Law Summary

Legal Basis

• Legal Framework: This Circular is issued pursuant to the Anti-Money Laundering Act of 2001 (Republic Act No. 9160), as amended by Republic Act No. 9194.
• Reference to Previous Circular: The provisions also reference Circular Letter No. 9-2002 related to the same context.

Waiver of Bank Secrecy Law

• Legal Principle: Entities involved in insurance, such as insurance brokers and reinsurance brokers, must waive the confidentiality protections afforded by bank secrecy laws.
• Relevant Laws: The waiver specifically pertains to Republic Act No. 1405 (law on bank deposits secrecy) and Republic Act No. 6426 (law on foreign currency deposits).

Requirements for Capital/Asset Infusion

• Submission of Undertaking:

  • Entities seeking to infuse capital to rectify capital impairment are required to submit an undertaking.
  • This undertaking must be signed by the concerned stockholder/s and the Board of Directors.

• Board Resolution:

  • A special board resolution may authorize the President or CEO to execute the undertaking.
  • A certified true copy of this Board Resolution must be attached to the undertaking.

• Sworn Declaration of Source of Funds:

  • The company and concerned stockholder/s must submit a sworn declaration detailing the source of funds.
  • Supporting documents for the declaration are also required.

Additional Documentation for Foreign Funding

• Infusion from Parent Company Abroad:
  • If the funds are sourced from a foreign parent company, a certified true copy of the board resolution from the parent company is necessary.
  • This resolution must be authenticated by the Philippine Consul.

Compliance and Enforcement

• Compliance Direction: The Circular mandates strict compliance with the outlined requirements.
• Adoption Date: The Circular was adopted on September 2, 2005.

Key Takeaways

• Insurance entities must waive bank secrecy laws when infusing capital to address capital impairments.
• Essential documentation includes an undertaking, board resolutions, and a sworn declaration of source of funds.
• Additional requirements apply for funds sourced from foreign parent companies, necessitating authentication by the Philippine Consul.
• The directive aims to ensure transparency and compliance with anti-money laundering regulations.