The Philippine Anti-Money Laundering Act of 2001

By Atty. Juris Bernadette M. Tomboc

I. Definition of Money-Laundering

Executive Order No. 9160 (September 29, 2001), otherwise known as the “Anti-Money Laundering Act of 2001” (AMLA) as amended by Republic Act No. 9194 (March 7, 2003) defines money laundering as “a crime whereby the proceeds of an unlawful activity as herein defined are transacted, thereby making them appear to have originated from legitimate sources.” (Section 4, Republic Act No. 9160)

II. Who May Be Liable

Money laundering may be committed by: (a) any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property or by any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offense of money laundering and (c) any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so.. (Section 4, Republic Act No. 9160, as amended)

III. What Constitutes “Unlawful Activity”

"Unlawful activity" refers to any act or omission or series or combination thereof involving or having direct relation to the following:

(a) kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended;

(b) violation of Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16 of Republic Act No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002;

(c) graft and corruption under 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;

(d) plunder under Republic Act No. 7080, as amended;

(e) robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended;

(f) “jueteng” and “masiao’ punished as illegal gambling under Presidential Decree No. 1602;

(g) piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No. 532;

(h) qualified theft under Article 310 of the Revised Penal Code, as amended;

(i) swindling under Article 315 of the Revised Penal Code, as amended;

(j) smuggling under Republic Act Nos. 455 and 1937;

(k) offenses related to e-commerce under Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000;

(l) hijacking and other violations under Republic Act No. 6235;

(m) destructive arson and murder, as defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against non-combatant persons and similar targets;

(n) fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation Code of 2000; and

(o) felonies or offenses of a similar nature that are punishable under the penal laws of other countries. (Section 3, Republic Act No. 9160, as amended)

IV. Institutions and Transactions Covered by the AMLA

Republic Act No. 9160 covers the following institutions:

(a) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP),

(b) insurance companies and all other institutions supervised or regulated by the Insurance Commission;

(c) securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant,

(d) mutual funds, closed-end investment companies, common trust funds, pre-need companies and other similar entities,

(e) foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities, and

(f) 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 Securities and Exchange Commission. (Section 3, Republic Act No. 9190)

Republic Act No. 9160 applies to transactions “in cash or other equivalent monetary instrument involving a total amount in excess of Five hundred thousand pesos (P500,000.00) within one (1) banking day." (Section 3, Republic Act No. 9160, as amended)

However, a transaction may be considered as suspicious regardless of the amount involved where any of the following circumstances exist:

(a) there is no underlying legal or trade obligation, purpose or economic justification;

(b) the client is not properly identified;

(c) the amount involved is not commensurate with the business or financial capacity of the client;

(d) taking into account all known circumstances, it may be perceived that the client's transaction is structured in order to avoid being the subject of reporting requirements under the Act;

(e) any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the client's past transactions with the covered institution; (e) the transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being or has been committed; or (f) any transaction that is similar or analogous to any of the foregoing. (Section 3, Republic Act No. 9160, as amended)

V. Creation of the Anti-Money Laundering Council

Republic Act No. 9160, as amended created the Anti-Money Laundering Council (AMLC) composed of the Governor of the Bangko Sentral ng Pilipinas as chairman and the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as members. The AMLC was given the following functions:

(a) to require and receive covered or suspicious transaction reports from covered institutions;

(b) 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 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.

(c) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General;

(d) to cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money laundering offenses;

(e) to investigate suspicious transactions and covered transactions deemed suspicious after an investigation by AMLC, money laundering activities, and other violations of this Act;

(f) to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property alleged to be the proceeds of any unlawful activity as defined in Section 3(i) hereof;

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

(h) 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;

(i) 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;

(j) 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; and

(k) to impose administrative sanctions for the violation of laws, rules, regulations and orders and resolutions issued pursuant thereto. (Section 7, Republic Act No. 9160, as amended)

VI. Prevention of Money Laundering

To prevent money laundering, Republic Act No. 9160, as amended, required covered institutions to “establish and record the true identity of its clients based on official documents.” They were required to maintain a system of verifying the true identity of their clients and, in case of corporate clients, 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. (Section 9, Republic Act No. 9160, as amended)

In the same light, Republic Act No. 9160 as amended absolutely prohibited the opening and maintenance of “anonymous accounts, accounts under fictitious names, and all other similar accounts.” Further, the BSP was given the authority to conduct annual testing of banks for the sole purpose of determining the existence and true identity of the owners of such accounts. (Section 9, Republic Act No. 9160, as amended)

