A. Anti-Money Laundering/Counter-Terrorism Financing – R.A. No.
Know Your Customer (KYC)/ Customer Due Diligence (CDD)
10365
Sec. 1. Covered persons:
1. 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;
2. insurance companies, pre-need companies and all other persons
supervised or regulated by the Insurance Commission
3. (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;
4. jewelry dealers in precious metals, who, as a business, trade in
precious metals, for transactions in excess of one million pesos;
5. jewelry dealers in precious stones, who, as a business, trade in
precious metals, for transactions in excess of one million pesos;
6. company service providers which, as a business, provide any of
the following services to third parties: (i) acting as a formation
agent of juridical persons; (ii) acting as (or arranging for another
person to act as) a director or corporate secretary of a company,
a partner of a partnership, or a similar position in relation to
other juridical persons; (iii) providing a registered office,
business address or accommodation, correspondence or
administrative address for a company, a partnership or any other
legal person to act as a nominee shareholder for another person;
and,
7. persons who provide any of the following services:
 managing of client money, securities or other assets;
 management of bank, savings or securities accounts;
 organization of contributions for the creation,
operation, or management of companies; and,
 creation, operation or management of juridical persons
or arrangements, and buying and selling business
entities
Obligations imposed upon covered institutions:
1.
 establish and record the true identity of their clients
based on official documents
 should inquire to prove that it is a real person and is
dealing with a legitimate transaction and source of
funds is valid
2. Record-keeping
 maintain and safely store all records of all their
transactions for 5 years from the transaction dates
 ensure that said records/files contain the full and true
identity of the owners or holders of the accounts
involved in the covered transactions and all other
identification documents
3. Reporting
 Covered Transaction Report (CTR) – transaction in
cash or other equivalent monetary instrument
involving a total amount in excess of Php500,000
within one banking day
 Suspicious Transaction Report (STR) – suspicious
transactions are transactions, regardless of amount,
where any of the following cirumstances exists:
a. There is no underlying legal or trade
obligation, purpose or economic
justification;
b. The client is not properly identified;
c. The amount involved is not commensurate
with the business or financial capacity of the
client;
d. Taking into account all known
circumstances, it may be perceived that the
client’s transaction is 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;
f. The transaction is in any way related to an
unlawful activity or any money laundering
activity or offense under this act 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.
4. Compliance with AMLC derivatives – if the AMLC exercises
supervisory or regulatory powers, the person must obey
Purpose of laundering:
1. To legitimately use the money
2. Not to subsequently persecuted for tax
B. Securitization Act of 2004 – R.A. 9267
Securitization - act of creating asset back securities for the subsequent
issue to the public to raise capital
C. Liberalization of Entry of Foreign Banks - R.A. 10641
Section 1. Modes of Entry. The Monetary Board may authorize foreign
banks to operate in the Philippine banking system through any one of the following"
modes of entry: (i) by acquiring, purchasing or owning up to one hundred percent
(100%) of the voting stock of an existing bank; (ii) by investing in up to
one hundred percent (100%) of the voting stock of a new banking subsidiary
incorporated under the laws of the Philippines; or (iii) by establishing branches
with full banking authority."
Section 4. Capital Requirements. (i) For Locally Incorporated
Subsidiaries – The minimum capital required for locally incorporated subsidiaries of
foreign banks shall be equal to that prescribed by the Monetary Board for domestic
banks of the same category.
(ii) For Foreign Bank Branches – Foreign banks that shall be authorized to
establish branches pursuant to Section 2(hi) of this Act shah permanently assign
capital of an amount not less than the minimum capital required for domestic banks
of the same category. The permanently assigned capital shall be inwardly remitted
and converted into Philippine currency.
The foreign bank branch may open up to five (5) sub-branches as may be
approved by the Monetary Board. Locally incorporated subsidiaries of foreign banks
pursuant to Section 2(h) of this Act shall have the same branching privileges as
domestic banks of the same category.”
Localization Requirements:
1. Establish branches/ROHQs/Subsidiaries
2. You can only do business if you create
branches/ROHQs/Subsidiaries
 Question: What entities are covered by localization
requirements?
