State policy and international cooperation
- The State protects and preserves the integrity and confidentiality of bank accounts (Section 2).
- The State ensures that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity (Section 2).
- Consistent with foreign policy, the State extends cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed (Section 2).
Core definitions and key concepts
- A “Covered institution” includes:
- Banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the BSP;
- Insurance companies and all other institutions supervised or regulated by the Insurance Commission; and
- Entities supervised or regulated by the Securities and Exchange Commission, including:
- securities dealers, brokers, salesmen, investment houses and similar entities managing securities or rendering services as investment agent, advisor, or consultant;
- mutual funds, close-end investment companies, common trust funds, pre-need companies and similar entities;
- foreign exchange corporations, money changers, money payment, remittance, and transfer companies and similar entities; and
- other entities administering or otherwise dealing in currency, commodities or financial derivatives, valuable objects, cash substitutes and other similar monetary instruments or property.
- A “Covered transaction” is a single, series, or combination of transactions involving a total amount in excess of Php4,000,000.00 or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days, except transactions between a covered institution and a properly identified client where the amount is commensurate with the client’s business or financial capacity or where the transaction has an underlying legal or trade obligation, purpose, origin or economic justification (Section 3).
- A “Covered transaction” also includes a single, series, or combination or pattern of unusually large and complex transactions in excess of Php4,000,000.00, especially cash deposits and investments having no credible purpose or origin, underlying trade obligation or contract (Section 3).
- A “Monetary instrument” includes:
- coins or currency of legal tender of the Philippines or any other country;
- drafts, checks and notes;
- 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; and
- other similar instruments where title passes by endorsement, assignment or delivery (Section 3).
- An “Offender” is any person who commits a money laundering offense (Section 3).
- A “Person” means any natural or juridical person (Section 3).
- “Proceeds” are amounts derived or realized from an unlawful activity (Section 3).
- “Supervising Authority” is the appropriate supervisory or regulatory agency, department or office supervising or regulating the covered institutions enumerated in Section 3(a) (Section 3).
- A “Transaction” is any act establishing any right or obligation or giving rise to any contractual or legal relationship, and includes any movement of funds by any means with a covered institution (Section 3).
- “Unlawful activity” covers specified offenses, including kidnapping for ransom (Article 267 of Act No. 3815), drug offenses under the Dangerous Drugs Act, specified corruption and graft and related offenses, plunder, specified robbery and extortion offenses, jueteng and masiao under Presidential Decree No. 1602, piracy, qualified theft, swindling, smuggling under Republic Act Nos. 455 and 1937, specified violations under the Electronic Commerce Act (Republic Act No. 8792), hijacking under Republic Act No. 6235, destructive arson and murder (including by terrorists against non-combatant persons and similar targets), fraudulent practices and violations under the Securities Regulation Code (Republic Act No. 8799), and felonies or offenses of a similar nature punishable under the penal laws of other countries (Section 3).
Money laundering offense and criminal liability
- Money laundering is a crime where the proceeds of an unlawful activity are transacted to make them appear to have originated from legitimate sources (Section 4).
- Money laundering is committed by any person who knowing that a monetary instrument or property represents, involves, or relates to proceeds of any unlawful activity:
- transacts or attempts to transact said monetary instrument or property (Section 4(a)); or
- performs or fails to perform any act as a result of which he facilitates the offense of money laundering (Section 4(b)); or
- is required under the Act to disclose and file with the Anti-Money Laundering Council (AMLC) and fails to do so (Section 4(c)) (Section 4).
- A person may be charged with and convicted of both money laundering and the unlawful activity as defined (Section 6).
- Proceedings relating to the unlawful activity are given precedence over prosecution of any offense or violation under the Act, without prejudice to freezing and other remedies (Section 6).
Court jurisdiction and venue
- Regional Trial Courts have jurisdiction to try all money laundering cases (Section 5).
- Money laundering cases committed by public officers and private persons in conspiracy with such public officers fall under the Sandiganbayan jurisdiction (Section 5).
Anti-money laundering council powers
- The Anti-Money Laundering Council (AMLC) is created (Section 7).
