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The Anti-Money Laundering Act of 2001, as Amended

JULIA C. BACAY-ABAD Executive Director

Anti-Money Laundering Council Secretariat

Objectives

Explain what money laundering is

- general concept

- definition under the law

Explain the important provisions of R.A. 9160 and why it has to be enacted/amended

What is Money Laundering?

Generally, “money laundering” is a

process by which money derived from illegal activity is concealed and disguised to make it appear as having originated from a legitimate

source.

is the process by which criminal

proceeds are given the appearance

of having been legitimately obtained.

How much dirty money is laundered?

• In 2008, approximately $800M-$2

trillion is laundered worldwide each

year!

• In 2012, approximately $2-3 trillion

each year!

Source: “The Global Regime for Transnational Crime”, Council on Foreign

Relations, Issue Brief, July 2, 2012, page 42

Why launder money?

Enjoy dirty money without being

detected

Create legitimate explanation for the acquisition of wealth

Evade taxes

Re-use money in financing further criminal activities

Avoid scrutiny of law enforcement

Stages of money laundering

The initial entry of “dirty money” into the financial system.

PLACEMENT

LAYERING

Moving funds around thru a series of transactions to further obscure its illegitimate origin

INTEGRATION

Putting the money into the legitimate economy

Why enact/amend the Anti-

Money Laundering Act of

2001?

R.A. 9160, otherwise known as the “Anti-Money Laundering Act (AMLA)

of 2001”

28 September 2001

- Congress approved R.A. 9160

5 March 2003 - R.A. 9160 was

amended by R.A. 9194

R.A. 9160, as further amended

18 June 2012 – R.A. No. 10167 was signed into law which further amended R.A. 9160

15 February 2013 – R.A. No. 10365 was signed into law, amending for the third time R.A. 9160

FATF

Financial Action Task Force

(FATF)

- Global watchdog on combating

Money Laundering and Terrorist

Financing

- FATF 40 Recommendations

Historical Background

In 2000, the Philippines:

- Lacked basic set of AML regulations

- Had no legislation criminalizing money

laundering

- Had no system of reporting suspicious

transactions

Countermeasures imposed on

the Philippines in 2000/2001

US Advisory 24 (July 2000)

“x x x, banks and other financial institutions

operating in the United States should carefully

consider, when dealing with transactions

originating in or routed to or through the

Philippines, or involving entities organized or

domiciled, or persons maintaining accounts in the

Philippines x x x.”

FATF Statement on Countermeasures (22 June 2001)

The FATF recommended that financial

institutions give “special attention” to business

relations and transactions with persons,

including companies and financial institutions,

from the non-cooperative countries and

territories (NCCT).

Hong Kong Monetary Authority (3 August 2001)

- advised all HK authorized institutions that

additional countermeasures should be applied

to the Philippines effective 30 Sept. 2001 unless

the Philippines “enacts significant legislation

which addresses the identified money

laundering concerns.”

FATF Statement on the Philippines (21 June 2002)

“x x x until the deficiencies have been fully

addressed and the necessary reforms have

been sufficiently implemented, it believes that

scrutiny of transactions with this jurisdiction

x x x continues to be necessary and reaffirms

its advice of June 2000 to apply x x x.”

Countermeasures in 2003

14 February 2003 – FATF recommended

that its members impose additional

countermeasures on the Philippines due to

its failure to enact legislation to address the

previously identified deficiencies in its AML

regime.

R.A. No. 9194

7 March 2003 - R.A. 9194 was signed into law,

amending R.A. 9160.

13 March 2003 – FATF members decided not to apply

countermeasures on the Phils.; however, it shall

remain in the list of non-cooperative countries &

territories (NCCT) until it has implemented effectively

its new AML legislation.

New Challenges

2008 – 2nd Mutual Evaluation (ME)

conducted jointly by the World Bank and the

Asia Pacific Group on Money Laundering

(APG).

Mutual Evaluation (ME) Findings

February 2010 – the Philippines was placed in

the FATF’s pool of jurisdictions that needed to

be reviewed and monitored with respect to

updated AML/CFT int’l standards (“Grey List).

Downgrade to Dark-Grey List

February 2012 – The Philippines was

downgraded to “dark-grey list” for failure to

sufficiently address the identified deficiencies in

its AML/CFT regime.

R.A. No. 10167

18 June 2012 – R.A. 10167 was signed into

law.

- FATF upgraded Philippines to “grey list”;

it, however, urged the Philippines to fully

address the remaining deficiencies.

Philippines averted blacklist!!!

23

R.A. No. 10365

15 February 2013 – R.A. 10365 was signed

into law.

22 February 2013 – FATF noted the significant

progress made by the Phils; decided to conduct

on-site visit to the Phils.; however, it raised

great concerns on non-inclusion of casino

sector in AML regulation.

On-site Visit to the Philippines

2-3 May 2013 – the FATF conducted on-site

visit to the Philippines; positive results

17-21 June 2013 – FATF plenary meeting in

Oslo, Norway;

- decision on the Phils.

