Purpose and Policy
- The amendments establish and strengthen anti-money laundering mechanisms by expanding covered and suspicious transaction rules and by expanding enforcement powers of the Anti-Money Laundering Council (AMLC).
Key Definitions and Expanded Coverage
- A “covered transaction” is a transaction 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 1, amending Section 3(b) of Republic Act No. 9160).
- “Suspicious transaction” covers transactions with covered institutions regardless of the amounts involved where any of these circumstances exist (Section 2, inserting Section 3(b-1)):
- 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 client’s business or financial capacity.
- The transaction is perceived to be structured to avoid being subject to reporting requirements under the Act.
- The transaction deviates from the client’s profile and/or the client’s past transactions with the covered institution.
- The transaction is related to an unlawful activity or offense under the Act that is about to be, is being, or has been committed.
- The transaction is similar or analogous to any of the foregoing circumstances.
- “Unlawful activity” refers to acts or omissions or series or combinations thereof involving or having direct relation to the enumerated offenses (Section 3, amending Section 3(i)), including:
- Kidnapping for ransom under Article 267 of Act No. 3815 (Revised Penal Code), as amended.
- Certain provisions of Republic Act No. 9165 (Comprehensive Dangerous Drugs Act of 2002) including Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16.
- Violations under Sections 3 paragraphs B, C: E, G, H and I of Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act), as amended.
- Plunder under Republic Act No. 7080, as amended.
- Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as amended.
- Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602.
- Piracy on the high seas under the Revised Penal Code, as amended, and Presidential Decree No. 532.
- Qualified theft under Article 310 of the Revised Penal Code, as amended.
- Swindling under Article 315 of the Revised Penal Code, as amended.
- Smuggling under Republic Act Nos. 455 and 1937.
- Violations under Republic Act No. 8792 (Electronic Commerce Act of 2000).
- Hijacking and other violations under Republic Act No. 6235; 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.
- Fraudulent practices and other violations under Republic Act No. 8799 (Securities Regulation Code of 2000).
- Felonies or offenses of a similar nature punishable under the penal laws of other countries.
Money Laundering Offense Standards
- Money laundering is a crime where proceeds of an unlawful activity as defined are transacted so they appear to have originated from legitimate sources (Section 4, amending Section 4 of Republic Act No. 9160).
- Money laundering is committed by a person who knows that the monetary instrument or property (i) represents, involves, or relates to proceeds of any unlawful activity, and then transacts or attempts to transact the monetary instrument or property (Section 4(a)).
- Money laundering is committed by a person who knows that the monetary instrument or property involves proceeds of any unlawful activity, and then performs or fails to perform an act resulting in facilitating the money laundering offense (Section 4(b)).
- Money laundering is committed by a person who knows that a monetary instrument or property required under the Act to be disclosed and filed with the AMLC is not disclosed and filed (Section 4(c)).
Anti-Money Laundering Council: Creation and Powers
- The Anti-Money Laundering Council (AMLC) is created with 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 (Section 5, amending Section 7).
- The AMLC must act unanimously in discharging its functions (Section 5).
- The AMLC may:
- Require and receive covered or suspicious transaction reports from covered institutions (Section 5(1)).
- Issue orders to the appropriate Supervising Authority or to the covered institution to determine the true identity of the owner of any monetary instrument or property subject of a covered or suspicious transaction report, or any request for assistance from a foreign state, when believed by the Council on the basis of substantial evidence to involve proceeds of an unlawful activity wherever located (Section 5(2)).
- Institute civil forfeiture proceedings and other remedial proceedings through the Office of the Solicitor General (Section 5(3)).
- Cause the filing of complaints with the Department of Justice or the Ombudsman for prosecution of money laundering offenses (Section 5(4)).
- Investigate suspicious transactions and covered transactions deemed suspicious after investigation (Section 5(5)).
- Apply ex parte to the Court of Appeals for the freezing of any monetary instrument or property alleged to be proceeds of an unlawful activity (Section 5(6)).
- Implement measures justified under the Act to counteract money laundering (Section 5(7)).
- Receive and act on requests from foreign states for assistance in their anti-money laundering operations under the Act (Section 5(8)).
- Develop educational programs on the effects, methods, prevention, and prosecuting/punishing offenders (Section 5(9)).
- Enlist government agencies and instrumentalities, including government-owned and controlled corporations, and use their personnel, facilities, and resources for stronger prevention, detection, investigation, and prosecution (Section 5(10)).
- Impose administrative sanctions for violations of laws, rules, regulations, and orders and resolutions issued pursuant thereto (Section 5(11)).
