ANTI – MONEY

LAUNDERING ACT
RA No. 9160, as amended by RA No. 10167 and RA No. 10365
 Money laundering is the illegal process of making large
amounts of money generated by a criminal activity, such as drug
trafficking or terrorist funding, appear to have come from a
legitimate source. The money from the criminal activity is
considered dirty, and the process “launders” it to make it look
CONCEPT OF clean (www.investopedia.com).
MONEY
LAUNDERING Money laundering is the illegal process of concealing the
origins of money obtained illegally by passing it through a
complex sequence of banking transfers or commercial
transactions. The overall scheme of this process returns the
“clean” money to the launderer in an obscure and indirect way
(Oxford English Dictionary, 3rd Edition).
 Placement

STAGES OF
MONEY Layering
LAUNDERING

Integration
 PLACEMENT

The placement stage represents the initial entry of the “dirty” cash or proceeds
of crime into the financial system.

Generally, this stage serves two purposes: (a) it relieves the criminal of holding
and guarding large amounts of bulky cash; and (b) it places the money into the
legitimate financial system. It is during the placement stage that money launderers
are the most vulnerable to being caught. This is due to the fact that placing large
amounts of money (cash) into the legitimate financial system may raise suspicions
of officials.
(www.moneylaundering.ca)
 LAYERING
The layering stage is the most complex and often entails the international
movement of the funds. The primary purpose of this stage is to separate the illicit
money from its source. This is done by the sophisticated layering of financial
transactions that obscure the audit trail and sever the link with the original crime.
During this stage, for example, the money launderers may begin by moving
funds electronically from one country to another, then divide them into
investments placed in advanced financial options or overseas markets; constantly
moving them to elude detection; each time, exploiting loopholes or discrepancies
in legislation and taking advantage of delays in judicial or police cooperation.
(www.moneylaundering.ca)
 INTEGRATION

It is at the integration stage where the money is returned to the criminal from
what seem to be legitimate sources. Having been placed initially as cash and
layered through a number of financial transactions, the criminal proceeds are now
fully integrated into the financial system and can be used for any purpose.
(www.moneylaundering.ca)
It is hereby declared the policy of the State to
protect and preserve the integrity and
confidentiality of bank accounts and to ensure that
the Philippines shall not be used as a money
laundering site for the proceeds of any unlawful PURPOSE OF
activity. Consistent with its foreign policy, the State THE LAW
shall extend cooperation in transnational
investigations and prosecutions of persons involved
in money laundering activities wherever committed.
(Sec. 2, RA No. 9160)
 MONEY LAUNDERING OFFENSE
(AS AMENDED BY RA NO. 10365)

Money laundering is committed by any person who, knowing that any monetary
instrument or property represents, involves, or relates to the proceeds of any
unlawful activity:
(a) transacts said monetary instrument or property;
(b) converts, transfers, disposes of, moves, acquires, possesses or uses said
monetary instrument or property;
(c) conceals or disguises the true nature, source, location, disposition, movement
or ownership of or rights with respect to said monetary instrument or property;
(d) attempts or conspires to commit money laundering offenses referred to in
paragraphs (a), (b) or (c);
(e) aids, abets, assists in or counsels the commission of the money laundering
offenses referred to in paragraphs (a), (b) or (c) above; and
(f) performs or fails to perform any act as a result of which he facilitates the
offense of money laundering referred to in paragraphs (a), (b) or (c) above.
Money laundering is also committed by any covered person who, knowing that a
covered or suspicious transaction is required under this Act to be reported to the
Anti-Money Laundering Council (AMLC), fails to do so.
(Sec. 4, RA No. 10365 amending Sec. 4 of RA No. 9160)
 UNLAWFUL ACTIVITIES / PREDICATE
CRIMES
• Kidnapping for ransom
• Drug offenses
• Graft and corrupt practices
• Plunder
• Robbery and extortion
• Jueteng and masiao
• Piracy on the high seas
• Qualified theft
• Swindling
• Smuggling
• E-commerce violations
• Hijacking, destructive arson and murder,
including those perpetrated by terrorists
against non combatants and similar civilian
targets
• Securities fraud
• Similar offenses punishable abroad
MORE UNLAWFUL ACTIVITIES / PREDICATE
CRIMES ADDED BY RA NO. 10365
• Frauds and illegal transactions (Art. 213-216, • Mining laws
RPC) • Illegal recruitment of migrant workers
• Forgeries and counterfeiting • Terrorism
• Forestry violations • Terrorism financing
• Fisheries violations • Wildlife Protection
• Fencing • Bribery and corruption of public officers
• Caves protection law • Human trafficking
• Carnapping • Intellectual property law violations
• Child abuse • Voyeurism
• Child pornography (Tax evasion is not included  )
 ANTI – MONEY LAUNDERING COUNCIL
The Anti-Money Laundering Council is hereby created and shall be composed of
the Governor of the Bangko Sentral ng Pilipinas as chairman, the Commissioner of
the Insurance Commission and the Chairman of the Securities and Exchange
Commission as members. The AMLC shall act unanimously in the discharge of its
functions as defined hereunder:

