze order, the AMLC may offense of money laundering include in its petition the freezing of related and - Imprisonment 4 – 7 years materially linked accounts. - Fine of ₱1.5 Million – ₱3 Million What is the remedy of a person whose account has For “performs or fails to perform any act as a been frozen? result of which he facilitates the offense of File a motion to lift the freeze order and the court money laundering” and “Malicious Reporting must resolve this motion before the expiration of the - Imprisonment 6 months – 4 years freeze order. - Fine of ₱100,000 – ₱500,000 Note: The Court of Appeals can lift it but the Supreme Court can issue RTO, adverse to the said freeze order. There is also Imposition of Administrative Sanctions. The imposition of administrative Bank Inquiry sanctions shall be without prejudice to the filing of Is AMLC authorized to inquire into bank deposits? criminal charges against the persons responsible for ✓ Yes. AMLC may inquire into or examine upon order the violation. of any competent court when there is probable cause that the deposit or investments involved are in For “Failure to Keep Records” any way related to a money laundering offense. - Imprisonment 6 months – 1 year (Section 11, RA 9160) upon ex parte application in - Fine of ₱100,000 – ₱500,000 cases of violation of AMLA. - Probable Cause - refers to such facts and For “Malicious Reporting” circumstances which would lead a reasonably - Imprisonment 6 months – 4 years discreet, prudent, or cautious man to believe - Fine of ₱100,000 – ₱500,000 that: (1) any monetary instrument or property For “Breach of Confidentiality” and “Breach of sought to be frozen, inquired into or Information Security and Confidentiality” preserved is in any way related to any - Imprisonment 3 – 8 years unlawful activity and/or money laundering - Fine of ₱500,000 – ₱1,000,000 offense; or (2) ML/TF has been committed and that the What are the penalties imposable? respondent is probably guilty thereof. Fines and imprisonment for conviction of money - The Court of Appeals shall resolve the application laundering offense; within 24 hours from filing thereof. Civil and criminal forfeiture of monetary instrument or property; Under what circumstances is AMLC authorized to Convicted offender to pay an amount equal to the inquire into bank deposits? value of monetary instrument or property ordered - Only upon order of competent court in case violation forfeited when order of forfeiture cannot be effected. of the law, when there is probable cause that the deposits or investments are related to an unlawful Other Pertinent Rules: activity or money laundering offense. A. AMLA Civil Forfeiture provisions AMLC files though OSG @SoraCPAOct2024 @studywithrachel  Claim on forfeited assets Terrorism Financing and Prevention and Payment in lieu of forfeiture Suppression Act (RA 10168) Financing of terrorism – Any person who B. Supreme Court's Civil Forfeiture Rules knowingly and intentionally possesses, provides, Only AMLC, through Office of the Solicitor collects, or uses property or funds to carry out, General may institute facilitate, or support a terrorist act, organization, or Venue is in the RTC where the monetary individual shall be guilty of financing terrorism. They instruments are located will face a penalty of reclusion temporal in its Petition must be acted upon within 24 hours maximum period to reclusion perpetua, and a fine of ₱500,000 – ₱1,000,000. Note: This law must NOT be applied in a way that Forfeiture refers to a court order transferring in discriminates against any individuals based on political favor of the government, after due process, exposure, religion, race, ethnicity, or similar attributes. ownership of property or funds representing, Discriminatory acts by banks, financial institutions, or involving, or relating to financing of terrorism. entities will lead to sanctions imposed by their regulators. Criminal Forfeiture - Shall apply to all criminal actions before any court involving the predicate Human Security Act (RA 9372) offenses. Prosecution may pursue the remedy of Terrorism — Any person who commits an act asset forfeiture by making the necessary allegation punishable under any of the following provisions of in the Information that it will proceed against the the Revised Penal Code: subject/proceeds/fruits/any property used in the (a) Article 122 (Piracy in General and Mutiny in the commission of the crime High Seas or in the Philippine Waters); Civil Forfeiture (CF) refers to the non-conviction- (b) Article 134 (Rebellion or Insurrection); based proceedings aimed at forfeiting, in favor of the (c) Article 134-a (Coup d'Etat), including acts government, monetary instruments or properties committed by private persons; related to an unlawful activity or money laundering (d) Article 248 (Murder); offense defined herein. (e) Article 267 (Kidnapping and Serious Illegal Freeze refers to the blocking or restraining of Detention); specific property or funds from being transacted, (f) Article 324 (Crimes Involving Destruction), or converted, concealed, moved or disposed without under: affecting the ownership thereof. (1) Presidential Decree No. 1613 (The Law on Freeze Order (FO) refers to a provisional remedy Arson); aimed at blocking or restraining monetary (2) Republic Act No. 6969 (Toxic Substances instruments or properties in any way related to an and Hazardous and Nuclear Waste Control unlawful activity, as herein defined, from being Act of 1990); transacted, converted, concealed, moved or (3) Republic Act No. 5207, (Atomic Energy disposed without affecting the ownership thereof Regulatory and Liability Act of 1968); AMLC is authorized to investigate property or funds (4) Republic Act No. 6235 (Anti-Hijacking (without a court order) that are in any way related Law); to financing of terrorism or acts of terrorism (5) Presidential Decree No. 532 (Anti-Piracy OR the property or funds of any person or persons in and Anti-Highway Robbery Law of 1974); relation to whom there is probable cause that such (6) Presidential Decree No. 1866, as amended person is involved in the acts of terrorism (Sec. 10, (Decree Codifying the Laws on Illegal and RA 10168) Unlawful Possession, Manufacture, Dealing AMLC, either upon its own initiative or at request of in, Acquisition or Disposition of Firearms, the Anti-Terrorism Council, further authorizes to Ammunitions or Explosives) issue an ex parte order to freeze accounts thereby sowing and creating a condition of without delay. Freeze order shall be for a period of widespread and extraordinary fear and 20 days, unless extended by the CA up to a panic among the populace, in order to coerce period not exceeding six (6) months upon the government to give in to an unlawful petition by the AMLC. demand shall be guilty of the crime of terrorism. The State aims to protect life, liberty, and property from terrorism, viewing it as a threat to national security and public welfare. Terrorism is declared a crime against Filipinos, humanity, and the law. Under certain conditions, the State can examine and sequester deposits. The Court of Appeals, as a special court for anti- terrorism cases, may authorize law enforcement to examine bank deposits, trust accounts, and other financial records (Section 27, HAS). @SoraCPAOct2024 @studywithrachel