Basic Queries About Money Laundering & The Anti-money Laundering Act [amla]

BASIC QUERIES ABOUT MONEY LAUNDERING & THE ANTI-MONEY LAUNDERING ACT [AMLA] (RA No. 9160, as amended by RA No. 9194, RA 10167, RA 10365 & RA 10927, the Revised Implementing Rules and Regulations [RIRR]), and the Casino Implementing Rules and Regulations (CIRR) of RA 10927 --------------------------------------------------------------------------------------------------------------------1.

What is money laundering? -

The act of transferring the monetary proceeds derived from illicit activities into funds with an apparently legal source.

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Laundering: The term used to describe investment or other transfer of money flowing from racketeering, drug transactions, and other illegal sources into legitimate channels so that its original source cannot be traced. (Black’s Law Dictionary, 6th ed.)

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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, as amended by RA 10365) 2.1. What are the phases of money laundering? - There are three (3) phases of money laundering: a. Placement or the stashing of funds into a financial institution. b. Layering: Money is moved from one institution to another in a confusing trail. c. Integration: Taking of funds from various banks or covered institution and invest in a legitimate business.

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Who are the “covered persons” under the AMLA? - ‘Covered persons’, natural or juridical, refer to: (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 Bangko Sentral ng Pilipinas (BSP);

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(2) insurance companies, pre-need companies and all other persons supervised or regulated by the Insurance Commission (IC); (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 Securities and Exchange Commission (SEC); (4) 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); (5) jewelry dealers in precious stones, who, as a business, trade in precious stones, for transactions in excess of One million pesos (P1,000,000.00); (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 or arrangement; and (iv) acting as (or arranging for another person to act as) a nominee shareholder for another person; and (7) persons who provide any of the following services:

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(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. (Sec. 3a, 10365) (8) casinos, including internet and ship-based casinos, with respect to their casino cash transactions related to the gaming operations (Sec. 1, RA 10927). Included are other entities as may be determined by the AGA (Appropriate Government Agency) (Section 5, Rule II, CIRR). Section 3, RA 10967 provides further: (1) ‘Casino’ refers to a business authorized by the appropriate government agency to engage in gaming operations:

(i) ‘Internet-based casinos’ shall refer a casinos in which persons participate by the use of remote communication facilities such as, but not limited to, internet, telephone, television, radio or any other kind of electronic or other technology for facilitating communication; and

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(ii) ‘Ship-based casino’ shall refer to casinos, the operation of which is undertaken on board a vessel, ship, boat or any other water-based wholly or partly intended for gambling; 2

(2) ‘Casino cash transaction’ refers to transactions involving the receipt of cash by a casino paid by or on behalf of a customer, or transactions involving the payout of cash by a casino to a customer or to any person in his/her behalf; and (3) ‘Gaming operations’ refer to the activities of the casino offering games of chance and any variations thereof approved by the appropriate government authorities. Gaming operations EXCLUDE the following: 1) Traditional Bingo operations authorized by the AGA; 2) Lotteries and sweepstakes of the Philippine Charity Sweepstakes Office (PCSO); and 3) Such other games of chance and variations as may be declared exempt by the AGA based on the result of their money laundering and terrorist financing risk assessment in consultation with AMLC. (Section 6Q, Rule III, CIRR). 2.1. Are lawyers and accountants included in the term "covered persons?" - The term ‘covered persons’ shall exclude lawyers and accountants acting as independent legal professionals in relation to information concerning their clients or where disclosure of information would compromise client confidences or the attorney-client relationship: Provided, That these lawyers and accountants are authorized to practice in the Philippines and shall continue to be subject to the provisions of their respective codes of conduct and/or professional responsibility or any of its amendments. (Sec. 3a, RA 10365) Lawyers and accountants who are: (1) authorized to practice their profession in the Philippines; and (2) engaged as independent legal or accounting professionals, in relation to information concerning their clients, or where disclosure of information would compromise client confidences or the attorney-client relationship, are not covered persons. “Independent legal or accounting professional” are lawyers and accountants working in a private firm or as a sole practitioner who by way of business provides purely legal, notarial or accounting services to their clients. “Purely Legal/Accounting Service” refers to: (1) Rendition of purely litigation, notarial, legal counseling, and/or other services that can only be undertaken by a lawyer, as a professional; or (2) Rendition of purely accounting, auditing and/or other services that can only be undertaken by a certified public accountant, as a professional. (Rule 2, Sec.1dddd 2018 RIRR) Persons, including lawyers and accountants, who provide any of the following services are COVERED: (a) Managing of client money, securities or other assets; (b) Management of bank, savings, securities or other assets; (c) Organization of contributions for the creation, operation or management of companies; and (d) Creation, operation or management of juridical persons or arrangements, and buying and selling business entities.

