Legal basis, amendment target, and consolidation
- Republic Act No. 10365 amends Republic Act No. 9160, the Anti-Money Laundering Act of 2001, to further strengthen its provisions.
- Republic Act No. 10365 further strengthens the anti-money laundering framework by amending operative definitions, coverage, reporting, freezing, forfeiture, penalties, and AMLC powers/limitations (Sections 1–12).
- The law results from the consolidation of House Bill No. 6565 and Senate Bill No. 3123, finally passed on February 6, 2013.
Core definitions and covered persons
- Section 1 amends Section 3(a) of Republic Act No. 9160 to define “covered persons” as natural or juridical persons, including:
- 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) (Section 3(a)(1)).
- Insurance companies, pre-need companies, and all other persons supervised or regulated by the Insurance Commission (IC) (Section 3(a)(2)).
- Securities dealers, brokers, salesmen, investment houses and other similar persons managing securities or rendering services as investment agent, advisor, or consultant; mutual funds, close-end investment companies, common trust funds, and other similar persons; and other entities administering or 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) (Section 3(a)(3)).
- 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) (Section 3(a)(4)).
- 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) (Section 3(a)(5)).
- Company service providers which, as a business, provide services to third parties, including:
- acting as a formation agent of juridical persons;
- 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;
- 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 shareholder for another person (Section 3(a)(6)).
- Persons providing services including:
- managing of client money, securities or other assets;
- management of bank, savings or securities accounts;
- organization of contributions for the creation, operation or management of companies; and
- creation, operation or management of juridical persons or arrangements, and buying and selling business entities (Section 3(a)(7)).
- Section 1 excludes from “covered persons” lawyers and accountants acting as independent legal professionals in relation to information concerning clients, or where disclosure would compromise client confidences or the attorney-client relationship, provided they are authorized to practice in the Philippines and remain subject to their codes of conduct and/or professional responsibility (Section 3(a) proviso).
- Section 3 inserts new definitions:
- “Precious metals” mean gold, silver, platinum, palladium, rhodium, ruthenium, iridium and osmium, including alloys, solders, and plating chemicals such as rhodium and palladium plating solutions and potassium gold cyanide and potassium silver cyanide in salt solution (Section 3(j)).
- “Precious stones” mean diamond, ruby, emerald, sapphire, opal, amethyst, beryl, topaz, and garnet used in jewelry making, including those formerly classified as semi-precious stones (Section 3(k)).
Unlawful activity expansion and specification
- Section 2 amends Section 3(i) to define “unlawful activity” as any act or omission or series or combination involving or having direct relation to enumerated predicate offenses.
- The predicate offenses expressly include the listed crimes and statutory violations, including (among others) kidnapping for ransom, violations under the Comprehensive Dangerous Drugs Act of 2002 (Republic Act No. 9165), offenses under the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019), plunder (Republic Act No. 7080), robbery and extortion under the Revised Penal Code, illegal gambling punished under Presidential Decree No. 1602, piracy on the high seas, qualified theft, swindling, smuggling, and violations of the Electronic Commerce Act of 2000 (Republic Act No. 8792) (Section 3(i) items (1)–(12) and continuing).
- The predicate list further includes (among others) hijacking and other violations under Republic Act No. 6235, offenses as defined relating to destructive arson and murder, terrorism and conspiracy under Republic Act No. 9372, and financing of terrorism under Republic Act No. 10168 (Section 3(i)(13)–(14)).
- The predicate list further covers corruption-related and fraud-type offenses under the Revised Penal Code (including bribery, corruption of public officers, fraudulent practices and illegal exactions, and malversation), plus forgeries and counterfeiting, anti-trafficking in persons violations, forestry code, fisheries code, and mining act violations (Section 3(i)(15)–(22)).
- The predicate list includes wildlife resources violations (Republic Act No. 9147), national caves and cave resources violations (Republic Act No. 9072), anti-carnapping (Republic Act No. 6539), firearms/ammunition/explosives illegal possession and related acts under Presidential Decree No. 1866, anti-fencing law (Presidential Decree No. 1612), and migrant workers and overseas Filipinos violations (Republic Act No. 8042 as amended by Republic Act No. 10022) (Section 3(i)(23)–(28)).
- The predicate list includes intellectual property code violations (Republic Act No. 8293), anti-photo and video voyeurism (Republic Act No. 9995), anti-child pornography (Republic Act No. 9775), Special Protection of Children Against Abuse, Exploitation and Discrimination (Republic Act No. 7610), and Securities Regulation Code of 2000 violations (Republic Act No. 8799), and also felonies or offenses of a similar nature punishable under penal laws of other countries (Section 3(i)(29)–(34)).
