Anti-Money Laundering In order to implement its continued commitment and support of the global fight against money laundering,

the BSP has issued a number of measures to bring the Philippines' regulatory regime on money laundering closer to international standards. In September 2001, the Anti-Money Laundering Act (AMLA) of 2001 was passed. The legislation, among others, defines money laundering as a criminal offense, prescribes penalties for such crimes committed and forms the foundation of a central monitoring and implementing council called the Anti-Money Laundering Council (AMLC). The AMLC is composed of the Governor of the Bangko Sentral as Chairman and the Commisioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as members. It acts unanimously in the discharge of its functions. To address concerns such as the high threshold level for covered transactions, the coverage of covered institutions and the existing Bank Secrecy Law, the amendments to the AMLA were signed into law on 7 March 2003. The amendments included the following: a) lowering the threshold for covered transactions from P4.0 million to P500,000; b) authorizing the BSP to inquire or examine any deposit or investment with any banking institution without court order in the course of a periodic or special examination; and c) removing the provision prohibiting the retroactivity of the law. With the approval of the law incorporating these amendments, the Financial Action Task Force sanctions on non-complying countries were not imposed on the Philippines. However, the Philippines at that time remained in the list of non-cooperative countries and territories (NCCTs). The countrys removal from the list will be determined by the FATF after close monitoring of the implementation issues. The revised implementing rules and regulations (IRR) on the AMLA of 2001 as amended was approved by the Congressional Oversight Committee on 6 August 2003 and was implemented on 3 September 2003. In October 2003, the Philippines amendments to the AMLA were evaluated by the FATF and were found to be at par with international standards. On 11 February 2005, the Philippines, Cook Islands, and Indonesia were removed from the list of NCCTs during the meeting of the FATF. After the countrys delisting from the list of NCCTs, the AMLC of the Philippines is now one of seven new members of the Egmont Group, the global network of FIUs against money laundering and terrorist financing, making the Philippines an equal partner in the global fight against money laundering and terrorist financing. Membership to the Egmont Group means affording AMLC free and unlimited access to a wealth of financial data contained in the databases of all the FIU-members of the group. All information exchanged by FIUs are subjected to strict controls and safeguards to ensure it is used only in an authorized manner, consistent with national provisions on privacy and data protection.

AMLA AT A GLANCE Rationale for Enacting the Law The Philippines, while striving to sustain economic development and poverty alleviation through, among others, corporate governance and public office transparency, must contribute its share and play a vital role in the global fight against money laundering. Hence, the compelling need to enact responsive antimoney laundering legislation in order to establish and strengthen an anti-money laundering regime in the country which will not only increase investors confidence but also ensure that the Philippines is not used as a site to launder proceeds of unlawful activities. History of the Act Republic Act No. 9160 otherwise known as The Anti-Money Laundering Act of 2001 was signed into law on September 29, 2001 and took effect on October 17, 2001 . The Implementing Rules and Regulations took effect on April 2, 2002 . On March 7, 2003 , R.A. No. 9194 (An Act Amending R.A. No. 9160) was signed into law and took effect on March 23, 2003 . The revised Implementing Rules and Regulations took effect on September 7, 2003 . Salient Features

Criminalizes money laundering Creates a financial intelligence unit Imposes requirements on customer identification, record keeping and reporting of covered and suspicious transactions Relaxes strict bank deposits secrecy laws Provides for freezing/seizure/forfeiture/recovery of dirty money/property Provides for international cooperation

Money Laundering is a crime whereby the proceeds of an unlawful activity as defined in the AMLA are transacted or attempted to be transacted to make them appear to have originated from legitimate sources. Money Laundering Offenses and Penalties

Knowingly transacting or attempting to transact any monetary instrument/property which represents, involves or relates to the proceeds of

an unlawful activity. Penalty is 7 to 14 years imprisonment and a fine of not less than P3M but not more than twice the value of the monetary instrument/property.

Knowingly performing or failing to perform an act in relation to any monetary instrument/property involving the proceeds of any unlawful activity as a result of which he facilitated the offense of money laundering. Penalty is 4 to 7 years imprisonment and a fine of not less than P1.5M but not more than P3M. Knowingly failing to disclose and file with the AMLC any monetary instrument/property required to be disclosed and filed. Penalty is 6 months to 4 years imprisonment or a fine of not less than P100,000 but not more than P500,000, or both.

Unlawful Activity is the offense which generates dirty money. It is commonly called the predicate crime. It refers to any act or omission or series or combination thereof involving or having direct relation to the following: Predicate Crimes/Unlawful Activities

Kidnapping for ransom Drug trafficking and related offenses Graft and corrupt practices Plunder Robbery and Extortion Jueteng and Masiao Piracy Qualified theft Swindling Smuggling Violations under the Electronic Commerce Act of 2000 Hijacking; destructive arson; and murder, including those perpetrated by terrorists against non-combatant persons and similar targets Fraudulent practices and other violations under the Securities Regulation Code of 2000

Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.

Other Offenses/Penalties

Failure to keep records is committed by any responsible official or employee of a covered institution who fails to maintain and safely store all records of all transactions of said institution, including closed accounts, for five (5) years from the date of the transaction/closure of the account. Penalty is 6 months to 1 year imprisonment or a fine of not less than P100,000 but not more than P500,000, or both. Malicious reporting is committed by any person who, with malice or in bad faith, reports/files a completely unwarranted or false information relative to money laundering transaction against any person. Penalty is 6 months to 4 years imprisonment and a fine of not less than P100,000 but not more than P500,000, at the discretion of the court. The offender is not entitled to avail the benefits of the Probation Law. If the offender is a corporation, association, partnership or any juridical person, the penalty shall be imposed upon the responsible officers, as the case may be, who participated in, or allowed by their gross negligence, the commission of the crime. If the offender is a juridical person, the court may suspend or revoke its license. If the offender is an alien, he shall, in addition to the penalties prescribed, be deported without further proceedings after serving the penalties prescribed. If the offender is a public official or employee, he shall, in addition to the penalties prescribed, suffer perpetual or temporary absolute disqualification from office, as the case may be.