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2.2. What are "precious metals?" - Precious metals shall mean gold, silver, platinum, palladium, rhodium, ruthenium, iridium and osmium. These include alloys of precious metals, solders and plating chemicals such as rhodium and palladium plating solutions and potassium gold cyanide and potassium silver cyanide and silver cyanide in salt solution. (Sec. 3j, RA 10365) 2.3. What are "precious stones?" - Precious stones shall mean diamond, ruby, emerald, sapphire, opal, amethyst, beryl, topaz, and garnet that are used in jewelry making, including those formerly classified as semi-precious stones. (Sec. 3k, RA 10365) “Dealer in Precious Metals and Stones/Jewelry Dealer” refers to an individual or entity who buys and/or sells precious metals, precious stones, and/or jewelry in the course of its business activities. The purchases or sales of precious metals, precious stones, and/or jewelry, as referred to herein, exclude those carried out for, connected with, or for the purpose of extracting precious metals or precious stones from a mine, or cutting or polishing precious stones. (Rule 2, Sec.1dd 2018 RIRR) 2.4. What are the Primary Duties of Covered Persons. -Covered persons shall, comply with all the requirements under the AMLA and TFPSA, their respective IRR, and other AMLC issuances. They shall have the duty to cooperate with the AMLC in the, discharge of the latter’s mandate, and execution of its lawful orders and issuances, to protect their businesses or professions from being used in ML/TF activities. The covered persons’ board of directors, partners or sole proprietors shall be ultimately responsible for the covered persons’ compliance with the AMLA and TFPSA, their respective IRR, and other AMLC issuances. (Section 2, Rule 4, 2018 RIRR) 3.

What is a “covered transaction?” “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 with or involving jewelry dealers, dealers in precious metals and dealers in precious stones in cash or other equivalent monetary instrument exceeding One Million pesos (Php1,000,000.00). (3) A casino cash transaction exceeding Five Million Pesos (PHP5,000,000.00) or its equivalent in other currency. (Rule 2, Sec.1w 2018 RIRR) (*Monetary instrument refers, but not limited, to: (1) Coins or currency of legal tender of the Philippines, or of any other country; (2) Credit instruments, including bank deposits, financial interest, royalties, commissions, and other intangible property; (3) Drafts, checks, and notes;

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(4) Stocks or shares, participation or interest in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character, including those enumerated in Section 3 of the Securities Regulation Code; (5) A participation or interest in any non-stock, non-profit corporation; (6) Securities or negotiable instruments, bonds, commercial papers, deposit certificates, trust certificates, custodial receipts, or deposit substitute instruments, trading orders, transaction tickets, and confirmations of sale or investments and money market instruments; (7) Contracts or policies of insurance, life or non-life, contracts of suretyship, preneed plans, and member certificates issued by mutual benefit association; and (8) Other similar instruments where title thereto passes to another by endorsement, assignment, or delivery. (Sec 1eee, Rule 2, 2018 RIRR) 3.1. What is a “transaction?” - refers to any act establishing any right or obligation, or giving rise to any contractual or legal relationship between the covered person and its customer. It also includes any movement of funds, by any means, in the ordinary course of business of a covered person. (Rule 2, Sec.1eeeee 2018 RIRR) 4.

What is “suspicion?” “suspicious transaction?” SUSPICION refers to a person’s state of mind—based on his skills, experience, and/or understanding of the customer profile—which considers that there is a possibility that any of the suspicious circumstances exists. (Rule 2, Sec.1yyyy 2018 RIRR) SUSPICIOUS TRANSACTION refers to a transaction, regardless of amount, where any of the suspicious circumstances, is determined, based on suspicion or, if available, reasonable grounds, to be existing. (Rule 2, Sec.1zzzz 2018 RIRR) 4.1. What is a “suspicious circumstance? -

refers to any of the following circumstances, the existence of which makes a transaction suspicious: (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 ML/TF or related unlawful activity 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, such as the relevant transactions in related and materiallylinked accounts. (Rule 2, Sec.1xxxx 2018 RIRR)