- The AMLC is composed of:
- the Governor of the BSP as chairman;
- the Commissioner of the Insurance Commission; and
- the Chairman of the Securities and Exchange Commission as members (Section 7).
- The AMLC shall act unanimously in discharging its functions (Section 7).
- The AMLC functions include:
- requiring and receiving covered transaction reports from covered institutions;
- issuing orders to determine the true identity of the owner of any monetary instrument or property subject of a covered transaction report or foreign assistance request, where the Council believes (based on substantial evidence) it represents/involves/relates to proceeds of an unlawful activity, directly or indirectly;
- instituting civil forfeiture and other remedial proceedings through the Office of the Solicitor General;
- causing the filing of complaints with the Department of Justice or the Ombudsman for prosecution;
- initiating investigations of covered transactions, money laundering activities, and other violations;
- freezing any monetary instrument or property alleged to be proceeds of an unlawful activity;
- implementing measures necessary and justified to counteract money laundering;
- receiving and acting on requests from foreign states for assistance under the Act;
- developing educational programs on effects, methods, prevention, detection, and effective prosecution/punishment; and
- enlisting assistance of any government branch/department/bureau/office/agency, including GOCCs, using their personnel, facilities, and resources for prevention, detection, investigation, and prosecution (Section 7).
AMLC secretariat and leadership
- The AMLC may establish a secretariat (Section 8).
- The secretariat is headed by an Executive Director appointed by the Council for a term of five (5) years (Section 8).
- The Executive Director must be a member of the Philippine Bar, at least thirty-five (35) years of age, and of good moral character, unquestionable integrity, and known probity (Section 8).
- Members of the Secretariat must have served for at least five (5) years with the Insurance Commission, Securities and Exchange Commission, or BSP and must hold full-time permanent positions within the BSP (Section 8).
Customer identification, records, and reporting duties
- Covered institutions must establish and record the true identity of clients using official documents (Section 9).
- Covered institutions must maintain a system for verifying clients’ true identity and, for corporate clients, verify legal existence and organizational structure, and authority/identification of persons acting on their behalf (Section 9).
- Anonymous accounts, accounts under fictitious names, and all other similar accounts are absolutely prohibited (Section 9).
- Peso and foreign currency non-checking numbered accounts are allowed, and the BSP may conduct annual testing solely to determine existence and true identity of owners (Section 9).
- Covered institutions must keep and safely store records of all transactions for five (5) years from the date of transactions (Section 9).
- For closed accounts, records on customer identification, account files, and business correspondence must be preserved and safely stored for at least five (5) years from the date the account was closed (Section 9).
- Covered institutions must report all covered transactions to the AMLC within five (5) working days from occurrence (Section 9).
- The Supervising Authority may prescribe a longer period for reporting, but it may not exceed ten (10) working days (Section 9).
- Covered institutions and their officers/employees/representatives/agents/advisors/consultants/associates must not be deemed to have violated Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791 and similar laws when reporting covered transactions in regular performance and in good faith (Section 9).
- Covered institutions and their personnel must not communicate—directly or indirectly—any person with respect to the fact that a covered transaction report was made, its contents, or any other related information (Section 9).
- Violating the no-communication rule triggers criminal liability for the concerned officer, employee, representative, agent, advisor, consultant, or associate (Section 9).
- No administrative, criminal, or civil proceedings lie against a person who made a covered transaction report in regular performance of duties and good faith, whether or not the report results in criminal prosecution under the Act or any other law (Section 9).
- Covered institutions and their personnel are also prohibited from informing any person or entity, including the media, or allowing publication/airing by mass media, electronic mail, or similar devices, of the fact that a covered transaction report was made, its contents, or related information (Section 9).
- Violating the confidentiality/broadcast prohibition results in criminal liability for the concerned officer, employee, representative, agent, advisor, consultant, or associate of the covered institution, or the media (Section 9).
Freeze authority and judicial limits
- Upon determination that there is probable cause that a deposit or similar account is related to an unlawful activity, the AMLC may issue a freeze order effective immediately for a period not exceeding fifteen (15) days (Section 10).
- Notice to the depositor that the account has been frozen must be issued simultaneously with the freeze order (Section 10).
- The depositor has seventy-two (72) hours upon receipt of notice to explain why the freeze order should be lifted (Section 10).
