Chap 11 Anti- Money Laundering ( RA 9160)

I. CONCEPTS
A. Policies
i. To protect and preserve the integrity and confidentiality of bank accounts
ii. Ensure that the Philippines shall not be used as a money laundering site for
the proceeds of any unlawful activity.
iii. Cooperation in transnational investigation and prosecution of persons
involved in money laundering
B. Covered Institutions
i. Banks, non-banks, quasi-banks, trust entities ad all other institutions
regulated by the BSP
ii. Insurance companies and all other institutions regulated by the insurance
commission
iii. Securities, brokers, salesmen, investment house and other entities
managing securities or service as agent, advisor, consultant
iv. Mutual funds, closed-end investment company, common trust fund and pre-
need companies
v. Foreign exchange corporations, money changers, money payments,
remittance, and transfer companies
vi. Those administering or dealing in currency, commodities, financial
derivatives or other monetary instruments or property supervised by the SEC

C. Covered and Suspicious transaction

i. Transaction in cash or monetary instrument exceeding P500,000 in one banking day
ii. Suspicious transactions regardless of the amount
a. No legal or trade obligation, purpose or economic justification b. Client is not properly identified
c. Amount is not commensurate with the clients financial capacity d. Structured transactions to avoid
being the subject of reporting
required under the act
e. Those which deviate from the profile of the client or past transactions
f. Related to any unlawful activity or offense
g. Any transaction that is similar to any of the foregoing
D. Monetary instrument
i. Coins/currency of legal tender of the Phil. Or any country ii. Drafts, checks and notes
iii. Securities or negotiable instruments, bonds, commercial papers, deposit certificates, trust certificates,
custodial receipts, trading orders, transaction tickets, confirmation of sale money market instruments
iv. Other similar instruments when title passes to another by endorsement, assignment or delivery
E. Unlawful Activities
Kidnapping for ransom under Art.267 of RPC
Secs. 4-6, 8-10, 12-16 of the Dangerous Drugs Act of 2002
23 Sec.3 par b, c, e, g, h, I of the Anti-Graft and Corrupt Practices Act
24 Plunder under RA 7080
25 Robbery and extortion under Arts. 294-296, 299-302 of the RPC
26 Jueteng and Masiao under PD 1602
27 Piracy on high seas under RPC and PD 532
28 Qualified theft under Art.310 of RPC
29 Swindling under Art.315 of RPC
30 Smuggling under RA 455 and 1937
31 Violations of Electronic Commerce Act of 2000
32 Hijacking and other violations of RA 6235
33 Destructive arson and murder under RPC
34 Fraudulent practices under Securities Regulation Code of 2000
35 Felonies or offenses of similar nature punishable under penal laws of other countries

Money Laundering Offense- is a crime whereby the proceeds of an unlawful activity are transacted, thereby making
them appear to have originated from legitimate sources. It can be committed by the ff:

23 Any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of
any unlawful activity, transacts or attempts to transact said monetary instrument or property
24 Any person knowing any monetary instrument or property represents, involves, or relates to, the proceeds of
any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of money
laundering referred to above
25 Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-
Money Laundering Council, fails to do so
II. Jurisdiction and Prosecution

Jurisdiction
23 Private persons- RTC
24 Public persons and private persons in conspiracy with the former-Sandiganbayan
Prosecution
23 Any person may be charged of both money laundering and the unlawful activity
24 Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or
violation w/o prejudice to the freezing and other remedies

III. Anti-Money Laundering Council

Composition
23 Governor of he BSP as chairman
24 Commissioner of the Insurance Commission
25 Chairman of the SEC
26
Functions
23 Require and receive covered or suspicious transaction reports from covered institutions
24 Issue orders addressed to the supervising authority of the institution to determine the true owner of a covered or
suspicious transaction report or request assistance on the basis of substantial evidence
25 Institute civil forfeiture proceedings through the OSG
26
Cause the filing of complaints with the DOJ or Ombudsman
Investigate suspicious and covered transactions
Apply before the CA ex parte, for the freezing of any monetary instrument or property
Implement measures as may be necessary to counteract money laundering
Receive and take action any request of assistance from foreign states in their own anti-money laundering
operations
Develop educational programs on the effects, methods, and means to prevent money laundering
Enlist assistance from government instrumentality for any anti-money laundering operation
Impose administrative sanctions for violation of laws, rules, regulations and orders issued pursuant thereto
Establish a secretariat:
23 Member of the Bar
24 35 years of age
25 GMC
26 Unquestionable integrity and known probity