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What is an “unlawful activity?” - 'Unlawful activity’ refers to any act or omission or series or combination thereof involving or having direct relation to the following: (1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended; (2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002; (3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act; (4) Plunder under Republic Act No. 7080, as amended; (5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended; (6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602; (7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No. 532; (8) Qualified theft under Article 310 of the Revised Penal Code, as amended; (9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of the Revised Penal Code, as amended; (10) Smuggling under Republic Act Nos. 455 and 1937; (11) Violations of Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000; (12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the Revised Penal Code, as amended; (13) Terrorism and conspiracy to commit terrorism as defined and penalized under Sections 3 and 4 of Republic Act No. 9372; (14) Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6, 7 and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing Prevention and Suppression Act of 2012; (15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as amended, and Corruption of Public Officers under Article 212 of the Revised Penal Code, as amended; (16) Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216 of the Revised Penal Code, as amended; (17) Malversation of Public Funds and Property under Articles 217 and 222 of the Revised Penal Code, as amended; (18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the Revised Penal Code, as amended; (19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-Trafficking in Persons Act of 2003; (20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705, otherwise known as the Revised Forestry Code of the Philippines, as amended; (21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise known as the Philippine Fisheries Code of 1998; (22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known as the Philippine Mining Act of 1995; (23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147, otherwise known as the Wildlife Resources Conservation and Protection Act; (24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National Caves and Cave Resources Management Protection Act; (25) Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of 2002, as amended; (26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended, otherwise known as the Decree Codifying the Laws on Illegal/Unlawful

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Possession, Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or Explosives; (27) Violation of Presidential Decree No. 1612, otherwise known as the AntiFencing Law; (28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022; (29) Violation of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines; (30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo and Video Voyeurism Act of 2009; (31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child Pornography Act of 2009; (32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic Act No. 7610, otherwise known as the Special Protection of Children Against Abuse, Exploitation and Discrimination; (33) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation Code of 2000; and (34) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.” (Sec. 3[i], RA 10365; Rule 3, Sec.1, 2018 RIRR) 5.1. What are the Predicate Offenses to Money Laundering (ML)? - All unlawful activities are the predicate offenses to ML. (Sec. 2, Rule 9, 2018 RIRR) 6.

What court has jurisdiction over money laundering cases? -

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The Regional Trial Courts shall have jurisdiction to try all cases on money laundering. Those committed by public officers and private persons who are in conspiracy with such pubic officers shall be under the jurisdiction of the Sandiganbayan (Sec. 5, AMLA; Sec. 3, Rule 9, 2018 RIRR). Who shall investigate money laundering offense?

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The AMLC (Anti-money Laundering Council) shall investigate (a) suspicious transactions; (b) covered transactions deemed suspicious after an investigation conducted by the AMLC; (c) money laundering activities; and (d) other violations of the AMLA (Rule 5.2., RIRR). Upon a finding of probable cause to charge a person with money laundering offense, the AMLC will cause the filing of a complaint with the DOJ or the Ombudsman, which shall conduct a preliminary investigation (Rule 6.2., RIRR). May a person be charged and/or convicted both for money laundering offense and unlawful activity?

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Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as herein defined. The prosecution of any offense or violation under this Act shall proceed independently of any proceeding relating to the unlawful activity. (Sec. 6, RA 10365) What is the composition of the AMLC? The composition of the AMLC: Chairman : BSP Governor Members : (a) Commissioner of the IC; and (b) Chairman of the SEC (Rule 7.1.a., RIRR)

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The AMLC shall act UNANIMOUSLY in discharging its functions. 9.1. What are the functions of the AMLC? - The functions of the AMLC are: 1) to require and receive covered or suspicious transaction reports from covered institutions; 2) to issue orders addressed to the appropriate Supervising Authority or the covered person to determine the true identity of the owner of the monetary instrument or property subject of a covered transaction or suspicious 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 offense; 5) to investigate suspicious transactions and covered transactions deemed suspicious after an investigation by AMLC, money laundering activities, and other violations of this Act; 6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property alleged to be laundered, proceeds from, or instrumentalities used in or intended for use in any unlawful activity as defined in Section 3(i) hereof; 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; 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; 11) to impose administrative sanctions for the violation of laws, rules, regulations and orders and resolutions issued pursuant thereto; and 12) to require the Land Registration Authority and all its Registries of Deeds to submit to the AMLC, reports on all real estate transactions involving an amount in excess of Five hundred thousand pesos (P500,000.00) within fifteen (15) days from the date of registration of the transaction, in a form to be prescribed by the AMLC. The AMLC may also require the Land Registration Authority and all its Registries of Deeds to submit copies of relevant documents of all real estate transactions. (Sec. 7, RA 10365) 9.1. Does the AMLC exercise quasi-judicial powers? - No. The AMLC does not exercise quasi-judicial powers and is simply an investigatory body (Subido Pagente Certeza Mendoza and Binay Law Offices v. CA, G.R. No. 216914, 06 December 2016).

