Strengthening Anti-Money Laundering Act

Policy and AML framework strengthened

Republic Act No. 11521 amends Republic Act No. 9160 (Anti-Money Laundering Act of 2001) by strengthening state policy to protect and preserve the integrity and confidentiality of bank accounts.
Republic Act No. 11521 requires the State to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity.
Republic Act No. 11521 directs the State to extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed.
Republic Act No. 11521 mandates implementation of targeted financial sanctions related to the financing of the proliferation of weapons of mass destruction, terrorism, and financing of terrorism, pursuant to United Nations Security Council resolutions.

Key definitions and expanded coverage

Section 3 amends Section 3 of Republic Act No. 9160 by redefining covered persons and covered transactions.
Section 3(a)(9) includes real estate developers and brokers as covered persons.
Section 3(a)(10) includes offshore gaming operation and its service providers, supervised, accredited, or regulated by PAGCOR or any government agency, as covered persons.
Section 3(b) defines “Covered transactions” as a cash or other equivalent monetary instrument transaction involving a total amount in excess of PHP 500,000.00 within one (1) banking day.
Section 3(b) provides higher thresholds for casino and offshore gaming-related cash:
- For covered persons under Section 3(a)(8), a single casino cash transaction involving an amount in excess of PHP 5,000,000.00 or its equivalent in any other currency.
- For covered persons under Section 3(a)(9), a single cash transaction involving an amount in excess of PHP 7,500,000.00 or its equivalent in any other currency.
Section 3(b-1) defines “Suspicious transactions” as covered-person transactions, regardless of amount, where any enumerated circumstance exists, including:
- absence of underlying legal or trade obligation, purpose, or economic justification;
- improper client identification;
- amount not commensurate with the client’s business or financial capacity;
- structuring perceived to avoid reporting requirements;
- deviation from the client’s profile or past transactions;
- relation to an unlawful activity or offense under the AMLA that is about to be, is being, or has been committed; and
- transactions similar or analogous to the foregoing.
Section 3(i) defines “Unlawful activity” to include acts or omissions related to specified offenses, including:
- fraudulent practice and other violations under Republic Act No. 8799 (Securities Regulation Code of 2000);
- violation of Section 9(a)(3) of Republic Act No. 10697 (Strategic Trade Management Act) in relation to proliferation of weapons of mass destruction and its financing under UNSC Resolution Nos. 1718 of 2006 and 2231 of 2015;
- violation of Section 254 of Chapter II, Title X of the National Internal Revenue Code of 1997, as amended, where the deficiency basic tax due in the final assessment is in excess of PHP 25,000,000.00 per taxable year, for each tax type covered, with a finding of probable cause by the competent authority, and where there is a finding of fraud, willful misrepresenting or malicious intent by the taxpayer;
- and no case for AMLC forfeiture is instituted to recover monetary instruments, property, or proceeds representing, involving, or relating to that tax crime if already recovered or collected by the Bureau of Internal Revenue (BIR) in a separate proceeding.
Section 3(i) also includes felonies and offenses of a similar nature punishable under penal laws of other countries.
Section 3 defines additional terms, including:
- “Offshore gaming operator” as an entity offering online games of chance or sporting events via the internet using a network and software program, by itself or through local service providers.
- “Service providers” as duly constituted business corporations providing components of offshore gaming operations to offshore gaming operators.
- “Real estate developer” as a natural or juridical person developing a real estate development project for the account of the developer and offering it for sale or lease.
- “Real estate broker” as a duly registered and licensed natural person acting for a professional fee, commission, omission or other valuable consideration as agent to offer, advertise, solicit, list, promote, mediate, negotiate, or effect the meeting of the minds in real estate transactions or similar transactions, including any interest therein.
- “Targeted financial sanctions” as asset freezing and prohibition to prevent funds or other assets from being made available, directly or indirectly, for the benefit of individuals or entities designated pursuant to relevant UNSC resolutions and designation processes.
- “Proliferation financing” when a person makes available an asset, provides a financial service, or conducts a financial transaction, knowing or being reckless as to whether it is intended, in whole or in part, to facilitate proliferation of weapons of mass destruction under UNSC Resolution No. 1718 of 2006 and 2231 of 2015.

AMLC composition and expanded powers

Section 7 amends Section 7 of Republic Act No. 9160 by creating the Anti-Money Laundering Council (AMLC) composed of 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 7 requires the AMLC to act unanimously in the discharge of its functions as defined under the AMLA.
Section 7(1) authorizes the AMLC to investigate suspicious transactions and covered transactions deemed suspicious after AMLC determination, money laundering activities, and other violations of the AMLA.
Section 7(13) empowers the AMLC to apply for issuance of a search and seizure order with any competent court during investigation.
Section 7(14) empowers the AMLC to apply for issuance of a subpoena ad testificandum and/or subpoena duces tecum with any competent court during investigation.
Section 7(15) requires the AMLC to implement targeted financial sanctions related to proliferation of weapons of mass destruction and its financing, including an ex parte freeze, without delay, against all funds and other assets owned and controlled directly or indirectly (including funds and assets derived or generated therefrom) by individuals or entities designated under UNSC Resolution Nos. 1718 of 2006 and 2231 of 2015 and successor resolutions, as well as any binding Security Council resolution.
Section 7(16) requires the AMLC to preserve, manage, or dispose assets pursuant to a freeze order, asset preservation order, or judgment of forfeiture, and provides that pending turnover to the national government, expenses incurred are deducted from the amount to be turned over to the national government.