(1) to require and receive covered transaction reports from covered institutions;
(2) to issue orders addressed to the appropriate Supervising Authority or the
covered institution to determine the true identity of the owner of any monetary
instrument or property subject of a covered transaction report or request for
assistance from a foreign State, or believed by the Council, on the basis of
substantial evidence, to be, in whole or in part, wherever located, representing,
involving, or related to, directly or indirectly, in any manner or by any means, the
proceeds of an unlawful activity;
(3) to institute civil forfeiture proceedings and all other remedial proceedings
through the Office of the Solicitor General;
(4) to cause the filing of complaints with the Department of Justice or the
Ombudsman for the prosecution of money laundering offenses;
(5) to initiate investigations of covered transactions, money laundering activities
and other violations of this Act;

(6) to freeze any monetary instrument or property alleged to be proceeds of any

unlawful activity;

(7) to implement such measures as may be necessary and justified under this Act to
counteract money laundering;

(8) to receive and take action in respect of, any request from foreign states for
assistance in their own anti-money laundering operations provided in this Act;
(9) to 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; and

(10) to 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.
(Sec. 7, RA No. 9160)
 FREEZE ORDER

There are two (2) instances where the AMLC may take advantage of a freeze
order:
(1) Upon verified ex parte petition before the Court of Appeals (Sec. 8, RA No.
10365 amending Sec. 1, RA No. 10167 which previously amended Sec. 10, RA
No. 9160);
(2) Upon its own initiative or at the Anti – Terrorism Council’s request (Sec. 11,
RA No. 10168, otherwise known as the Terrorism Financing Prevention and
Suppression Act of 2012).
 FREEZE ORDER
SEC. 8, RA NO. 10365 AMENDING SEC. 1, RA NO. 10167 WHICH
PREVIOUSLY AMENDED SEC. 10, RA NO. 9160

Upon a verified ex parte petition by the AMLC and after determination that

probable cause exists that any monetary instrument or property is in any way
related to an unlawful activity as defined in Section 3(i) hereof, the Court of
Appeals may issue a freeze order which shall be effective immediately, for a
period of twenty (20) days. Within the twenty (20)-day period, the Court of
Appeals shall conduct a summary hearing, with notice to the parties, to determine
whether or not to modify or lift the freeze order, or extend its effectivity. The total
period of the freeze order issued by the Cout of Appeals under this provision shall
not exceed six (6) months.
This is without prejudice to an asset preservation order that the Regional Trial
Court having jurisdiction over the appropriate anti-money laundering case or civil
forfeiture case may issue on the same account depending upon the circumstances
of the case, where the Court of Appeals will remand the case and its
records: Provided, That if there is no case filed against a person whose account has
been frozen within the period determined by the Court of Appeals, not exceeding
six (6) months, the freeze order shall be seemed ipso
facto lifted: Provided, further, That this new rule shall not apply to pending cases
in the courts. In any case, the court should act on the petition to freeze within
twenty-four (24) hours from filing of the petition. If the application is filed a day
before a no working day, the computation of the twenty-four (24)-hour period shall
exclude the nonworking days.
The freeze order or asset preservation order issued under this Act shall be limited
only to the amount of cash or monetary instrument or value of property that the
court finds there is probable cause to be considered as proceeds of a predicate
offense, and the freeze order or asset preservation order shall not apply to amounts
in the same account in excess of the amount or value of the proceeds of the
predicate offense.
 FREEZE ORDER
SEC. 11, RA NO. 10168