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The AMLA is the first line of defense against money laundering in compliance with our international obligation. There are three (3) stages of determination, two (2) levels of investigation, falling under three (3) jurisdictions: 1. The AMLC investigates possible money laundering offences and initially determines whether there is probable cause to charge any person with a money laundering offence under Section 4 of the AMLA, resulting in the filing of a complaint with the Department of Justice or the Office of the Ombudsman; 2. The DOJ or the Ombudsman conducts the preliminary investigation proceeding and if after due notice and hearing finds probable cause for money laundering offences, shall file the necessary information before the Regional Trial Courts or the Sandiganbayan; 3. The RTCs or the Sandiganbayan shall try all cases on money laundering, as may be applicable. (Subido Pagente Certeza Mendoza and Binay Law Offices v. CA, G.R. No. 216914, 06 December 2016). AMCL is an investigating body; the bank inquiry ex parte is not a violation of the constitutional right to due process The AMLC, in investigating probable money laundering activities, does not exercise quasi-judicial powers, but merely acts as an investigatory body with the sole power of investigation similar to the functions of the National Bureau of Investigation (NBI). Hence, the ex parte application for the bank inquiry order cannot be said to violate any person's constitutional right to procedural due process. Also, the source of the right to privacy respecting bank deposits is statutory, not constitutional; hence, the Congress may validly carve out exceptions to the rule on the secrecy of bank deposits, as illustrated in Section 11 of R.A. No. 9160. The AMLC's inquiry and examination into bank accounts are not undertaken whimsically based on its investigative discretion. The AMLC and the CA are respectively required to ascertain the existence of probable cause before any bank inquiry order is issued. Section 11 of R.A. 9160, even with the allowance of an ex parte application therefor, cannot be categorized as authorizing the issuance of a general warrant. This is because a search warrant or warrant of arrest contemplates a direct object but the bank inquiry order does not involve the seizure of persons or property. (Estrada v. Sandiganbyan (5th Division), G.R. No. 217682, July 17, 2018, J. Bersamin) 10.

What are the measures under the AMLA to prevent money laundering? a)

Customer Identification Covered institutions shall maintain accounts only in the true and full name of the account owner or holder. The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under fictitious names, and all other similar accounts shall be absolutely prohibited (Sec. 9, AMLA; Rule 9.1.e., RIRR). Covered institutions shall establish and record the TRUE IDENTITY of its clients based on official documents (Rule 9.1.a, RIRR). The AMLA Rules (Rule 9.1.f., RIRR) even prohibits the opening and creation of new accounts without FACE-TO-FACE contact and full compliance with the requirements of customer identification.

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b)

Record keeping

All covered persons shall maintain and safely store for five (5) years records of its transactions (Rule 9.2., RIRR). For existing and new accounts, 5-years from 17 October 2001 or from the dates of the accounts or transactions, whichever is later (Rule 9.2.b., RIRR). For closed accounts, 5-years from date of closure (Rule 9.2.c., RIRR). However, if any money laundering case based on any record has been filed, said record must be retained beyond the 5-year period until the final resolution or termination of the case (Rule 9.2.d., RIRR). c)

occurrence exceeding

relevant subject to 10365)

Reporting of Covered and Suspicious Transactions. Covered persons shall report to the AMLC all covered transactions and suspicious transactions within five (5) working days from thereof, unless the AMLC prescribes a different period not fifteen (15) working days. Lawyers and accountants acting as independent legal professionals are not required to report covered and suspicious transactions if the information was obtained in circumstances where they are professional secrecy or legal professional privilege. (RA

10.1. Are numbered accounts allowed? - YES. PESO and FOREIGN CURRENCY NON-CHECKING numbered accounts shall be allowed; Provided, the TRUE IDENTITY of the customer is obtained and recorded that is open to examination by the BSP, SEC and IC (Sec. 9, AMLA; Rule 91.g., RIRR). 10.2. What about anonymous accounts or accounts under fictitious names? - NO. The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under fictitious names and all other similar accounts shall be absolutely prohibited. (Sec. 9, AMLA) 11.