IV. Prevention of Money Laundering

Customer Identification
23 Institutions shall establish and record the true identity of its clients based on office documents
24 Maintain a system of verifying the identity and legal existence of their clients
25 Anonymous, fictitious an similar accounts are prohibited
26 Peso and foreign currency non-checking accounts shall be allowed which will be subject to test by the BSP to
determine the existence and identity of the owners
27
Record Keeping
23 Records of transactions shall be maintained and stored from 5 years from the date of transaction
24 For closed accounts, its records shall also be stored for 5 years from the date it was closed
25
Reporting of Covered and Suspicious Transaction
23 Shall be reported to AMLC within 5 working days from the occurrence thereof, unless supervising
authority prescribes a longer period not exceeding 10 days
24 Should a transaction be determined a a covered and suspicious transaction, it shall be required to report the
same
25 Such reporting shall not be considered as a violation of RA 1405, RA 6426, RA 8791, but are prohibited to
communicate to any other person
26 In case of violation of the prohibition above, they shall be criminally liable
27 Reporting to the AMLC is also prohibited to be disclosed to the media or any other person or entity
Freezing of Monetary Instrument or Property
23 To the CA, upon application ex parte by the AMLC and after determination that probable cause exists, may
issue a freeze order
24 Such order shall be for 20 days unless extended by the Court
Authority to inquire into bank deposits
23 The AMLC may inquire upon order of any competent court when it has been established that:
There is probable cause that the deposit or investment s related to any unlawful activity; or
A money laundering offense
No court order shall be required in the following activities
 23 Kidnapping for ransom
24 Violations of Dangerous Drug Act of 2002
25 Hijacking and other violations of RA 6235
26 Destructive arson and murder including those perpetrated by terrorists

Forfeiture

23 Civil forfeiture
When there is a report made, and the Court, in a petition filed for the purpose of seizure, the Rules of Court
on civil forfeiture applies
24 Claim on Forfeiture Assets
Those claiming an interest may apply, by verified petition, for a declaration that the seized instrument or property
legitimately belongs to him and pray for the segregation and exclusion
It shall be filed with the court which rendered the judgment of forfeiture within 15 days from the order of
forfeiture
25 Payment in lieu of forfeiture
Is allowed because forfeiture cannot be enforced due to the ff:
3 With due diligence, it cannot be located
4 Substantially altered, destroyed, diminished in value or rendered worthless by any act or omission
attributable to the offender
5 Concealed, removed, converted or transferred to prevent from being found or avoid forfeiture
6 Located outside the Philippine or outside the jurisdiction of the court
7 Commingled with other instrument or property rendering it difficult to be identified or segregated

VI. Mutual assistance among states

Request for assistance from a foreign state

23 The AMLC may execute or refuse to execute such request and inform the state of any valid reason for not
executing such request
Powers of the AMLC to act on a request for assistance
23 May execute a request by:
Tracking down, freezing, restraining and seizing assets
Give information needed
Apply for an order of forfeiture
24 Court will issue such order only when accompanied by:
Authenticated copy of the order of a court in the requesting state ordering the forfeiture
Certification or affidavit of a competent officer of the requesting stat that the conviction and order of
forfeiture are final
Obtaining assistance from foreign state
23 Tracking down, freezing, restraining and seizing assets
24 Obtain info that it needs relating to covered transaction and money laundering offense
25 Enter into the premises belonging to or in the possession of the persons named in the request, to the extent
allowed by the law of the foreign state
26 Apply for an order of forfeiture and must be accompanied by the order of the RTC and an affidavit of the Clerk
of Court that the conviction and forfeiture are final
Limitations on request
23 When it contravenes the constitution
24 Prejudicial to the interest of the Philippines
Except: if there is a treaty between the Phil. And the requesting State relating to the provisions of
assistance in money laundering offense
Requirement for request from a foreign state
23 Confirm that an investigation or prosecution is being conducted
24 State the grounds on which any person is being investigated or prosecuted for
25 Give sufficient particulars as to the identity of the person
26 Give particulars sufficient to identify the institution believed to have any info
27 Ask from the institution for any info which may be of assistance to the investigation or prosecution
28 Specify the manner in which such info will be obtained or produced
29 Give all the particulars necessary for the issuance by the court in the requested state of the orders
needed by th requesting state
30 Contain other info as may assist in the execution of the request
Authentication of documents
23 Signed or certified by a judge or equivalent officer in or of the requesting state
24 Authenticated by the oath or affirmation of a witness or sealed with an official seal of a minister or secretary
of the government of the requesting state
25 By the secretary of embassy, consul general, consul or any officer in the foreign service of the Philippines
stationed in the foreign state
Extradition
23 Negotiate for the inclusion of money laundering offenses among extraditable offenses