Reporting Rules and Confidentiality
- Covered institutions must report to the AMLC all covered transactions and suspicious transactions within five (15) working days from occurrence (Section 6, amending Section 9(c)).
- The Supervising Authority may prescribe a longer period, but not exceeding ten (10) working days (Section 6).
- If a transaction is both a covered transaction and a suspicious transaction, the covered institution must report it as a suspicious transaction (Section 6).
- The Act provides that reporting covered or suspicious transactions to the AMLC in the regular performance of duties in good faith does not constitute violation of certain other laws (including Republic Act No. 1405, Republic Act No. 6426, Republic Act No. 8791, and other similar laws), but it imposes confidentiality prohibitions (Section 6).
- Covered institutions and their officers and employees are prohibited from communicating, directly or indirectly, to any person:
- the fact that a covered or suspicious transaction report was made;
- the contents; or
- any other information related to it (Section 6).
- Violation of the confidentiality prohibition makes the concerned officer and employee of the covered institution criminally liable (Section 6).
- No administrative, criminal, or civil proceedings lie against any person who made a covered or suspicious transaction report in the regular performance of duties in good faith, whether or not the reporting results in any criminal prosecution under the Act or any other law (Section 6).
- Covered institutions and their officers and employees are prohibited from communicating to any person or entity, including the media, the fact that a report was made, its contents, or related information; reporting may not be published or aired by mass media, electronic mail, or similar devices (Section 6).
- If a prohibited communication/publication occurs, the concerned officer and employee of the covered institution and media are held criminally liable (Section 6).
Freezing and Deposit Inquiry Mechanisms
- The Court of Appeals may issue a freeze order upon an ex parte application by the AMLC and after determining probable cause exists that a monetary instrument or property is related in any way to an unlawful activity as defined in Section 3(i) (Section 7, amending Section 10).
- Freeze orders become effective immediately (Section 7).
- A freeze order lasts for twenty (20) days, unless extended by the court (Section 7).
- The AMLC may inquire into or examine any particular deposit or investment with a banking institution or non-bank financial institution upon an order of a competent court in cases involving probable cause that deposits or investments are related to an unlawful activity under Section 3(i) or a money laundering offense under Section 4 (Section 8, amending Section 11).
- No court order is required in cases involving unlawful activities defined in Sections 3(i)(1), (2) and (12) (Section 8).
- To ensure compliance, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine any deposit or investment during periodic or special examinations in accordance with BSP examination rules (Section 8).
Criminal Penalties for Related Misconduct
- Malicious reporting: Any person who, with malice or in bad faith, reports or files completely unwarranted or false information relative to a money laundering transaction is punishable by six (6) months to four (4) years imprisonment and a fine of not less than PHP 100,000.00 but not more than PHP 500,000.00, at the court’s discretion (Section 9(c), amending Section 14(c)).
- The malicious reporter cannot avail of the Probation Law (Section 9(c)).
- If the offender is a corporation, association, partnership, or any juridical person, the penalty is imposed on the responsible officers who participated in or allowed the crime by their gross negligence (Section 9(c)).
- If the offender is a juridical person, the court may suspend or revoke its license (Section 9(c)).
- If the offender is an alien, the alien is deported without further proceedings after serving the prescribed penalties (Section 9(c)).
- If the offender is a public official or employee, the public official or employee suffers perpetual or temporary absolute disqualification from office, as the case may be, in addition to the penalties (Section 9(c)).
- A public official or employee who is called to testify and refuses to do so or purposely fails to testify suffers the same penalties as prescribed (Section 9(c)).
- Breach of confidentiality: The punishment for a person convicted under Section 9(c) for breach of confidentiality is imprisonment of three (3) to eight (8) years and a fine of not less than PHP 500,000.00 but not more than PHP 1,000,000.00 (Section 9(d), amending Section 14(d)).
- Where breach of confidentiality is published or reported by media, the responsible reporter, writer, president, publisher, manager, and editor-in-chief are liable under the Act (Section 9(d)).
Deletion and Transitional Handling
- Section 15 of Republic Act No. 9160 is deleted (Section 10).
- Existing AMLC freeze orders remain in force for thirty (30) days after the Act’s effectivity unless extended by the Court of Appeals (Section 12).
Requisites on Effectivity Publication
- The Act takes effect fifteen (15) days after complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation (Section 11 and Section 13).
Formal Enactment and Approval
- Republic Act No. 9194 was finally passed by the House of Representatives and the Senate on March 5, 2003, and is approved on March 7, 2003 by President Gloria Macapagal-Arroyo.