The AMLC, either upon its own initiative or at the request of the ATC, is hereby
authorized to issue an ex parte order to freeze without delay:
(a) Property or funds that are in a way related to financing of terrorism or acts of
terrorism;
(b) Property or funds of any person, group of persons, terrorist organization, or
association in relation, in relation to whom there is probable cause to believe
that they are committing or attempting or conspiring to commit, or
participating in or facilitating the commission of financing of terrorism or acts
of terrorism as defined herein.
The freeze order shall be effective for a period not exceeding twenty (20) days.
Upon a petition filed by the AMLC before the expiration of the period, the
effectivity of the freeze order may be extended up to a certain period not
exceeding six (6) months upon order of the Court of Appeals; Provided, that the
twenty – day period shall be tolled upon filing of a petition to extend the
effectivity of the freeze order.
 COVERED TRANSACTIONS

It is a transaction in cash or other equivalent monetary instrument involving a total

amount in excess of P500,000.00 within one (1) banking day; for casinos that are
now covered under Section 3(a)(8), a single casino transaction involving an
amount in excess of P5,000,000.00 or its equivalent in any other currency (Sec. 2,
RA No. 10927 amending Sec. 3(b), RA No. 9160).
 COVERED ENTITIES
Entities supervised or regulated by the BSP:
• Banks
• Non – Banks
• Quasi – Banks
• Trust entities
• Pawnshops
• Non – stock savings and loans associations
• Electronic money issues
• Foreign exchange dealers, money changers, remittance and transfer companies
• Other entities regulated and supervised by the BSP
Persons and entities supervised or regulated by the Insurance Commission:
• Insurance companies
• Pre – need companies
• Insurance agents
• Insurance brokers
• Professional reinsurers
• Reinsurance brokers
• Holding companies
• Holding company systems
• Mutual benefit associations
• All other persons and entities supervised or regulated by the IC
Persons and entities supervised and regulated by SEC:
• Securities dealers, brokers, salesmen, investment houses, and other similar persons managing
securities or rendering services, such as investment agents, advisors, or consultants;
• Mutual funds or open – end investment companies, close – end investment companies or issuers,
and other similar entities;
• Other entities, administering or otherwise dealing in commodities, or financial derivatives based
thereon, valuable objects, cash substitutes, and other similar monetary instruments or properties,
supervised or regulated by SEC.
Designated Non – Financial Businesses and Professions
• Jewelry dealers, dealers in precious metals, and dealers in precious stones;
• Company service providers which, as a business, provide any of the following services to third
persons:
• Acting as formation agent of juridical persons;
• Acting as (or arranging for another person to act as) director or corporate secretary of a
company, partner of a partnership, or a similar position in relation to other juridical persons;
• 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
• Acting as (or arranging for another person to act as) a nominee share – holder for another
person
• Persons, including lawyers and accountants (except for independent legal or accounting
professionals), who provide any of the following services:
• Managing of client money, securities or other assets;
• Management of bank, savings, securities or other assets;
• 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.
• Casinos: business authorized to engage in gaming operations. It includes internet – based and
ship – based casinos.
 SUSPICIOUS TRANSACTIONS
Transactions with covered institutions, regardless of the amounts involved, where
any of the following circumstances exist:
• There is no underlying legal or trade obligation, purpose or economic
justification;
• The client is not properly identified;
• The amount involved is not commensurate with the business or financial
capacity of the client;
• 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;
• Any circumstances 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;
• The transaction is in any way related to an unlawful activity or offense under the
AMLA that is about to be, is being or has been committed; or
• Any transaction that is similar or analogous to any of the foregoing.
 OBLIGATIONS OF COVERED INSTITUTIONS

CUSTOMER IDENTIFICATION

Covered institutions shall establish and record the true identity of its clients based
on official documents. They shall maintain a system of verifying the true identity
of their clients and, in case of corporate clients, require a system of verifying their
legal existence and organizational structure, as well as the authority and
identification of all persons purporting to act on their behalf.
RECORD KEEPING

All records of transactions of covered institutions shall be maintained and safely

stored for five years from the dates of transactions. With respect to closed
accounts, the records on customer identification, account files and business
correspondence, shall be preserved and safely stored for at least five years from
the dates when they were closed.
REPORTING OF COVERED AND SUSPICIOUS TRANSACTIONS

Covered institutions shall report to the AMLC all covered or suspicious

transactions within five working days from occurrence thereof, unless AMLC
prescribes a longer period not exceeding fifteen (15) working days. Conviction of
the unlawful activity is not necessary before a report is made.