- The AMLC has seventy-two (72) hours to dispose of the depositor’s explanation (Section 10).
- If the AMLC fails to act within the seventy-two (72) hours after receipt of the explanation, the freeze order automatically dissolves (Section 10).
- The AMLC’s fifteen (15)-day freeze order may be extended by court order, and the fifteen (15)-day period is tolled pending the court’s decision to extend (Section 10).
- No court issues a temporary restraining order or writ of injunction against AMLC freeze orders except the Court of Appeals or the Supreme Court (Section 10).
Court-authorized inquiry into deposits
- Despite Republic Act No. 1405, Republic Act No. 6426, Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution (Section 11).
- The inquiry/examination requires an order of any competent court in cases of violation of the Act when probable cause exists that the deposits or investments are related to a money laundering offense (Section 11).
- This provision does not apply to deposits and investments made prior to the effectivity of the Act (Section 11).
Forfeiture: civil and criminal mechanisms
- Civil forfeiture uses the Revised Rules of Court on civil forfeiture when:
- there is a covered transaction report; and
- a court, in a petition filed for the purpose, orders seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to the report (Section 12).
- In criminal prosecution where the court orders forfeiture of monetary instrument or property related to a money laundering offense defined in Section 4, an offender or any person claiming an interest may file a verified petition for declaration of legitimate ownership and for segregation/exclusion (Section 12).
- The verified petition must be filed in the court that rendered the conviction and forfeiture order within fifteen (15) days from the date of the forfeiture order, and failure to file within that period makes the order final and executory (Section 12).
- A court may order payment in lieu of forfeiture when the forfeiture order cannot be enforced because:
- the instrument/property cannot be located with due diligence;
- it is substantially altered, destroyed, diminished in value, or rendered worthless by acts/omissions attributable to the offender;
- it is concealed, removed, converted, or transferred to prevent finding or avoid forfeiture;
- it is located outside the Philippines or placed/brought outside the court’s jurisdiction;
- it is commingled with other monetary instruments/property of the offender or a third person/entity, making identification or segregation difficult.
- When payment in lieu is ordered, the court orders the convicted offender to pay an amount equal to the value of the monetary instrument or property (Section 12).
Mutual assistance with foreign states
- When a foreign state requests assistance in investigation or prosecution of a money laundering offense, the AMLC may execute or refuse and must inform the foreign state of a valid reason for refusal or for delaying execution, recognizing mutuality and reciprocity at all times (Section 13).
- The AMLC may execute requests by:
- tracking down, freezing, restraining, and seizing assets alleged to be proceeds of any unlawful activity;
- giving information needed; and
- applying for forfeiture in court (Section 13).
- A court must not issue an order of forfeiture based on the AMLC’s application unless accompanied by:
- an authenticated copy of the requesting state court order ordering forfeiture of the monetary instrument/property of a person convicted of a money laundering offense in the requesting state; and
- a certification/affidavit of a competent officer stating conviction and forfeiture order are final and that no further appeal lies as to either (Section 13).
- The AMLC may request foreign assistance by:
- tracking down, freezing, restraining, and seizing assets;
- obtaining information needed relating to any covered transaction, money laundering offense, or directly/indirectly related matter;
- seeking, to the extent allowed by foreign law, premises entry, search, and document/material/object removal through proper courts in the foreign state; and
- applying for forfeiture orders in the proper court of the foreign state (Section 13).
- Supporting documents for premises entry/search requests must be duly authenticated under the foreign state’s applicable law or regulation (Section 13).
- Requests for forfeiture to a foreign state must include:
- an authenticated copy of the regional trial court order ordering forfeiture of the monetary instrument/property of a convicted offender; and
- an affidavit of the clerk of court stating conviction and forfeiture order are final and no further appeal lies (Section 13).
- The AMLC may refuse requests where execution contravenes the Constitution or is likely to prejudice national interest unless there is a treaty on assistance in money laundering offenses with the requesting state (Section 13).
- Mutual assistance requests must confirm the investigation/prosecution or conviction, state grounds and conviction details, give sufficient particulars on identity, identify covered institutions and requested info/materials, specify manner of production and recipients, provide particulars needed for writs/orders/processes in the requested state, and include other information assisting execution (Section 13).