Answer: Remittance and Platform Provider (RPP), E-money
Issuers (EMIs), and Virtual Currency Exchange (VCE)
D. Investment Houses Law – P.D. 129
Section 7. Powers. In addition to the powers granted to corporations in
general, an Investment House is authorized to do the following:
1. Arrange to distribute on a guaranteed basis securities of other
corporations and of the Government or its instrumentalities;
2. Participate in a syndicate undertaking to purchase and sell,
distribute or arrange to distribute on a guaranteed basis securities
of other corporations and of the Government or its
instrumentalities;
3. Arrange to distribute or participate in a syndicate undertaking to
purchase and sell on a best efforts basis securities of other
corporations and of the Government or its instrumentalities;
4. Participate as soliciting dealer or selling group member in tender
offers, block sales, or exchange offering or securities; deal in
options, rights or warrants relating to securities and such other
powers which a dealer may exercise under the Securities Act
(Act No. 83, as amended);
5. Promote, sponsor, or otherwise assist and implement ventures,
projects and programs that contribute to the economy's
development;
6. Act as financial consultant, investment adviser, or broker;
7. Act as portfolio manager, and/or financial agent, but not as
trustee of a trust fund or trust property as provided for in
Chapter VII of Republic Act No. 337, as amended;
8. Encourage companies to go public, and initiate and/or promote,
whenever warranted, the formation, merger, consolidation,
reorganization, or recapitalization of productive enterprises, by
providing assistance or participation in the form of debt or
equity financing or through the extension of financial or
technical advice or service;
9. Undertake or contract for researches, studies and surveys on
such matters as business and economic conditions of various
countries, the structure of financial markets, the institutional
arrangements for mobilizing investments;
 10. Acquire, own, hold, lease or obtain an interest in real and/or
personal property as may be necessary or appropriate to carry on
its objectives and purposes;
11. Design pension, profit-sharing and other employee benefits
plans; and,
12. Such other activities or business ventures as are directly or
indirectly related to the dealing in securities and other
commercial papers, unless otherwise governed or prohibited by
special laws, in which case the special law shall apply.
Nothing in this section shall preclude other enterprises not covered by this Decree
from engaging in the activities listed under subsections (3) to (11) of this section,
except as may otherwise be governed by special laws.
E. Lending Company Regulation Act of 2007 – R.A. 9474
Lending Companies
 refers to a corporation engaged in granting loans from its own
capital funds or from funds sourced from not more than nineteen
persons
 not include banking institutions, investment houses, savings and
loan associations, financing companies, pawnshops, insurance
companies, cooperatives and other credit institutions already
regulated by law
Section 4. Form of Organization. A lending company shall be established
only as a corporation: Provided That existing lending investors organized as single
proprietorships or partnerships shall be disallowed from engaging in the business
of granting loans to the public one year after the date of effectivity of this Act.
No lending company shall conduct business unless granted an authority to operate
by the SEC.
F. Financing Company Act of 1996 – R.A. 8556
Financing Companies
 corporations, except banks, investment houses, savings and loan
associations, insurance companies, cooperatives, and other
financial institutions organized or operating under other special
laws, which are primarily organized for the purpose of extending
credit facilities to consumers and to industrial, commercial, or
agricultural enterprises, by direct lending or by discounting or
factoring commercial papers or accounts receivable, or by
buying and selling contracts, leases, chattel mortgages, or other
evidences of indebtedness, or by financial leasing of movable as
well as immovable property
Sec. 9. Rights and powers. Financing companies shall have the following
powers, in addition to those granted by this Act and by other laws:
1. Engage in quasi-banking and money market operations with the
prior approval of the Bangko Sentral ng Pilipinas;
2. Engage in trust operations subject to the provisions of the
General Banking Act upon prior approval by the Bangko
Sentral ng Pilipinas;
3. Issue bonds and other capital instruments subject to pertinent
rules and regulations of the Bangko Sentral ng Pilipinas;
4. Rediscount their paper with government financial institutions
subject to relevant laws, rules and regulation;
5. Participate in special loan or credit programs sponsored by or
made available through government financial institutions; and
6. Provide foreign currency loans and leases to enterprises who
earn foreign currency by exports or other means, subject to
existing laws and rules and regulations promulgated by the
Bangko Sentral ng Pilipinas.