Money laundering offense and liability
- Section 4 amends Section 4 to state that 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, does any of the following:
- (a) transacts the monetary instrument or property;
- (b) converts, transfers, disposes of, moves, acquires, possesses or uses the monetary instrument or property;
- (c) conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to the monetary instrument or property;
- (d) attempts or conspires to commit the money laundering offenses referred to in (a), (b) or (c);
- (e) aids, abets, assists in or counsels the commission of the money laundering offenses referred to in (a), (b) or (c); and
- (f) performs or fails to perform any act as a result of which the person facilitates the offense referred to in (a), (b) or (c) (Section 4(a–f)).
- Money laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under the law to be reported to the Anti-Money Laundering Council (AMLC), fails to do so (last paragraph of Section 4).
- Section 5 amends Section 6(a) to allow any person to be charged with and convicted of both:
- money laundering; and
- the underlying unlawful activity as defined (Section 6(a)).
- Section 5 also amends Section 6(b) to require that prosecution of any offense or violation under the anti-money laundering law proceed independently of any proceeding relating to the unlawful activity (Section 6(b)).
AMLC creation, functions, and reporting controls
- Section 7 amends Section 7 to create the Anti-Money Laundering Council (AMLC).
- The AMLC is composed of:
- the Governor of the Bangko Sentral ng Pilipinas as Chairman;
- the Commissioner of the Insurance Commission as a member; and
- the Chairman of the Securities and Exchange Commission as a member (Section 7).
- The AMLC shall act unanimously in discharging its functions as defined in the law (Section 7).
- Section 7 strengthens AMLC powers by including, among others, the function:
- to apply before the Court of Appeals, ex parte, for 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 (Section 7(6)).
- Section 7 adds/updates AMLC reporting access powers over real estate by requiring that:
- Land Registration Authority and all its Registries of Deeds 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, in a form prescribed by the AMLC (Section 7(12)).
- The AMLC may also require submission of copies of relevant documents of all real estate transactions (Section 7(12)).
- Section 9 amends Section 9(c) to require reporting:
- Covered persons must report to the AMLC all covered transactions and suspicious transactions within five (5) working days from occurrence, unless the AMLC prescribes a different period not exceeding fifteen (15) working days (Section 9(c)).
- Section 9 provides a reporting exemption:
- Lawyers and accountants acting as independent legal professionals are not required to report covered and suspicious transactions when the relevant information was obtained in circumstances subject to professional secrecy or legal professional privilege (Section 9(c)).
- Section 9 imposes strict anti-tipping and confidentiality rules:
- Covered persons and their officers and employees are prohibited from communicating 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, in any manner or by any means (Section 9(c)).
- Such reporting must not be published or aired by mass media, electronic mail, or similar devices (Section 9(c)).
- Violation triggers criminal liability for the concerned officer and employee of the covered person and media (Section 9(c)).
Freezing orders, timelines, and injunction limits
- Section 8 amends Section 10 on freezing of monetary instruments or property.
- The AMLC may seek judicial freezing through a verified ex parte petition.
- After determination that probable cause exists that a monetary instrument or property is in any way related to an unlawful activity defined in Section 3(i), the Court of Appeals may issue a freeze order.
- A freeze order:
- is effective immediately;
- is limited to a duration that shall not exceed six (6) months depending on the circumstances of the case (Section 10).
- A freeze order is ipso facto lifted if there is no case filed against the person whose account has been frozen within the court-determined period (Section 10).
- This new rule on ipso facto lifting does not apply to pending cases in the courts (Section 10).
- The Court of Appeals must act on the AMLC petition within twenty-four (24) hours from filing.
- If the application is filed a day before a nonworking day, the twenty-four (24)-hour period excludes nonworking days (Section 10).
- A person whose account has been frozen may file a motion to lift the freeze order, and the court must resolve the motion before expiration of the freeze order (Section 10).
- No court may issue a temporary restraining order or writ of injunction against any freeze order except the Supreme Court (Section 10).
Civil forfeiture, asset claims, and payment in lieu
- Section 9 amends Section 12(a–c) to provide civil forfeiture mechanisms.
- Upon AMLC determination of probable cause that any monetary instrument or property is related to an unlawful activity under Section 3(i) or a money laundering offense under Section 4, the AMLC files 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 apply (Section 12(a)).