What is required of covered persons in cases of occurrence of covered and suspicious transactions? -

Covered persons shall report to the AMLC all covered transactions and suspicious transactions within five (5) working days from occurrence thereof, unless the AMLC prescribes a different period not exceeding fifteen (15) working days. 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. (RA 10365)

11.1. What is “transaction reporting?” 10

Covered Transaction (CTR) also a Suspicious Transaction (STR). Should a transaction be determined to be both a covered and a suspicious transaction, the same shall be reported as a suspicious transaction. In this regard, it shall l be reported first as a CTR, subject to updating if it is finally confirmed to be reportable as STR. (Rule 22, 2018 RIRR) Exemption from reporting: Lawyers and accountants who are: (a) authorized to practice their profession in the Philippines; and (b) engaged as independent legal or accounting professionals, in relation to information concerning their clients, or where disclosure of information would compromise client confidences or the attorney-client relationship are not required to file CTRs. Lawyers and accountants, however, are not precluded from submitting STRs to the AMLC with regard to any transaction of their clients that is in any way related to ML/TF or related unlawful activity that is about to be committed, is being or has been committed. (Rule 22, 2018 RIRR) Confidentiality of reporting: When reporting covered or suspicious transactions, 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, or the media, the fact that a covered or suspicious transaction has been or is about to be reported, the contents of the report, or any other information in relation thereto. Any information about such reporting shall not be published or aired, in any manner or form, by the mass media, or through 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. (RA 10365; Rule 22, Se.6 2018 RIRR) 12.

Is there a violation of the secrecy of bank deposits law and similar laws when reporting covered or suspicious transactions? -

NONE. When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers and employees, shall not be deemed to have violated the secrecy of bank deposits law and similar laws (Rule 9.3.c., RIRR).

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In fact, 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 and in good faith, whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law ( Rule 9.3.e). This is known as the SAFE HARBOR PROVISION.

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When reporting covered or suspicious transactions to the 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

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or form by the mass media”, 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. (RA 10365) 16.

What action may the AMLC interpose against proceeds of any unlawful activity? -

The AMLC shall apply via a verified ex parte petition before the Court of Appeals (CA) for a FREEZE ORDER of any monetary instrument or property alleged to be proceeds of any unlawful activity (Rule 7.2. par. 6, RIRR; Section 4, RA 10967).

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The AMLC may also apply for an asset preservation order before the Regional Trial Court having jurisdiction over the appropriate anti-money laundering case or civil forfeiture case regarding the same account (Section 4, RA 10967). 16.1. What is the nature of a freeze order? - A freeze order is an extraordinary and interim relief issued by the CA to prevent dissipation, removal, or disposal of properties that are suspected to be proceeds of, or related to, unlawful activities as defined in Section 3(i) of RA 9160, as amended. The primary objective of a freeze order is to temporarily preserve monetary instrument or property that are in any way related to an unlawful activity or money laundering, by preventing the owner from utilizing them during the duration of the freeze order. The relief is pre-emptive in character, meant to prevent the owner from disposing his property and thwarting the State’s effort in building its case and eventually filing civil forfeiture proceedings and/or prosecuting the owner (Ligot v. Republic, 692 SCRA 509, 06 March 2013). 16.2. What is the basis in obtaining a freeze order? - Upon a determination that probable cause exist that any monetary instrument or property is in any way related to an unlawful activity in Sec. 3(i). (RA 10365; Sec. 4, RA 10967) (*Probable Cause – It includes such facts and circumstances which would lead a reasonably discreet, prudent or cautious man to believe than an unlawful activity and/or money laundering offense is about to be, is being or has been committed and that the account or any monetary instrument or property subject thereof sought to be frozen is in any way related to said unlawful activity and/or money laundering offense [Rule 10..2., RIRR]). (**Related Web of Accounts – Related web of accounts pertaining to the money instrument or property subject of the freeze order is defined as those accounts, the funds and sources of which originated from and/or are materially linked to the monetary instrument(s) or property(ies) subject of the freeze order(s) [Rule 10.4., RIRR]). 16.3. What is the effective period of the freeze order? - The freeze order shall be effective immediately, for a period of twenty (20) days. Within the twenty (20)-day period, the CA 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 CA under this provision shall not exceed six (6) months.