Information security and confidentiality rules

Section 8-A requires the AMLC and its Secretariat to securely protect information received or processed.
Section 8-A prohibits the AMLC and its Secretariat from revealing, in any manner, any information known by reason of office.
Section 8-A applies the confidentiality prohibition even after separation from the AMLC.
Section 8-A requires the AMLC to formulate rules governing information exchange and dissemination, and the security and confidentiality of information, including procedures for handling, storage, protection, and access.

Freezing of monetary instruments and property

Section 10(a) establishes a court-mediated freeze process for monetary instruments or property related to an unlawful activity under Section 3(i).
Section 10(a) requires a verified ex parte petition by the AMLC, followed by court determination that probable cause exists that the property or monetary instrument is in any way related to an unlawful activity.
Section 10(a) empowers the Court of Appeals to issue a freeze order effective immediately for a period of twenty (20) days.
Section 10(a) mandates that within the twenty (20) day period, the Court of Appeals conduct a summary hearing with notice to the parties to determine whether to modify or lift the freeze order or extend its effectivity.
Section 10(a) limits the total effectivity of a Court of Appeals freeze order under this provision to not exceed six (6) months.
Section 10(a) provides that the freeze mechanism is without prejudice to an asset preservation order issued by the Regional Trial Court in the appropriate anti-money laundering case or civil forfeiture case.
Section 10(a) provides an ipso facto rule: if no case is filed against a person whose account has been frozen within the period determined by the Court of Appeals (in no event exceeding six (6) months), the freeze order is deemed ipso facto lifted.
Section 10(a) states that the new rule does not apply to pending cases in the courts.
Section 10(a) requires courts to act on the petition to freeze within twenty-four (24) hours from filing of the petition, and excludes nonworking days from the computation if the application is filed a day before a nonworking day.
Section 10(a) limits the reach of freeze orders and asset preservation orders to the amount of cash or monetary instrument or the value of property that the court finds there is probable cause to consider as proceeds of a predicate offense, and prohibits application to amounts in the same account in excess of the probable-cause proceeds amount or value.
Section 10(a) allows a person whose account has been frozen to file a motion to lift the freeze order, and requires the court to resolve the motion before expiration of the freeze order.
Section 10(a) prohibits all courts from issuing a temporary restraining order or writ of injunction against any freeze order, except the Supreme Court.
Section 10(b) creates a sanctions-based freeze power: for implementing targeted financial sanctions on proliferation financing under Section 3(15), the AMLC may issue an ex parte order to freeze without delay.
Section 10(b) provides that the freeze order remains effective until the basis for issuance is lifted.
Section 10(b) provides an effective-judicial-protection procedure: the aggrieved party may file with the Court of Appeals within twenty (20) days from issuance a petition to determine the basis of the freeze order.
Section 10(b) allows the person whose property or funds are frozen to withdraw sums the AMLC determines are reasonably needed for monthly family needs and sustenance, including services of counsel and family medical needs.
Section 10(b) authorizes the AMLC, if circumstances warrant, to initiate civil forfeiture proceedings to preserve the assets and protect them from dissipation.
Section 10(b) prohibits temporary restraining orders or writs of injunction against the freeze order, except the Court of Appeals or the Supreme Court.

Injunction limits on asset preservation

Section 12(d) amends Section 12 to prohibit courts from issuing a temporary restraining order (TRO) or writ of injunction against any provisional asset preservation order or asset preservation, except the Court of Appeals or the Supreme Court.

Criminal penalties for information breach

Section 14(d) amends the penal provisions for breaches connected to information security and confidentiality.
Section 14(d) imposes 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 on a person convicted for violation under Section 9(c) or Section 8-A on information security and confidentiality.
Section 14(d) provides that if the offender is a public official or employee, the offender suffers in addition a penalty of perpetual or temporary absolute disqualification from public office, depending on the case.
Section 14(d) provides liability for media publication or reporting: for breaches of confidentiality published or reported by media, the responsible reporter, writer, president, publisher, manager, and editor-in-chief are liable under the AMLA.

Limits on AMLC and BIR operations

Section 20 amends the Non-Intervention rule by declaring that nothing in the AMLA nor related antecedent laws or existing agreements allows the AMLC to participate in any manner in BIR operations.
Section 20 permits coordination with the BIR in investigations relating to violations of Section 254 of the NIRC, as amended, when used as a predicate offense to money laundering.

Implementing rules, separability, repeal, effectivity

Implementing rules: The AMLC must issue the necessary rules and regulations within ninety (90) days from the effectivity of Republic Act No. 11521.
Separability: Section 10 provides that if any provision or section is held unconstitutional or invalid, the remaining provisions continue in full force and effect.
Repealing: Section 11 repeals or modifies provisions of existing laws, orders, rules and regulations, or parts thereof that conflict with the AMLA amendments; it also adopts all provisions of Republic Act No. 9160, as amended, that are not inconsistent with Republic Act No. 11521.