Breach of confidentiality. When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers/employees are prohibited from communicating directly or indirectly, in any manner or by any means, to any person/entity/media, the fact that such report was made, the contents thereof, or any other information in relation thereto. In case of violation thereof, the concerned official and employee of the covered institution shall be criminally liable. Neither may such reporting be published or aired in any manner or form by the mass media, electronic mail or other similar devices. In case of a breach of confidentiality published or reported by media, the

responsible reporter, writer, president, publisher, manager and editor-in-chief shall also be held criminally liable. Penalty is 3 to 8 years imprisonment and a fine of not less than P500,000 but not more than P1M. Covered Institutions Covered Institutions are those mandated by the AMLA to submit covered and suspicious transaction reports to the AMLC. These are:

Banks and all other entities, including their subsidiaries and affiliates, supervised and regulated by the Bangko Sentral ng Pilipinas Insurance companies and all other institutions supervised or regulated by the Insurance Commission Securities dealers, pre-need companies, foreign exchange corporations and other entities supervised or regulated by the Securities and Exchange Commission

Covered & Suspicous Transactions

Covered transactions are single transactions in cash or other equivalent monetary instrument involving a total amount in excess of Five Hundred Thousand (P500,000) Pesos within one (1) banking day Suspicious transactions are transactions with covered institutions, regardless of the amounts involved, where any of the following circumstances exists:

there is no underlying legal/trade obligation, purpose or economic justification; the client is not properly identified; the amount involved is not commensurate with the business or financial capacity of the client; the transaction is structured to avoid being the subject of reporting requirements under the AMLA; there is a deviation from the clients profile/past transactions; the transaction is related to an unlawful activity/offense under the AMLA;

and transactions similar or analogous to the above.

Freezing of Monetary Instrument or Property The Court of Appeals, upon application ex parte (without notice to the other party) by the AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity, may issue a freeze order which shall be effective immediately. The freeze order shall be for a period of 20 days unless extended by the court. Authority to Inquire into Bank Deposits Notwithstanding the provisions of R.A. No. 1405, as amended, R.A. No. 6426, as amended, R.A. No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any competent court in cases of violation of this act when it has been established that there is probable cause that the deposits/investments are involved/related to an unlawful activity as defined in Sec. 3(i) of the AMLA or a money laundering offense under Sec. 4 thereof; except that no court order shall be required in cases involving kidnapping for ransom; drug trafficking and related offenses; and hijacking, destructive arson and murder, including those perpetrated by terrorists against non-combatant persons and similar targets.

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 person involved in money laundering activities wherever committed.

Organization The Anti-Money Laundering Council is composed of the Governor of the Bangko Sentral ng Pilipinas (BSP) as Chairman and the Commissioner of the Insurance Commission (IC) and the Chairman of the Securities and Exchange Commission (SEC) as members. It acts unanimously in the discharge of its functions. The AMLC is assisted by a Secretariat headed by an Executive Director and consists of four (4) units; the Compliance and Investigation Group (CIG), the Legal Evaluation Group (LEG), the Information Management and Analysis Group (IMAG) and the Administrative and Financial Services Division (AFSD).

Functions

Requires and receives covered or suspicious transaction reports from covered institutions (banks and all other institutions and their subsidiaries and affiliates supervised or regulated by BSP; insurance companies and all other institutions supervised or regulated by the IC; and securities dealers and other entities supervised or regulated by the SEC); Issues orders addressed to the appropriate Supervising Authority (the BSP, IC or SEC) or the covered institution to determine the true identity of the owner of any monetary instrument/property subject of a covered or suspicious transaction report or request for assistance from a foreign State, or believed by the AMLC, on the basis of substantial evidence, to be representing, involving, or related to the proceeds of an unlawful activity; Institutes civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General; Causes the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money laundering offenses; Investigates suspicious transactions and covered transactions deemed suspicious after an investigation by AMLC, money laundering activities, and other violations of the AMLA; Applies before the Court of Appeals, ex parte, for the freezing of any

monetary instrument/property alleged to be proceeds of any unlawful activity as defined in the AMLA;

Implements such measures as may be necessary and justified to counteract money laundering; Receives and takes action in respect of any request for assistance from foreign states in their own anti-money laundering operations; Develops educational programs on the pernicious effects of money laundering, the methods and techniques used in money laundering, the viable means of preventing money laundering and the effective ways of prosecuting and punishing offenders; Enlists the assistance of any branch, department, bureau, office, agency or instrumentality of the government, including government-owned and controlled corporations in undertaking any and all anti-money laundering operations, which may include the use of its personnel, facilities and resources for the more resolute prevention, detection and investigation of money laundering offenses and prosecution of offenders; Imposes administrative sanctions for the violation of laws, rules, regulations and orders and resolutions issued pursuant thereto; and Examines or inquires into bank deposits/investments upon order of any competent court in cases of violation of the AMLA, when it has been established that there is probable cause that the deposits/investments are related to an unlawful activity. No court order, however, is necessary in cases involving kidnapping for ransom; narcotics offenses; and hijacking, destructive arson and murder, including those perpetrated by terrorists against non-combatant persons and similar targets.

To ensure compliance with AMLA, the BSP may inquire into or examine any deposit or investment with any banking institution or non-bank financial institution when the examination is made in the course of a periodic or special examination in accordance with the rules of examination of the BSP.