Covered institutions are required to maintain and safely store all records of all transactions for five years. For closed accounts, records on customer identification, account files and business correspondence should be preserved for at least five years from the dates when they were closed. (Section 9, Republic Act No. 9160, as amended)

Further, they are required to report to the AMLC all covered or suspicious transactions within five working days, unless the Supervising Authority prescribes a longer period not exceeding ten working days. (Section 9, Republic Act No. 9160, as amended)

Reporting of covered or suspicious transactions to the AMLC by covered institutions and their officers and employees shall not be considered as a violation of Republic Act No. 1405, also known as the Bank Secrecy Act, as amended, Republic Act No. 6426, otherwise known as the “Foreign Currency Deposit Act of the Philippines,” as amended, Republic Act No. 8791, also known as the “General Banking Law of 2000” and other similar laws. (Section 9, Republic Act No. 9160, as amended)

Any person who has 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 shall not be subject to any administrative, criminal or civil proceedings. (Section 9, Republic Act No. 9160, as amended)

However, covered institutions, their officers and employees are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person or entity such as the media, the fact that a covered or suspicious transaction report was made, the contents thereof, or any other information in relation thereto. Neither may such reporting be published or aired in any manner or form by mass media, electronic mail, or other similar devices. In case of violation thereof, the concerned officer and employee of the covered institution or media shall be criminally liable. (Section 9, Republic Act No. 9160, as amended)

VII. Penalties

Any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of any unlawful activity who transacts or attempts to transact said monetary instrument or property shall be subject to the penalty of imprisonment ranging from seven to fourteen years and a fine of not less than three million Philippine pesos but not more than twice the value of the monetary instrument or property involved in the offense. (Section 14, Republic Act No. 9160, as amended)

Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity who performs or fails to perform any act as a result of which he facilitates the offense of money laundering shall be subject to the penalty of imprisonment from four to seven years and a fine of not less than one million five hundred thousand Philippine pesos but not more than three million Philippine pesos. (Section 14, Republic Act No. 9160, as amended)

Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC) who fails to do so shall be subject to the penalty of imprisonment from six months to four years or a fine of not less than one hundred thousand Philippine pesos but not more than five hundred thousand Philippine pesos, or both. (Section 14, Republic Act No. 9160, as amended)

Any person convicted for failure to maintain and safely store all records of all transactions of covered institutions for five (5) years from the dates of transactions and, with respect to closed accounts, the records on customer identification, account files and business correspondence shall be subject to the penalty of imprisonment from six months to one year or a fine of not less than one hundred thousand Philippine pesos but not more than five hundred thousand Philippine pesos, or both. (Section 14, Republic Act No. 9160, as amended)

Any person who, with malice, or in bad faith, reports or files a completely unwarranted or false information relative to money laundering transaction against any person shall be subject to the penalty imprisonment for six months to four years and fine of not less than one hundred thousand Philippine pesos but not more than five hundred thousand Philippine pesos, at the discretion of the court: The offender is not entitled to avail the benefits of the Probation Law. (Section 14, Republic Act No. 9160, as amended)

If the offender is a corporation, association, partnership or any juridical person, the penalty shall be imposed upon the responsible officers, as the case may be, who participated in, or allowed by their gross negligence, the commission of the crime. Further, the court may suspend or revoke its license. (Section 14, Republic Act No. 9160, as amended)

If the offender is an alien, he shall, in addition to the penalties prescribed under the law, be deported without further proceedings after serving his sentence. (Section 14, Republic Act No. 9160, as amended)

Any public official or employee who is called upon to testify and refuses to do the same or purposely fails to testify shall suffer the same penalties prescribed under the law. If the offender is a public official or employee, he shall, in addition to the prescribed penalties, suffer perpetual or temporary absolute disqualification from office, as the case may be. (Section 14, Republic Act No. 9160, as amended)

Covered institutions and their officers and employees who communicate 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 report was made, the contents thereof, or any other information in relation thereto shall be subject to the punishment of imprisonment ranging from three to eight years and a fine of not less than five hundred thousand Philippine pesos but not more than one million Philippine pesos. (Section 14, Republic Act No. 9160, as amended)

The responsible reporter, writer, president, publisher, manager and editor-in-chief shall be liable in case of breach of confidentiality that is published or reported by media. (Section 14, Republic Act No. 9160, as amended)