FATF Statement on the Phils. (Oslo, Norway, 21 June 2013)

“The FATF welcomes the Philippines’ significant

progress in improving its AML/CFT regime and notes

that the Philippines has established the legal and

regulatory framework to meet its commitments in its

Action Plan regarding the strategic deficiencies that

the FATF had identified in October 2010. The

Philippines is therefore no longer subject to

FATF’s monitoring process under its on-going

global AML/CFT compliance process.”

Officially, the Philippines is out of

the FATF list of monitored-

jurisdictions!!!

Salient Features of R.A. No. 9160 (AMLA)

• Criminalized money laundering in the

Philippines

• Created the Philippines’ FIU (AMLC)

• Introduced civil forfeiture without the

necessity of conviction or prosecution in a

criminal case

Significant Terms Under the Law

Covered Institutions (now

“covered persons”)

Transaction

Money Laundering

Unlawful Activity

Covered Institutions

A) Those under the Bangko Sentral ng

Pilipinas (BSP)

- banks, non-banks, quasi-banks, trust entities,

foreign exchange dealers, pawnshops, money

changers, remittance and transfer companies and

other similar entities and all other persons and

their subsidiaries and affiliates supervised or

regulated by the BSP


B) Those under the Insurance

Commission

- insurance companies, pre-need

companies and all other persons

supervised or regulated by the I.C.


C) Those under the Securities & Exchange Commission (SEC)‏

(i) securities dealers, brokers, salesmen, investment houses and other similar persons managing securities or rendering services as investment agent, advisor, or consultant;

(ii) mutual funds, close-end investment companies, common trust funds, and other similar persons; and

(iii) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by the SEC.

Transaction defined

‘Transaction’ refers to any act

establishing any right or obligation or

giving rise to any contractual or legal

relationship between the parties thereto. It

also includes any movement of funds by

any means with a covered institution.

Covered Transaction defined

‘Covered transaction’ is a transaction in

cash or other equivalent monetary

instrument involving a total amount in

excess of Five Hundred Thousand

Pesos (Php500,000.00) within one (1)

banking day.

Suspicious Transaction (ST) defined

Regardless of the amount

involved, where any of the

following circumstances exist(s):

a) there is no underlying

legal or trade obligation,

purpose or economic

justification;

“ST”

b. the client is not properly identified;

c. the amount involved is not commensurate

with the business or financial capacity of

the client;

“ST”

d. Taking into account all known circumstances, it

may be perceived that the client’s transactions

are structured in order to avoid being the subject of

reporting requirements under the Act;

e. Any circumstance relating to the transaction which

is observed to deviate from the profile of the

client and/or the client’s past transactions with

the covered institution;

“ST”

f. The transaction is in any way related to an

unlawful activity or any money laundering

offense that is about to be, is being or has

been committed; or

g. Any transaction that is similar, analogous

or identical to any of the foregoing.

Definition of money laundering under the AMLA

Under the AMLA, it is a crime whereby the proceeds of an unlawful activity are transacted thereby making them appear as having originated from legitimate sources.

Note: Definition of ML has been expanded under R.A. No. 10365

Unlawful Activity--

-- is any act or omission or a series or combination thereof involving or having direct relation to any of the following offenses:

1. Kidnapping for ransom

2. Drug trafficking and other violations of the Comprehensive Dangerous Drugs Act of 2002

Unlawful activity…

3. Graft and Corruption under R.A.

No. 3019, as amended

4. Plunder (R.A. 7080, as amended)

5. Robbery and Extortion

6. Jueteng and Masiao (P.D. 1602)

7. Piracy (RPC & PD 532)

8. Qualified Theft under Art. 310, RPC


9. Swindling under Art. 315, RPC

10. Smuggling under RA 455 & 1937

11. Violations of the Electronic Commerce Act of 2000

12. Hijacking and other violations under RA 6235; destructive arson and murder as defined in the Revised Penal Code


13. Terrorism and conspiracy to commit

terrorism under RA 9372

14. Terrorism Financing as defined under R.A.

10168

15. Bribery and Corruption of Public Officers

16. Frauds and Illegal Exactions and

Transactions

17. Malversation of Public Funds & Property


18. Forgeries and Counterfeiting

19. Trafficking in Persons under RA 9208

20. Violations of the Revised Forestry

Code (PD No. 705)

21. Violations of the Philippine Fisheries

Code (Secs. 86-106, Chap.6)

22. Violations of the Philippine Mining Act

of 1995 (Secs. 101-107, 110)


23. Violations of the Wildlife Resources

Conservation & Protection Act [Sec. 27(c), (e),

(f), (g) & (i)

24. Violation of the National Caves & Cave

Resources Management Protection Act [Sec.

7(b)]

25. Carnapping under RA 6539

26. Violations of PD 1866 (Laws on Illegal/Unlawful

Possession, Manufacture, Dealing In, etc. of

Firearms)


27. Violation of the Anti-Fencing Law

28. Violation of the Migrant Workers & Overseas

Filipinos Act (Sec. 6)

29. Violation of the Intellectual Property Code of the

Phils.