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If there is no case filed against a person whose account has been frozen within the period determined by the CA, not exceeding six (6) months, the freeze order shall be seemed ipso facto lifted (Section 4, RA 10967). The freeze order shall take effect immediately and shall remain effective for a total period not exceeding six (6) months. This is without prejudice to an asset preservation order that the regional trial court having jurisdiction over the appropriate AMLC 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. (Sec.2.8, 2018 RIRR) Lifting the Effects of the Freeze Order (a) The freeze order shall be deemed ipso facto lifted after its expiration, unless an ML complaint against the person whose monetary instrument or property was frozen, or a petition for CF against the frozen monetary instrument or property, has been filed, in which case the freeze order shall remain effective until the ML case is terminated or an asset preservation order is issued, respectively. (b) Before the expiration of the freeze order, the covered person shall secure a written confirmation from the AMLC to ascertain if a petition for civil forfeiture or an ML complaint has been filed. (Sec. 2.10, Rule 10, 2018 RIRR) 16.4. Within what period will the CA act on the application for a freeze order? - CA shall act on the application within 24-hours from filing of the petition. If the application is filed a day before a nonworking day, the computation of the 24hour period shall exclude the nonworking days (Section 4, RA 10967). 16.5. What amount, cash or instrument is covered by the freeze order or asset protection order? - The freeze order or asset preservation order 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 (Section 4, RA 10967). 16.6. What is the remedy of a person whose account was frozen? - A person whose account has been frozen may file a motion to lift the freeze order and the court must resolve this motion before the expiration of the freeze order. Motion to Lift (Rule 10, Sec. 2.9, 2018 RIRR) (a) A person whose monetary instrument or property has been frozen may file a motion to lift the freeze order. (b) If a freeze order is imposed on an account, including bank account, of a covered person that it uses for payment of salary, rent, suppliers, and/or taxes in the ordinary course of a legitimate business, the covered person may apply with the court which issued the freeze order to lift the same by submitting a bond or other acceptable securities of equal value to the amount or value subject of the freeze order. The bond or security when approved by the court shall secure the

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payment or enforcement of any order or judgment that the AMLC may recover in the appropriate action relating to the freeze order. (c) The court must resolve the motion before the expiration of the freeze order. 16.7. May a court issue a TRO/injunction against a freeze order? - No court shall issue a temporary restraining order or a writ of injunction against any freeze order except the Supreme Court (SC) (Sec. 10, RA 10365). 16.8. What is an asset preservation order (APO)? - Asset Preservation Order” (APO) refers to a provisional remedy aimed at preserving monetary instruments or properties in any way related to an unlawful activity or money laundering offense, during the pendency of civil forfeiture proceedings. (Rule 2, Sec.1f 2018 RIRR) - Upon verified petition by the AMLC, with prayer for issuance of asset preservation order, and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity, the Regional Trial Court may issue an asset preservation order, in accordance with the “Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money Laundering Offense under Republic Act No. 9160, as Amended” (A.M. No. 05-11-04-SC), which shall be effective immediately, forbidding any transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition of the subject monetary instrument or property. (Rule 12, Sec. 1.4 2018 RIRR). 16.9 What is the remedy against a APO? - File a Motion to Discharge. (a) A person whose monetary instrument or property has been preserved may file a motion to discharge the asset preservation order. (b) If an asset preservation order is imposed on an account of a covered person that it uses for payment of salary, rent, suppliers, and/or taxes in the ordinary course of a legitimate business, the covered person may apply with the court which issued the asset preservation order to discharge the same by submitting a bond or other acceptable securities of equal value to the amount or value subject of the asset preservation order. The bond or security when approved by the court shall secure the payment or enforcement of any order or judgment that the AMLC may recover in the appropriate action relating to the asset preservation order. (Section 1.5, Rule 12, 2018 RIRR) 17.

May the AMLC inquire into or examine bank deposits or investments without violating the secrecy of bank deposits law and similar laws? -

YES. Notwithstanding the provisions of RA No. 1405 (Secrecy of Bank Deposits), RA No. 6426 (Foreign Currency Deposits Acts), RA No. 8791 (General Banking Law) and other laws, the AMLC may inquire or examine any particular deposit or investment, including related accounts, with any banking institution or non-bank financial institutions (Sec. 11, AMLA, as amended by RA 10167). Bank inquiry may be with or without a court order. a) Inquiry of bank deposits WITH court order