(Sundiang, Sr. and Aquino)

 PROHIBITION ON REPORTING
When reporting covered or suspicious transactions to AMLC, covered persons and
their officers and employees are prohibited from communicating, directly or
indirectly, in any manner or by any means, to any person or entity, the media, the
fact that a covered or suspicious transaction has been reported or is about to be
reported, the contents of the report, or any other information in relation thereto.
Neither may such reporting be published or aired in any manner or form by the
mass media, including in or by electronic mail, or other similar devices. In case of
violation thereof, the concerned officer and employee of the covered person and
media shall be held criminally liable.
(Riguera)
 SAFE HARBOR PROVISION
No administrative, criminal or civil proceedings, shall lie against any person
for having made a covered or suspicious transaction report in the regular
performance of his duties in good faith, whether or not such reporting results in
any criminal prosecution under this Act or any other law.
Lawyers and accountants acting as independent legal and accounting
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.
(Riguera)
 AUTHORITY OF THE AMLC TO INQUIRE
INTO AND EXAMINE BANK DEPOSITS
The AMLC may inquire into or examine any particular deposit or investment, including
related accounts, with any banking institution or non-bank financial institution. This can
either be upon court order or without court order in certain exceptional cases.

Related accounts shall refer to accounts, the funds and sources of which originated from
and/or are materially linked to monetary instruments or properties subject to freeze orders.
A court order ex parte must first be obtained before the AMLC can inquire into related
accounts.
(Sundiang, Sr. and Aquino)
 BANK INQUIRY WITH COURT ORDER

In cases of violations of RA No. 9160 as amended, 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/predicate crimes or a money
laundering offense.

The AMLC must submit a verified ex parte petition to the Court of Appeals asking
to inquire into bank deposits, including related accounts.
(Sundiang, Sr. and Aquino)
 BANK INQUIRY WITHOUT COURT ORDER
No court order shall be required for the examination of bank deposits by AMLC in cases involving:
• Kidnapping for ransom (Art. 267, RPC);
• Drug offenses (Sec. 4, 5, 7, 8, 9, 10, 12, 13, 14, 15, RA No. 9165);
• Hijacking and other violations (RA No. 6235), destructive arson and murder (RPC), including
those perpetrated by terrorists against non-combatant person and similar targets;
• Felonies or offenses of similar nature punishable under the penal laws of other countries;
• Terrorism and conspiracy to commit terrorism (RA No. 9372);
• Terrorism financing (RA No. 10168).
 CONCEPT OF BENEFICIAL OWNERSHIP
A “beneficial owner” is a natural person who:
• Ultimately owns or controls the corporation;
• Has ultimate control over the corporation.
In other words, a beneficial owner is a natural individual who controls the
customer.

Covered persons are required to determine who the beneficial owner, if any, of a
certain transaction is aside from the actual customer.
(www.conventuslaw.com)
 CIVIL FORFEITURE

Upon determination by the AMLC that probable cause exists that any monetary
instrument or property is in any way related to an unlawful activity as defined in
Section 3(i) or a money laundering offense under Section 4 hereof, the AMLC
shall file with the appropriate court through the Office of the Solicitor General, a
verified ex parte petition for forfeiture, and the Rules of Court on Civil Forfeiture
shall apply.
The forfeiture shall include those other monetary instrument or property having an
equivalent value to that of the monetary instrument or property found to be related
in any way to an unlawful activity or a money laundering offense, when with due
diligence, the former cannot be located, or it has been substantially altered,
destroyed, diminished in value or otherwise rendered worthless by any act or
omission, or it has been concealed, removed, converted, or otherwise transferred,
or it is located outside the Philippines or has been placed or brought outside the
jurisdiction of the court, or it has been commingled with other monetary
instrument or property belonging to either the offender himself or a third person or
entity, thereby rendering the same difficult to identify or be segregated for
purposes of forfeiture.
 TERRORISM

Terrorism is committed by any person who commits the crimes

enumerated in Sec. 3, RA No. 9372 and other relevant laws adding to
or amending the same, thereby sowing and creating a condition of
widespread and extraordinary fear and panic among the populace, in
order to coerce the government to give in to an unlawful demand. The
Human Security Act also punishes conspiracy to commit terrorism.
 TERRORISM FINANCING

Terrorism financing is an act whereby a person directly or indirectly, willfully and

without lawful excuse, possesses, provides, collects or uses property or funds or
makes available property, funds or financial services or other related services, by
any means, with the unlawful or willful intention that they should be used or with
the knowledge that they are to be used, in full or in part: (a) to carry out or
facilitate the commission of any terrorist act; (b) by a terrorist organization,
association or group; (c) by an individual terrorist.
(Sec. 4, RA No. 10168)
END