UNIT 4: Anti-Money

Laundering Act (AMLA)

WHAT TO EXPECT?
• The unit will deal on institutions which are covered by the AMLA as
well as its reportorial requirements under such law.
• Included in this unit is the discussion on financial transactions which
may be considered as covered or suspicious as well as the unlawful
activities (predicate crimes) which will enable the Anti-Money
Laundering Council (AMLC) to inquire into the related bank deposits.
POWERS OF THE ANTI-MONEY LAUNDERING
COUNCIL (AMLC)
• Require and receive covered or suspicious transaction reports from
covered institutions (banks and all other institutions and their subsidiaries
and affiliates supervised or regulated by the 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);
• Issue 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;
POWERS OF AMLC
• Institute civil forfeiture proceedings and all other remedial
proceedings through the Office of the Solicitor General;
• Cause the filing of complaints with the Department of Justice or the
Ombudsman for the prosecution of money laundering offenses;
• Investigate suspicious transactions and covered transactions deemed
suspicious after an investigation by AMLC, money laundering
activities, and other violations of the AMLA, as amended;
• Apply 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;
POWERS OF AMLC
• Implement such measures as may be necessary and justified to
counteract money laundering;
• Receive and take action in respect of any request for assistance from
foreign states in their own anti-money laundering operations;
• Develop 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;
POWERS OF AMLC
• Enlist 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;
• Impose administrative sanctions for the violation of laws, rules, regulations
and orders and resolutions issued pursuant thereto;
• Inquire or examine any particular deposit or investment, including related
accounts, when it has been established that there is probable cause that
the deposits or investments, including related accounts involved, are
related to an unlawful activity or a money laundering offense under the
AMLA as amended;
POWERS OF AMLC
• Issue an ex parte freeze order related to financing of terrorism or acts
of terrorism or owned by any persons or persons in relation to whom
there is probable cause to believe that such person/persons are
committing or attempting or conspiring to commit or participating in
or facilitating terrorism financing or acts of terrorism;
• Investigate property or funds related to financing of terrorism or acts
of terrorism or owned by any persons or persons in relation to whom
there is probable cause to believe that such person/persons are
committing or attempting or conspiring to commit or participating in
or facilitating terrorism financing or acts of terrorism;
POWERS OF AMLC
• Issue a freeze order with respect to property or funds to comply with
terrorism related Resolutions; and
• Enlist the assistance of any branch, department , bureau, office,
agency or instrumentality of the government including government
owned and controlled corporations in undertaking measures to
counter terrorism financing.
HOW IS MONEY LAUNDERING COMMITTED?
• Money laundering is committed by:
• (1) Knowing that any monetary instrument or property represents,
involves, or relates to proceeds of any unlawful activity and there
is failure to report the same; or
• (2) Failing to report a covered or suspicious transaction.
In relation to the first instance of committing money
laundering, the following activities are considered
unlawful (original list):
• Kidnapping for ransom;
• Drug offenses;
• Graft and corrupt practices;
• Plunder;
• Robbery and extortion;
• Jueteng and masiao;
• Piracy on high seas;
• Qualified theft;
• Swindling;
• Smuggling;
• E-commerce violations;
• Hijacking, destructive arson, murder;
• Securities fraud; and
• Offenses punishable by foreign laws.
With the amendment of the law, the
following predicate crimes were added:
• Frauds and Illegal Transactions (RPC);
• Forgeries and counterfeiting;
• Forestry law violations;
• Fisheries law violations;
• Firearms law violations;
• Fencing law violations;
• Caves protection law violations;
• Carnapping;
• Child abuse law violations;
• Child pornography;
• Malversation;
• Mining law violations;
• Migrant workers and OFWs;
• Terrorism;
• Terrorism financing;
• Wildlife protection law violations;
• Bribery and corruption of public officials;
• Human Trafficking;
• Intellectual property law violations; and
• Voyeurism (photo and video).
COVERED OR SUSPICIOUS TRANSACTIONS
• Generally, covered transactions relate to certain transactions in cash
or other equivalent monetary instrument involving a total amount
exceeding five hundred thousand pesos (₱500,000.00) within one (1)
banking day.
• For casinos, a single casino transaction involving an amount
exceeding of Five million pesos (₱5,000,000.00) or its equivalent in
any other currency is considered as a covered transaction.
SUSPICIOUS TRANSACTIONS (regardless of the amount)