VII. Penalties
 Crime of money laundering
23 Any person knowing that any monetary instrument or property represents, involves, or relates to, the
proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property
Imprisonment of 7 to 14 years and a fine not less than P3M
24 Any person knowing any monetary instrument or property represents, involves, or relates to, the proceeds
of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of
money laundering referred to above
4-7 years and fin not less than P1.5M not more than P3M
25 Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-
Money Laundering Council, fails to do so
6m-4years or fine not less than P100,000 not more than P500,000, or both
Failure to keep records
23 6m-1year or fine not less than P100,000 not more than P500,000, or both
Malicious reporting
23 Any person who, with malice or bad faith, reports a completely unwarranted or false info relative to money
laundering
6m-4years and a fine not less than P100,000 not more than P500,000
If corporation- upon the responsible officers
Juridical person- suspend or revoke its license
Alien- deportation
Public official- perpetual or temporary absolute disqualification from office
Public official who refuses to testify- same penalties above
Breach of Confidentiality
23 3-8years and fine P500,000- P1M
24 If disclosed to media- reporter, writer, publisher, manager, editor

VIII. Prohibitions against political harassment

shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and
commerce
no case may be filed against and no assets shall be frozen or forfeited to the prejudice of a candidate for electoral office during
election period

IX. Implementing rules and Regulations

23 The BSP, IC, and SEC shall promulgate rules to effectively implement this Act. These rules shall be submitted to the
congressional oversight committee for approval.
24 Covered institutions shall formulate their own prevention programs

X. Congressional Oversight Committee

Composition
3 7 members from the Senate and 7 members from the House of Representatives
4 Shall be appointed by the Senate President and the Speaker, respectively, based on proportional
representation of parties
Powers
3 Power to promulgate rules to overse the implementation of the law and to review and revise the rules issued
by the AMLC within 30 days from promulgation

XI. Rules and Regulation for banks and non-financial institutions to combat money laundering

25 Take reasonable measures to establish and record the true identity and legal existence of their clients
26 in case of doubt, obtain the true identity of the persons on whose behalf an account is opened
27 anonymous or fictitious accounts should not be allowed
28 identity of clients should be updated
29 necessary records of transactions should be maintained
30 special attention should be given to complex, unusual large transactions and all unusual patterns of transaction
31 other suspicious transactions not involving deposit should be reported
32 Banks should avoid business with criminals
33 Programs against money laundering- employee training, audit function, development of internal policies.

Distribution of Assets
Before any distribution of assets of the closed bank, PDIC shall charge against such assets:

Reasonable receivership expenses (subject to approval of court)

Reasonable liquidation expenses

After payment of all liabilities and claims against closed bank, PDIC shall pay any surplus dividends at the legal rate of
interest from the date of takeover to the date of distribution, to creditors and claimants in accordance with legal
priority before distribution to the shareholders.
XIV. Payment of Insured Deposits
Manner of Payment

23 Whenever an insured bank shall have been closed by the Monetary Board, payment of the insured deposits
on such closed banks shall be made by the PDIC by:

Cash

Transferred deposit

24 Transfer deposit deposit in an insured bank made available to a depositor by PDIC as payment of insured
deposit of such depositor in a closed bank. Not to exceed two hundred fifty thousand (250,000)

25 A joint account shall be insured separately from any individually owned deposit account.

26 Maximum insured deposits of Joint accounts shall be divided into as many equal shares as there are co-
owners, unless a different sharing is stipulated in the document of deposit.

27 If an account is held by a juridical person jointly with an individual, it is presumed that the maximum insured
deposit belongs to the juridical person.

28 The aggregate of the interests of each co-owner over several joint accounts shall likewise not exceed 250,000

29 No owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights
provided unless his name is registered in the books of the issuing bank.