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- Bank inquiry order maybe availed of ex parte premised on the existence of probable cause for violation of an unlawful activity under Sec. 3 (i) or money laundering offense under Sec. 4. - inquiry includes related accounts which shall refer to accounts, the funds and sources of which originated from and/or are materially linked to the monetary instruments(s) or property(ies) subject of the freeze order(s). 1. - The Court of Appeals shall act on the application to inquire into or examine any deposit or investment with any banking institution or nonbank financial institution within twenty-four (24) hours from filing of the application. (RA 10167) - The authority to inquire into or examine the main account and the related accounts shall comply with the requirements of Article III, Sections 2 and 3 of the 1987 Constitution (RA 10167). Likewise, the constitutional injunction against ex post facto laws and bills of attainder shall be respected in the implementation of the AMLA (RA 10365). b) inquiry of bank deposits by the AMLC (Rule 11, Sec. 2, 2018 RIRRR) The AMLC shall issue an ex parte order authorizing the AMLC Secretariat to inquire into or examine any particular deposit or investment account, including related accounts, with any banking institution or non-bank financial institution and their subsidiaries and affiliates when it has been established that probable cause exists that the deposits or investments involved, including related accounts, are in any way related to any of the following unlawful activities: (a) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended; (b) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002; (c) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the Revised Penal Code, as amended; (d) Felonies or offenses of a nature similar to those mentioned in Rule 11, Sections 2.1 (a), (b) and (c), which are punishable under the penal laws of other countries; (e) Terrorism and conspiracy to commit terrorism as defined and penalized under Republic Act No. 9372; and (f) Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6, 7 and 8 of the TFPSA. 17.1. Is the provision of Section 11 of the AMLA Constitutional? - YES. Section 11 of the AMLA allowing the ex-parte application by the AMLC for authority to inquire into, and examine, certain bank deposits and investments is constitutional (Subido Pagente Certeza Mendoza and Binay Law Offices v. CA, G.R. No. 216914, 06 December 2016; Republic v. Bolante, GR No. 190357, 17 April 2017). 17.2. What is the basis of bank inquiry?

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- 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 as defined in Section 3(i) or a money laundering offense under Section 4. (RA 10167) - Bank inquiry maybe made in the event of violation of the AMLA and does not presuppose the pre-existence of a money laundering offense case already filed in court. The phrase in Section 11, RA 9160, “upon order of any competent court in cases of violation of this Act,” should be interpreted to mean “in the event there are violations” of the AMLA, and not that there are already cases pending in court for such violations. (Republic v. Eugenio, Jr. (545 SCRA 384 [2008]) - For the issuance of a bank inquiry order, it is necessary for the AMLC to be able to show specific facts and circumstances that provide a link between an unlawful activity or a money laundering offense, on one hand, and the account or monetary instrument or property sought to be examined on the other hand (Republic v. Bolante, GR No. 190357, 17 April 2017). 17.3. Is the ex-parte application for a bank inquiry order a violation of due process? - NO. The AMLC's ex parte application for a bank inquiry, which is allowed under Section 11 of R.A. 9160, does not violate substantive due process. There is no such violation, because the physical seizure of the targeted corporeal property is not contemplated in any form by the law. The AMLC may indeed be authorized to apply ex parte for an inquiry into bank accounts, but only in pursuance of its investigative functions akin to those of the National Bureau of Investigation. As the AMLC does not exercise quasi-judicial functions, its inquiry by court order into bank deposits or investments cannot be said to violate any person's constitutional right to procedural due process (Republic v. Bolante, GR No. 190357, 17 April 2017). There is nothing arbitrary in Section 11 of the AMLA in the allowance of and authorization to AMLC to undertake an inquiry into certain bank accounts or deposits. Instead, it provides safeguards before a bank inquiry order is issued, ensuring adherence to the general state policy of preserving the absolutely confidential nature of Philippine bank accounts: (1) The AMLC is required to establish probable cause as basis for its exparte application for bank inquiry order; (2) The CA, independent of the AMLC's demonstration of probable cause, itself makes a finding of probable cause that the deposits or investments are related to an unlawful activity under Section 3(i) or a money laundering offense under Section 4 of the AMLA;

cause

(3) A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court order ex-parte for the principal account which court order ex-parte for related accounts is separately based on probable that such related account is materially linked to the principal account inquired into; and

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Article III,

of probable

17.4

to secrecy of 9160.