• 1. There is no underlying legal or trade obligation, purpose or

economic justification
• Every transaction with a covered institution should indicate a purpose for
which it was made.
• For instance, one who intends to send money through a remittance agent
should indicate the purpose of which on the transaction slip.
• Failure to indicate the purpose makes the transaction suspicious.
• 2. The client is not properly identified
• AMLA mandates that covered institutions should require their clients to
submit any or some competent proof of identity when transacting with them.
One who is opening an account in a certain bank should present valid IDs and
should make a personal appearance thereat before the latter will approve it.
• In the Bank of Bangladesh case, RCBC did not require the personal
appearance of William Go for the opening of the latter’s account.
• 3. The amount involved is not commensurate with the business or
financial capacity of the client
• One who is making regular huge amount of deposits in a bank but with no
established legitimate source of income makes his/her transactions
suspicious.
• Under normal circumstances, one who has no, or with insufficient income
cannot make a regular daily deposit of ₱500,000. If such is the case, a
question would arise as to the source of the said huge amount of deposits.
Currently, banks’ standard operating procedures require depositors to identify
their sources of income in order to establish a link between the amount of
deposits and the related sources thereof. This is in compliance with the
AMLA.
• 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 act
• In certain cases, some, in order to remove a transaction from the ambit of the
so-called covered transactions, would split huge amounts into transactional
amounts below or up to the extent of the ₱500,000/₱5,000,000 daily limit.
For instance, a ₱1,000,000 deposit may be split into two or more daily
transactions so as to exempt it from the reportorial requirements mandated
by the AMLA.
• 5. The transaction is in any way related to an unlawful activity or
any money laundering activity or offense under the AMLA, as
amended, is being or has been committed
• Reasonable link between the transaction and the alleged unlawful activity, as
enumerated herein, must be established in order for such transaction to be
considered suspicious.

• 6. Any transaction that is similar, analogous or identical to any of

the foregoing.
COVERED ENTITIES
• Banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,
pawnshops, money changers, remittance and transfer companies and
other similar entities;
• Insurance companies, pre-need companies;
• Securities dealers, brokers, salesmen, investment houses and other similar
persons managing securities or rendering services as investment agent,
advisor, or consultant;
• Mutual funds, close-end investment companies, common trust funds, and
other similar persons;
• 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;
• Jewelry dealers in precious metals, who, as a business, trade in precious
metals, for transactions in excess of One million pesos (P1,000,000.00);
• 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 or arrangement; and (iv) acting as (or arranging for another person
to act as) a nominee shareholder for another person;
• Persons who provide any of the following services: (i) managing of
client money, securities or other assets; (ii) management of bank,
savings or securities accounts; (iii) organization of contributions for
the creation, operation or management of companies; and (iv)
creation, operation or management of juridical persons or
arrangements, and buying and selling business entities.
• Casinos, including internet and ship-based casinos, with respect to
their casino cash transactions related to their gaming operations.
MANDATORY REPORTORIAL REQUIREMENT
GUIDELINES FOR COVERED ENTITIES
• Covered institutions shall report to the AMLC all covered
transactions and suspicious transactions within five (5) working days
from occurrence thereof, unless the Supervising Authority prescribes
a longer period not exceeding ten (10) working days.

• Should a transaction be determined to be both a covered transaction

and a suspicious transaction, the covered institution shall be required
to report the same as a suspicious transaction.
AUTHORITY OF THE AMLC TO INQUIRE INTO
DEPOSITS
• Upon lawful order of the Court of Appeals, the AMLC may inquire into or
examine any particular deposit or investment, including related accounts
notwithstanding the provisions of the Bank Secrecy Law, Foreign Currency
Deposit Act, General Banking Law, and other laws.

• This requirement of the law means that no other lower courts, like the
Regional Trial Court (RTC) or Municipal Trial Court (MTC), can issue the
authority to the AMLC.

• Hence, an authority given to the AMLC by a Regional Trial Court is void.

• It shall be the duty of the Court of Appeals (CA) to act on the
application to inquire into or examine any deposit or investment with
any banking institution or non-bank financial institution within 24
hours from filing of the application.
• However, the AMLC, in certain cases, may proceed with the inquiry of
deposits even in the absence of the authority issued by the Court of
Appeals. Thus, the court-issued authority is no longer necessary in
the following cases:
• Kidnapping for ransom;
• Drug offenses;
• Hijacking, destructive arson, murder;
• Similar foreign offenses;
• Terrorism and conspiracy to commit terrorism; and
• Terrorism financing.
CASE
• Assuming that probable cause exists that one, is guilty of money
laundering and the AMLC wants to preserve the proceeds of such
crime, what is the remedy of the AMLC?

• ANSWER: Upon a verified ex parte petition by the AMLC and after

determination that probable cause exists, the Court of Appeals (CA)
may issue a freeze order which shall be effective immediately, for a
period of 20 days. The same order may be extended for up to 6
months by the CA, after the conduct of a summary hearing.
 Unit 5: Philippine Deposit
Insurance Corporation (PDIC)
Law
INSURABLE DEPOSITS AND MAXIMUM
LIABILITY
• Under the PDIC Law, as amended, insurable deposit means amount
due to any bona fide depositor for legitimate deposits in an insured
bank as of the date of closure, but not to exceed ₱500,000.00.