Proof of Claims

23 PDIC may require proof of claims to be filed before paying the insured deposits.

24 It may require final determination by the courts if not satisfied to the viability of the claim.

25 Settlement Period and Penalties in Case of Failure to Settle Failure to settle claim within six months from the date
of filing claim due to grave abuse of discretion, gross negligence, bad faith, or malice shall subject the directors,
employees, or officers of PDIC Responsible for the delay to imprisonment from six months to one year.

26 Period shall not apply if the validity of the claim depends on resolution of issues of fact or law by another office.

27 Upon payment to such depositor, PDIC shall be subrogated to all of the rights of the depositor to the extent of
such payment.

28 Such subrogation shall include the right to receive the same dividends from the proceeds of the assets of the closed
bank. But such depositor shall retain his claim for any uninsured portion of his deposit.

Notice

23 PDIC shall commence the determination of insured deposits due to depositors of the closed bank upon its actual takeover
of the closed bank.

24 PDIC shall publish the notice once a week for at least 3 consecutive weeks in a newspaper of general circulation or
newspaper circulated in the community where the closed bank or its branches are located.

Discharge

Payment of an insured deposit shall discharge PDIC. And payment of a transferred deposit by the new bank in which
a transferred deposit has been made available shall discharge PDIC and the new bank.

Recognition of Owner

PDIC cannot recognize as the owner any person, whose name or interest as such owner is not disclosed on the
records of a closed bank, as part owner of any portion of a deposit appearing on the records of the closed bank
under a name other than that of the claimant.

Withholding of Payment
 PDIC may withhold payment of such portions of the insured deposit of any depositor in a closed bank as may be
required to provide for the payment of any liability of such depositor as a stockholder of the closed bank, or any
liability of such depositor to the closed bank or to its receiver, which is not offset against a claim due from such bank,
pending the determination and payment of such liability by such depositor or any other liable therefore.

Prescription

All rights of a depositor with respect to the insured deposit shall be barred if:

He fails to file a claim within two years from actual take-over of the closed bank by the receiver.
Or does not enforce his claim within two years after the filing a claim Unless otherwise waived by
PDIC.

All rights of the depositor subrogated to PDIC shall thereupon revert back to the depositor. PDIC shall be
discharged from any liability.
XV. Investment by PDIC
Money of the PDIC not otherwise employed shall be invested in obligations of the Republic of the Philippines or by
obligations guaranteed by it.

23 It shall not sell or purchase any such obligation for its own account or in its own right and interest in any one
time aggregating in excess of 100,000 without approval of the Insurance Commissioner.

24 Insurance Commissioner may waive the requirement of his approval as he may determine.

The banking or checking account of PDIC shall be kept in:

23 BSP

24 PNB

25 Any bank designated as fiscal agent or depository of RP

XVI. Extension of Loans

In order to prevent an insured bank from closing, PDCI may make loans, purchase the assets, assume liability, or make
deposits in such insured bank, upon such conditions as the Board of Directors may prescribe, the operations of such bank
is essential to provide adequate banking service in the community or maintain financial stability in the economy.

23 Such power may also be exercised in case of a closed insured bank if:

the resumption of the operations of said bank is vital to the interest of the community

Severe financial climate exists

24 Reopening of said bank is subject to the approval of the Monetary Board.

PDIC may provide any corporation acquiring control of, merging or consolidating with or acquiring the assets of an insured
bank in order to prevent such closing or of a closed insured bank in order to restore it to normal operation
23 Within 60 days from date of assistance, PDIC shall submit a report to MB

PDIC shall determine the actual payoff and liquidation thereof will be more expensive than the exercise of its power prior to
exercise of its powers.

PDIC may grant financial assistance to insured banks, with systemic consequences with a probable failure or closure, as
may be necessary to prevent its failure or closure. subject to the approval of the Monetary Board.
 23 systemic risk possibility that failure of one bank to settle net transactions with other banks will trigger a chain
reaction, depriving other banks of funds leading to a general shutdown of normal clearing and settlement
activity.

Likelihood of a sudden unexpected collapse of confidence in a significant portion of the

banking or financial system with potentially large real economic effects.

PDIC may not purchase the voting or common stock of an insured bank but it can enter into or force agreements that it
determines to be necessary to protect its financial interests.