 Investment Houses, Lending Companies, and Financing
Companies are subject to the supervision of the SEC
 Investment Houses, Lending Companies, and Financing can now
own 100% shares of a domestic bank; no nationalization
requirement anymore, but there is still a localization
 Question: When are Investment Houses Law, Lending Company
Regulation Act, and Financing Company Act under Central
Bank?
Answer: 1) If affiliated or subsidiary of a bank; 2) Has quasi-banking
license/deposit substitutes 3) Has a trust license for trust activities
Difference between Lending and Financing Companies
Lending Companies Financing Companies
Financial capital should be at Financial capital should be at
least P1,000,000 least P50,000,000
Cannot get a quasi-banking Can get a quasi-banking
Cannot involve trust activities Can involve trust activities
G. Electronic Money Issuers (EMIs) – BSP Circular 649
 Section 2. Definition. E-money shall mean monetary value as represented
by a claim on its issuer, that is – Virtual currency exchange vs E-money Issuer vs FIAT currency
a. electronically stored in an instrument or device; Virtual currency exchange - value is agreed upon by the community that use this
b. issued against receipt of funds of an amount not lesser in value currency.
than the monetary value issued; E-money – good as FIAT; stores cash in digital form
c. accepted as a means of payment by persons or entities other than FIAT currency – backed by the government’s assets and reserves
the issuer;
d. withdrawable in cash or cash equivalent; and,
e. issued in accordance with this Circular
BANKING FINALS POINTERS
Electronic money issuer shall be classified as follows:
a. Banks PRUDENTIAL MEASURES
b. Non-bank financial institutions supervised by the BSP
c. Non-bank institutions registered with the BSP as a money 1. Single Borrowers Limit (SBL) – Section 35 GBL
transfer agent under Section 4511N of the Manual of - Main purpose: Prevent the bank from making excessive loans and
Regulations for Non-Bank Financial Institutions other credit accommodations to a single borrower or corporate group.
The SBL is a damage-control mechanism.
H. Remittance and Transfer Company (RTCs) – BSP Circular 942
- The current SBL is 25% of the net worth of a bank.
Remittance services - performance of services related to movement of o The SBL may be increased by an additional 10% provided
funds from originator (OFW) to a beneficiary that the additional liabilities are adequately secured by trust
receipts, shipping documents, warehouse receipts and
Forms of RTCs: similar documents.
1. Remittance agent – any entity that operates a remittance - Loans extended by banks for projects under the Public-Private
business network Partnership (PPP) Program of the government may have a separate
o Remittance Direct Agent (RDA) – covered by a direct SBL of 25%.
contracted remittance agreement or similar agreement - Loans extended by banks to oil companies which are engaged in
to act in behalf of a third party engaged in remittance energy and power generation may also have an additional 15% SBL.
business
o Remittance Agent Network Provider (RANP) – entity
that provides a network to perform remittance business
2. Remittance Platform Provider (RPP) – any entity that provides a Tier 1 Tier 2
shared or common platform/IT infrastructure and maintains
settlement accounts in order to provide funds for remittance  core capital (e.g. permanent  supplementary capital (e.g.