• The term ‘closure’ refers to the closure of bank due to insolvency.

• Thus, if the closure was caused by reasons other than insolvency, the
provisions of the PDIC Law shall not apply.
DEPOSITIS EXCLUDED FROM THE COVERAGE
OF THE PDIC LAW
• 1. Deposit accounts which are unfunded, fictitious or fraudulent;
• 2. Deposit products constituting or emanating from unsafe and
unsound banking practices;
• 3. Deposits that are determined to be proceeds of an unlawful
activity as defined under the Anti-Money Laundering Law.
THE RULE ON JOINT ACCOUNTS?
• Regardless of whether the conjunction “and,” “or,” or “and/or” is
used, the account shall be insured separately from any individually-
owned deposit account.

• If the account is held by a juridical person or entity jointly with one or

more natural persons, the maximum insured deposit shall be
presumed to belong entirely to such juridical person or entity.
EXAMPLE 1
• Bank records show the following account balances in the name of
Lucas Santos and his son Max Santos:
Lucas Santos - P500,000
Max Santos - P500,000
Lucas Santos and/or Max Santos –P500,000

• How much can Lucas Santos recover from PDIC?

• In EXAMPLE 1, Lucas Santos can recover up to P750,000, which can
be computed as:

From Lucas Santos (individual account)

P500,000
From Lucas Santos/or
Max Santos joint account (1/2 of P500,000) 250,000
Total P750,000
EXAMPLE 2
• Bank records show the following joint account balances:
Lucas Santos and/or Max Santos – P400,000
Lucas Santos and/or Lucy Santos – P400,000
Lucas Santos and/or Lulu Santos – P400,000

• How much can Lucas Santos recover from PDIC?

• In this instance, Lucas Santos can recover up to P500,000, which can be
computed as:
From Lucas Santos and/or
Max Santos joint account (1/2 of P400,000) P200,000
From Lucas Santos and/or
Lucy Santos joint account (1/2 of P400,000) 200,000
From Lucas Santos and/or
Lulu Santos joint account (1/2 of P400,000) 200,000
Total P600,000

The total amount of P600,000 is subject to the legal threshold of P500,000

considering that the subject accounts are of the same nature.
EXAMPLE 3
• Bank records show the following joint account balances:
Lucas Santos and/or XYZ Corporation – P700,000

• Who is entitled to recover from PDIC? How much?

• ANS: XYZ Corporation is entitled to recover P500,000. To reiterate, if the

account is held by a juridical person or entity (XYZ Corporation) jointly with
one or more natural persons (Lucas Santos), the maximum insured deposit
shall be presumed to belong entirely to such juridical person or entity (XYZ
Corporation), subject to the maximum recoverable amount of insurance.
• If the depositor’s recoverable insurance is subject to limitation, how
do you treat the uninsured portion?

• The claim for the uninsured portion of the deposit is a claim against
the assets of the closed bank. Thus, from its assets, a closed bank
should satisfy first the claim of priority creditors. Any excess may be
used to pay the uninsured portion of the deposits.
PRESCRIPTIVE PERIOD FOR FILING THE CLAIM
• Claim shall be within 2 years from actual take-over of the closed bank
by the receiver (PDIC).

• Hence, the use of the bank’s actual closure date as the reckoning
point for the filing of the claim is improper.

• Once the claim has been filed, the depositor may enforce his/her
claim within 2 years from the date of filing of the claim.
SPLITTING OF DEPOSITS
• Splitting of deposits within 120 days immediately preceding or during
a bank-declared bank holiday, or immediately preceding a closure
order issued by the Monetary Board for the purpose of availing of the
maximum deposit insurance coverage is punishable as a crime.

• Under the BSP's rules, banks are allowed to declare a bank holiday if
and when they can no longer service the withdrawals of their
depositors.
• Can the court stop the PDIC from pursuing an action which is allowed
under its charter?

• ANS: No court, except the CA, shall issue any TRO, preliminary
injunction, or preliminary mandatory injunction against the PDIC for
any action under the PDIC Charter.
DOCUMENTARY REQUIREMENTS FOR
INSURANCE CLAIM
• 1. ORIGINAL EVIDENCE OF DEPOSITS (passbook, certificate of time deposit, bank
statement, used or unused checks, or ATM card);
• 2. TWO (2) VALID ORIGINAL PHOTOBEARING IDENTIFICATION DOCUMENT (ID)
with clear signature of depositor/claimant;
• 3. Photocopy of BIRTH CERTIFICATE from the Philippine Statistics Authority (For
depositors below eighteen (18) years old);
• 4. Original copy of a notarized Special Power of Attorney (SPA) for claimants who
are not the signatories in the bank records; and
• 5. Accomplished Claim Form.

• Depositors with valid deposit accounts with balances of P100,000.00 and below
are not required to file claims.