(4) The authority to inquire into or examine the main or principal account and the related accounts shall comply with the requirements of Sections 2 and 3 of the Constitution. The foregoing demonstrates that the inquiry and examination into the bank account are not undertaken whimsically and solely based on the investigative discretion of the AMLC. In particular, the requirement demonstration by the AMLC, and determination by the CA, of cause emphasizes the limits of such governmental action (Subido Pagente Certeza Mendoza and Binay Law Offices v. CA, G.R. No. 216914, 06 December 2016). Is the ex-parte application for a bank inquiry order a violation of the right to privacy? - NO. As regards the purported violation of the right to privacy, the Court recalled the pronouncement in Eugenio that the source of the right privacy governing bank deposits is statutory, not constitutional. The legislature may validly carve out exceptions to the rule on the bank deposits, and one such legislation is Section 11 of R.A.

The Court in Subido emphasized that the holder of a bank account that is the subject of a bank inquiry order issued ex parte has the opportunity to question the issuance of such an order after a freeze order has been issued against the account. The account holder can then question not only the finding of probable cause for the issuance of the freeze order, but also the finding of probable cause for the issuance of the bank inquiry order. (Republic v. Bolante, GR No. 190357, 17 April 2017). 18.

May the AMLC forfeit monetary instrument or property? -

YES. The AMLC is authorized to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General (OSG) [Rule 12.1., RIRR]. 18.1. What the basis of 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. (RA 10365) 18.2. Is a criminal conviction for an unlawful activity a pre-requisite for civil forfeiture? - NO. A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not essential element of civil forfeiture (Republic v. Glasgow Credit & Collection Services, Inc., 542 SCRA 95 2008]).

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18.2. Where is the venue of civil forfeiture cases? -The venue of civil forfeiture cases is any RTC (regional trial court) of the judicial region where the monetary instrument, property or proceeds representing, involving or relating to an unlawful activity or to a money laundering offense are located (Republic v. Glasgow Credit & Collection Services, Inc., 542 SCRA 95 2008]). 18.3. What is the nature of civil forfeiture cases? - Forfeiture proceedings are actions in rem—service may be made by publication (Republic v. Eugenio, Jr. (545 SCRA 384 [2008]). 18.4. What is included in civil forfeiture? - 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. (RA 10365) 18.4. What is the remedy of a claimant in case of forfeiture? - The claimant may apply, by a verified petition, for a declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or property corresponding thereto. The verified petition shall be filed with the court which rendered the judgment of forfeiture, within fifteen (15) days from the date of the finality of the order of forfeiture, in default of which the said order shall become final and executory. This provision shall apply in both civil and criminal forfeiture. (RA 10365) 18.5. Is payment possible in lieu of forfeiture? - YES. Where the court has issued an order of forfeiture of the monetary instrument or property subject of a money laundering offense defined under Section 4, and said order cannot be enforced because any particular monetary instrument or property cannot, with due diligence, be located, or it has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, directly or indirectly, attributable to the offender, or it has been concealed, removed, converted, or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof, 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 instruments 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 18

purposes of forfeiture, the court may, instead of enforcing the order of forfeiture of the monetary instrument or property or part thereof or interest therein, accordingly order the convicted offender to pay an amount equal to the value of said monetary instrument or property. This provision shall apply in both civil and criminal forfeiture. (RA 10365) 19.

May the AMLC intervene or participate in the operations of the BIR? - Nothing contained in this Act nor in related antecedent laws or existing agreements shall be construed to allow the AMLC to participate in any manner in the operations of the BIR.

20.

What are the prohibitions under the AMLA? -

The prohibitions against the AMLA are: (a) The AMLA shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce. NO case for money laundering may be filed to the prejudice of a candidate for an electoral office during an election period (Rule 15.1., RIRR). (b) No assets shall be attached or forfeited to the prejudice of a candidate for an electoral office during an election period (Rules 15.2.a & b, RIRR). (c) The provision of this law shall not be construed or implemented in a manner that will discriminate against certain customer types, such as politically-exposed persons, as well as their relatives, or against a certain religion, race or ethnic origin, or such other attributes or profiles when used as the only basis to deny these persons access to the services provided by the covered persons. Whenever a bank, or quasi-bank, financial institution or whenever any person or entity commits said discriminatory act, the person or persons responsible for such violation shall be subject to sanctions as may be deemed appropriate by their respective regulators. (RA 10365)

-No ML Case During Election Period. No case for ML may be filed against a candidate for an electoral office during an election period. (Sec. 4.5, Rule 9, 2018 RIRR) ***** ***** ***** larry p. ignacio ©***** ***** *****

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