- Forfeiture extends beyond directly related property to include other monetary instruments or property with equivalent value when the former cannot be located with due diligence, has been substantially altered, destroyed, diminished in value, rendered worthless, concealed/removed/converted/transferred, located outside the Philippines or brought outside the court’s jurisdiction, or commingled in a way that makes identification or segregation difficult (Section 12(a)).
- Claim on forfeited assets: where the court issued an order of forfeiture of monetary instrument or property in a criminal prosecution for a money laundering offense under Section 4, the offender or any other person claiming an interest may file a verified petition for declaration of lawful ownership and segregation/exclusion.
- The claim petition must be filed with the court that rendered the forfeiture judgment within fifteen (15) days from the date of finality of the forfeiture order; failure to file within the period makes the order final and executory, and this applies in both civil and criminal forfeiture (Section 12(b)).
- Payment in lieu of forfeiture: where forfeiture cannot be enforced because the property cannot be located with due diligence, has been substantially altered/destroyed/diminished/rendered worthless by acts attributable directly or indirectly to the offender, was concealed/removed/converted/transferred to prevent finding or avoid forfeiture, is located outside the Philippines or outside the court’s jurisdiction, or is commingled so segregation is difficult, the court may order the convicted offender to pay an amount equal to the value of the monetary instrument or property.
- This payment-in-lieu rule applies in both civil and criminal forfeiture (Section 12(c)).
Penal provisions and AMLC administrative sanctions
- Section 10 amends Section 14 to specify imprisonment and fines for money laundering.
- A person convicted under Section 4(a), (b), (c) and (d) is punished with:
- imprisonment of seven (7) to fourteen (14) years; and
- a fine of not less than Three million Philippine pesos (Php3,000,000.00) but not more than twice the value of the monetary instrument or property involved (Section 14(a)).
- A person convicted under Section 4(e) and (f) is punished with:
- imprisonment of four (4) to seven (7) years; and
- a fine of not less than One million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three million Philippine pesos (Php3,000,000.00) (Section 14(a)).
- A person convicted under the last paragraph of Section 4 (failure to report required covered/suspicious transactions by a covered person who knows reporting is required) is punished with:
- imprisonment of six (6) months to four (4) years or
- a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both (Section 14(a)).
- A covered person, its directors, officers or personnel who knowingly participated in the crime of money laundering is subject to imprisonment ranging from four (4) to seven (7) years and a fine corresponding to not more than two hundred percent (200%) of the value of the monetary instrument or property laundered (Section 14(e)).
- Administrative sanctions are imposed without prejudice to filing criminal charges (Section 14(f)).
- After due notice and hearing, the AMLC may, at its discretion, impose sanctions—including monetary penalties, warning, or reprimand—on any covered person, its directors, officers, employees, or any other person for violating the Act, its implementing rules and regulations, or for failure/refusal to comply with AMLC orders, resolutions, and other issuances (Section 14(f)).
- Monetary penalties under AMLC administrative sanctions may be imposed in amounts determined appropriate by the AMLC but not more than Five hundred thousand Philippine pesos (P500,000.00) per violation (Section 14(f)).
- The AMLC may promulgate rules on fines and penalties taking into account attendant circumstances such as nature and gravity of the violation or irregularity (Section 14(f)).
- Section 14(g) provides an anti-discrimination command:
- The law must not be construed or implemented to discriminate against certain customer types (including politically-exposed persons and their relatives) or against a religion, race, ethnic origin, or other attributes/profiles when used as the only basis to deny access to services.
- Persons responsible for discriminatory acts are subject to sanctions by their respective regulators as deemed appropriate (Section 14(g)).
AMLC limitations on BIR operations; constitutional compliance
- Section 11 inserts Section 20 on non-intervention:
- Nothing in the anti-money laundering law or related antecedent laws or existing agreements allows the AMLC to participate in any manner in the operations of the Bureau of Internal Revenue (BIR) (Section 20).
- Section 11 inserts Section 21 to require constitutional compliance:
- Authority to inquire into or examine the main account and related accounts must comply with Article III, Sections 2 and 3 of the 1987 Constitution, which are incorporated by reference.
- The constitutional injunction against ex post facto laws and bills of attainder must be respected in implementing the Act (Section 21).
Separability, repeals, and other final provisions
- Section 13 contains a separability clause: unconstitutional provisions do not affect the validity and effectivity of other provisions.
- Section 14 contains a repealing clause: laws, decrees, orders, issuances, or portions inconsistent with the Act are repealed, amended, or modified accordingly.