30. Violation of the Anti-Photo & Video Voyeurism Act

of 2009 (Sec.4)

31. Violation of the Anti-Child Pornography Act of 2009

(Sec. 4)


32. Violations of the Special Protection of Children

Against Abuse, Exploitation & Discrimination (RA

7610)

33. Fraudulent practices and other violations of the

Securities Regulation Code of 2000 (RA 8799)

34. Felonies or offenses of similar nature that are

punishable under the penal laws of other

countries.

The AMLC – Phils.’ Financial Intelligence Unit (FIU)

Governor of the Bangko Sentral ng Pilipinas,

as Chairman

Insurance Commissioner, Chairman of SEC,

as Member as Member

The AMLC Secretariat

The AMLC is assisted by a Secretariat

headed by an Executive Director

Executive Director

Compliance and

Investigation Group

Legal Services

Group

Administrative and

Financial Services Division

Information Management

and Analysis Group

Technical

Services Staff

Among the functions of the AMLC under R.A. 9160

1. Require and receive covered and

suspicious transaction reports

from covered institutions;

2. Investigate suspicious

transactions, money laundering

activities, and other violations of

the AMLA;

Functions of the AMLC…

3. Secure freeze order from the Court

of Appeals against any monetary

instrument or property deemed

related to an unlawful activity;

4. Institute civil forfeiture and all other

remedial proceedings through the

Office of the Solicitor General;


5. Cause the filing of complaints with

the Department of Justice or the

Office of the Ombudsman for the

prosecution of money laundering ;

6. Receive and take action on any

request for assistance from foreign

countries in their own AML

operations;


7. Develop educational programs to

make the public aware of the

pernicious effects of money

laundering and how they can

participate in bringing the offenders

to the fold of the law


8. Impose administrative sanctions

on those who violate the law,

rules, & regulations in connection

with the implementation of the

law;

9. Implement such measures as may

be necessary and justified to

counteract money laundering.

Additional Functions under other laws

1. R.A. 9372 (HSA) – AMLC serves as a support agency

for the Anti-Terrorism Council (ATC);

2. R.A. 10168 (Terrorist Financing Suppression Law) – the

AMLC shall:

i. Investigate financing of terrorism;

ii. Issue without delay ex parte freeze order, either

upon its initiative or upon request of the ATC, against

TF-related funds or property

Obligations of Covered Institutions under the Law

Customer Identification

Record Keeping

Reporting of CTs and STs

Recent Amendments to the AMLA

1. R.A. No. 10167 (2012)

2. R.A. No. 10365 (2013)

Amendments by R.A. 10167

A. Petition for Freeze Order

- The Court of Appeals shall act on the ex

parte petition within 24 hours.

- No court shall issue a TRO or a writ of

injunction against any freeze order, except

the Supreme Court.


B. Application for Bank Inquiry

Old Provision New Provision

No express provision on

which court has jurisdiction;

Filed with the Regional Trial

Court

Express provision; Filed with the Court

of Appeals

No express provision on

procedure; but notice and

hearing required (pursuant to

Republic vs. Eugenio)

Express provision; Ex Parte

Application

--

Court of Appeals acts within 24 hours

Amendments by R.A. No. 10365

A. New covered institutions (now

“covered persons”):

1. Jewelry dealers in precious

metals, who, as a business, trade

in precious metals in transactions

in excess of P1Million.


…new covered persons

2. Jewelry dealers in precious

stones, who, as a business, trade

in precious stones for

transactions in excess of

P1Million.



3. Company service providers

which, as a business, provide any of

the ff services:

- acting as a formation agent of

juridical persons;

- acting as (or arranging for another

person to act as) a director or

corporate secretary, a partner, or

similar position


- providing a registered office, business

address or accommodation, correspondence

or administrative address for a company,

partnership or any other legal person or

arrangement;

- Acting as (or arranging for another person to

act as) a nominee shareholder for another

person



4. Persons who provide any of the ff services:

- managing of client money, securities or other assets;

- management of bank, savings or securities accounts

- organization of contributions for creation, operation or

management of companies;

- creation, operation or management of juridical persons or

arrangements, and buying & selling business entities

Exemption: Professional Secrecy or Legal Professional Privilege

“Lawyers and accountants acting as

independent legal professionals are not required

to report covered and suspicious transactions if

the relevant information was obtained in

circumstances where they are subject to

professional secrecy or legal professional

privilege.” (Sec. 9, as amended by R.A. 10365)


B. Additional

Unlawful Activities

- From 14 to 34 (See slides 43-48)


C. Definition of money laundering (Sec. 4)

“Money laundering” is committed by any

person who, knowing that any monetary

instrument (M/I) or property represents,

involves, or relates to the proceeds of any

unlawful activity:

Definition of ML under R.A. 10365

(a) Transacts said MI /property

(b) converts, transfers, disposes of,

moves, acquires, possesses, uses

said MI/property;

(c) Conceals or disguises the true

nature, source, location, disposition,

movement or ownership of or rights with

respect to said MI/property

Definition of ML under R.A. 10365

(d) attempts or conspires to commit ML

offenses referred to in pars. (a), (b) or (c);

(e) aids, abets, assists in or counsels

the commission of ML;

(f) Performs or fails to perform any act as a

result of which he facilitates the offense of

ML.

Thank you! [email protected]

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