- Documents are authenticated if signed/certified by a judge/magistrate/equivalent officer in the requesting state and further authenticated by oath/affirmation of a witness or sealed by a minister/secretary of state or equivalent government officer, or by an authorized Philippine embassy/consular official in the foreign state where records are kept, authenticated by the seal of the office (Section 13).
- The Philippines shall negotiate for inclusion of money laundering offenses as defined as extraditable offenses in all future treaties (Section 13).
Penalties for money laundering and related crimes
- A person convicted under Section 4(a) is punished with imprisonment of seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos (Php 3,000,000.00) but not more than twice the value of the monetary instrument or property involved (Section 14).
- A person convicted under Section 4(b) 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 person convicted under Section 4(c) 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 person convicted for failure to keep records under Section 9(b) is punished with imprisonment of six (6) months to one (1) year 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).
- Malicious reporting of completely unwarranted or false information relative to a money laundering transaction carries imprisonment of six (6) months to four (4) years and 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), at the court’s discretion (Section 14).
- Malicious reporting offenders are not entitled to avail of the benefits of the Probation Law (Section 14).
- If the offender is a corporation, association, partnership, or other juridical person, the penalties are imposed on responsible officers who participated or who knowingly permitted or failed to prevent the crime (Section 14).
- If the offender is a juridical person, the court may suspend or revoke its license (Section 14).
- If the offender is an alien, the offender is deported without further proceedings after serving the penalties (Section 14).
- If the offender is a public official or employee, the offender suffers perpetual or temporary absolute disqualification from office, as the case may be (Section 14).
- A public official or employee called to testify who refuses or purposely fails to testify suffers the same penalties (Section 14).
- Breach of confidentiality for violations under Section 9(c) is punished with imprisonment of three (3) to eight (8) years and a fine of not less than Five hundred thousand Philippine pesos (Php500,000.00) but not more than One million Philippine pesos (Php1,000,000.00) (Section 14).
Incentives, political harassment limits, restitution
- A system of special incentives and rewards is established for the appropriate government agency and its personnel who led and initiated investigation, prosecution, and conviction of persons involved in the offense penalized in Section 4 (Section 15).
- The Act may not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce (Section 16).
- No case for money laundering may be filed against and no assets may be frozen, attached or forfeited to the prejudice of a candidate for an electoral office during an election period (Section 16).
- Restitution for any aggrieved party is governed by the New Civil Code (Section 17).
Implementing rules, oversight, and appropriations
- The BSP, Insurance Commission, and SEC promulgate implementing rules within thirty (30) days from the Act’s effectivity (Section 18).
- The implementing rules must be submitted to the Congressional Oversight Committee for approval (Section 18).
- Covered institutions must formulate money laundering prevention programs consistent with the Act, including information dissemination, prevention/detection/reporting practices, and training of responsible officers and personnel (Section 18).
- A Congressional Oversight Committee is created with seven (7) members from the Senate and seven (7) members from the House of Representatives (Section 19).
- Senate members are appointed by the Senate President based on proportional representation of parties/coalitions, with at least two (2) Senators representing the minority (Section 19).
- House members are appointed by the Speaker based on proportional representation of parties/coalitions, with at least two (2) members representing the minority (Section 19).
- The Oversight Committee may promulgate its own rules, oversee implementation, and review or revise AMLC implementing rules within thirty (30) days from promulgation (Section 19).
- The AMLC receives an initial appropriation of Twenty-five million Philippine pesos (Php25,000,000.00) drawn from the national government, and future appropriations are included in the General Appropriations Act (Section 20).
Separability, repeal, and effectivity rules
- If any provision or section is held invalid, the remainder of the Act and its application to other persons/circumstances are unaffected (Section 21).
- All inconsistent laws, decrees, executive orders, rules and regulations, and parts thereof, including relevant provisions of Republic Act No. 1405, Republic Act No. 6426, Republic Act No. 8791, and other similar laws, are repealed, amended, or modified accordingly (Section 22).
- The Act’s effectivity and the exclusion for deposits/investments made prior to effectivity follow Section 23 (fifteen (15) days after publication; no application to pre-effectivity deposits/investments).