transactions within its network shareholder equity and disclosed subordinated debt, undisclosed
3. E-money Issuers (EMIs) – any entity authorized by the Bangko reserves) and revaluation reserves)
Sentral which provides money transfer or remittance services  Tier 1 capital includes paid up  Tier 2 must not exceed Tier 1
using electronic stored money value system and similar digital common stock, paid up perpetual capital
financial services and non-cumulative preferred  Upper tier 2 capital consists of
stock, surplus and undivided paid up, perpetual and cumulative
I. Virtual Currency Exchanges – BSP Circular 944
profits of a domestic bank preferred stock, paid up lifetime
Virtual Currency Exchanges (VCE) – any entity that offers services or redeemable preferred stock and
engages in activities that provide facility for the conversion or exchange of BSP approved unsecured
fiat currency to VC or vice versa subordinated debt with a
 minimum original maturity of 10
years
 Lower tier 2 capital includes BSP-
approved unsecured debt with a
minimum original maturity of 5
years, deposit for perpetual and
cumulative preferred stock
subscription, and deposit for
limited life redeemable preferred
stock subscription
2. DOSRI
- Limits of DOSRI (3)
1) Individual Ceiling
o Total Allowable Outstanding Direct Credit
Accommodations to each director, officer, stockholder, or
his related interest.
o Which is an amount equivalent to his:
 Unencumbered deposits in the lending bank plus
the book value of his paid in capital contribution
in the bank.
2) Aggregate Ceiling
o The total allowable direct and indirect credit
accommodations to DOSRI.
o 15% of the total portfolio of the bank
o 100% of the combined capital accounts
3) Ceiling on Unsecured Loans
o 30% (70% of credit accommodation must be secured)
TYPES OF LOANS NOT COVERED BY THE SBL
Subsection X330.1 Exclusions from Individual Ceiling.  The following loans,
other credit accommodations and guarantees shall be excluded in determining
compliance with the individual ceiling. 
Loans, other credit accommodations and guarantees secured by assets considered as
non-risk by the Monetary Board;
Assets considered as non-risk shall refer to the following:
1.   Cash;
2.   Debt securities issued by the BSP or the Philippine government;
3.   Deposits maintained in the lending bank and held in the Philippines;
4.   Debt securities issued by the U.S. government;
5.   Debt securities issued by central governments, central banks of foreign countries
and multilateral financial institutions such as International Finance Corporation,
Asian Development Bank and World Bank, with the highest credit quality given by
any two internationally accepted rating agencies;
6.   Such other assets considered as non-risk by the Monetary Board.
Loans, other credit accommodations and advances to officers in the form of fringe
benefits granted in accordance with existing regulations;
Loans, other credit accommodations and guarantees extended by a cooperative bank
to its cooperative shareholders;
ANTI-MONEY LAUNDERING ACT
1. Covered Persons (3)
a. Regulated by the BSP
b. Regulated by the SEC
c. Regulated by the Insurance Commission
d. Designated Non-Financial Business Persons
2. Primary Responsibilities (at least 2) – LISTED ABOVE
COVERED TRANSACTIONS VS. SUSPICIOUS TRANSACTIONS (AMLA
R.A. 9160 as amended)

 Loans secured by obligations of the Bangko Sentral or the
Government and those fully guaranteed by the Government;
 Loans to the extent covered by deposit hold-outs;
 Loans under letters of credit to the extent covered by margin
deposits; and
 Other non-risk items as determined by the Monetary Board.
NON-RISK ASSETS (BSP Circular No. 423)
G. “Covered transaction” refers to:
1. A transaction in cash or other equivalent monetary instrument exceeding Five
Hundred Thousand pesos (Php500,000.00)
2. A transaction exceeding One Million pesos (Php1,000,000.00) in cases of
jewelry dealers, dealers in precious metals and dealers in precious stones.
H. “Suspicious Transaction” refers to a transaction, regardless of amount,
where any of the following circumstances exists:
1. there is no underlying legal or trade obligation, purpose or economic justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or financial capacity
of the client;
4. taking into account all known circumstances, it may be perceived that the client’s
transaction is structured in order to avoid being the subject of reporting requirements
under the AMLA;
5. 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 person;
6. the transaction is in any way related to an unlawful activity or any money
laundering activity or offense that is about to be committed, is being or has been
committed; or
7. any transaction that is similar, analogous or identical to any of the foregoing.

LOCALIZATION REQUIREMENTS
- Refers to the need to incorporate.
- You can only do business in the Philippines if you create subsidiaries.
- Which entities have a localization requirement?
o Remittance Platform Provider
o E-Money Issuers
o Virtual Currency Exchange