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
Covered Institutions
B) Those under the Insurance
Commission
- insurance companies, pre-need
companies and all other persons
supervised or regulated by the I.C.
Covered Institutions
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
Unlawful activity…
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
Unlawful activity…
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
Unlawful activity…
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)
Unlawful activity…
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)
Unlawful activity…
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)
Unlawful activity…
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;
Functions of the AMLC…
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;
Functions of the AMLC…
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
Functions of the AMLC…
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.
Amendments by R.A. 10167
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.
Amendments by R.A. 10365
…new covered persons
2. Jewelry dealers in precious
stones, who, as a business, trade
in precious stones for
transactions in excess of
P1Million.
Amendments by R.A. 10365
…new covered persons
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
Amendments by R.A. 10365
- 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
Amendments by R.A. 10365
…new covered persons
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)
Amendments by R.A. 10365
B. Additional
Unlawful Activities
- From 14 to 34 (See slides 43-48)
Amendments by R.A. 10365
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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