Financial assistance may take the form of equity or quasi-equity of insured banks as may be deemed necessary by the
Board of Directors with concurrence by the MB. The corporation shall dispose of such equity as soon as practicable.

XVII. Borrowings
PDIC is authorized to borrow from the BSP on such terms as may be agreed by them. Such loans granted by the BSP shall be
consistent with monetary policy, the interest rate thereon shall not exceed the treasury bill rate.

When in the Judgment of the Board of Directors, the PDIC has insufficient funds to attain its purpose, PDIC shall be authorized
to borrow money, obtain loans, or arrange credit lines or other credit accommodations from any bank designated as
depository or fiscal agent by the RP.

XVII. Issuance of Bonds

With approval of the President of RP, PDIC is authorized to issue bonds, debentures, and other obligations necessary fro
the purpose of settlement of insured deposits in closed banks as well as for financial assistance.
BoD shall determine interest rate and other requirements of such obligation.

PDIC shall provide appropriate reserves for the redemption of said obligation.

XIX. Reports and Audit

23 PDIC shall annually make a report of its operations to the Congress as soon s practicable after Jan 1

24 Financial transactions shall be audited by the COA in accordance with principles and processes and procedures
applicable to commercial corporate transactions. Audit shall be conducted in places where the accounts of the
corporation are normally kept.

25 COA shall have access to all books, accounts, records, reports, files, and all other papers belonging to PDIC pertaining
to its financial transactions. Except as to matters relating to the Function of the PDIC which shall be subject to visitorial
audit only.

XX. Miscellaneous
26 Signs

Insured banks shall place signs in all place of business and in its statements that its deposits are insured by PDIC.

BoD may exempt from this requirement advertisements not relating to deposits.

27 Merger or consolidation of insured banks

Upon consent of PDIC, banks may:

Merge or consolidate with an uninsured bank

Assume liability to pay any deposits made in noninsured bank

Transfer assets to any noninsured bank

Protection Against Losses

23 PDIC may require an insured bank to provide protection and indemnity against burglary, defalcation, losses
arising from discharge of duties, by particular acts of its directors, employees, officres

24 BoD shall determine the bonding requirement referring to directors, officers, anfd employees of an insured bank
 25 If insured bank refuse to comply with any such requirement, PDIC may add the cost thereof to the assessment
otherwise payable to such bank.

Directors, Officers and employees of Insured banks

23 No person shall be a director, officer, or employee of an insured bank who has been convicted of any criminal
offense involving dishonesty of breach of trust.
Penalty for violation of this prohibition: the bank will be subject to penalty of not more than 100 for every day of
violation.

XXI. Criminal Penalties

Punishable by prision mayor or a fine of 50,000-2,000,000,000 or both, any director, officer, employee or agent of bank who:

23 Willful refusal to submit reports

24 Unjustified refusal to permit examination and audit of records as required by law, rules, and regulations

25 Willful making of false statement or entry in any bank report or document

26 Submission of false material information in connection with or in relation to any financial assistance extended
to the bank

27 Splitting of deposits or creation of fictitious loans or deposit accounts

Splitting deposits deposit accounts with an outstanding balance

of more than the statutory maximum amount of insured deposit maintained under the name of a
person is broken down and transferred into two or more accounts in the names of persons who have
no beneficial ownership on transferred deposits in their names within 30 days preceding or during a
bank declared holiday, or preceding a closure order issued by the MB for the purpose of availing of
the maximum deposit insurance coverage.

Refusal to allow PDIC to takeover a closed bank placed under its receivership

Refusal to turnover or destroying or tampering bank records

Fraudulent disposal , transfer or concealment of any asset, property, liability of the closed bank under the
receivership of the PDIC

Violation, or causing a person to violate, the exemption of garnishment, levy attachment, or execution provided
under the PDIC Law and the NCBA

Willful failure or refusal to comply with, or violation of any provision of eh PDIC Law, or commission of any other
irregularities and/or conducting business in an unsafe or unsound manner.

XXII. FINES
BOD is authorized to impose administrative fines for violation of any other instruction, rule, or regulation issued by PDIC, against a
bank or any of its directors, officers, or agents responsible for such act, omission, or violation. In no case such fine exceed 3
times the amount of the damages or costs caused by the transaction for each day that the violation subsist.