State policy and transnational cooperation
- The State shall protect the integrity and confidentiality of bank accounts (Rule 2).
- The State shall ensure that the Philippines shall not be used as a money laundering site for proceeds of any unlawful activity (Rule 2).
- Consistent with foreign policy, the Philippines shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities, wherever committed (Rule 2).
Core definitions and key terms
- Covered Institution includes:
- Banks, offshore banking units, quasi-banks, trust entities, non-stock savings and loan associations, pawnshops, and all other institutions supervised and/or regulated by the Bangko Sentral ng Pilipinas (BSP), including their subsidiaries and affiliates (Rule 3.a.1).
- Insurance companies, insurance agents, insurance brokers, professional reinsurers, reinsurance brokers, holding companies, holding company systems and all other persons/entities supervised and/or regulated by the Insurance Commission (IC) (Rule 3.a.2).
- Securities dealers, brokers, salesmen, associated persons of brokers/dealers, investment houses, investment agents/consultants, trading advisors, other entities managing securities or similar services, mutual funds/open-end companies, close-end companies, common trust funds, pre-need companies/issuers, foreign exchange corporations, money changers, money payment/remittance/transfer companies, and other similar entities supervised and/or regulated by the Securities and Exchange Commission (SEC) (Rule 3.a.3).
- Subsidiary and affiliate ownership thresholds are defined for BSP-supervised institutions:
- A subsidiary exists when more than 50% of outstanding voting stock is owned by a BSP-supervised institution (Rule 3.a.1(a)).
- An affiliate exists when at least 20% but not exceeding 50% of voting stock is owned by a BSP-supervised institution (Rule 3.a.1(b)).
- Customer includes persons/entities that keep an account or transact with a covered institution, and also includes beneficiaries of transactions and certain managed-asset beneficiaries; it includes insurance policy holders, whether actual or prospective (Rule 3.a.3(n)).
- Property means anything of value, whether real or personal, tangible or intangible, and includes interests and benefits/privileges/claims/rights related to such value (Rule 3.a.3(o)).
- Covered Transaction is any cash or other equivalent monetary instrument transaction involving a total amount in excess of PHP 500,000.00 within one (1) banking day (Rule 3.b).
- Suspicious Transactions are transactions, regardless of amount, where any of the listed circumstances exists, including:
- No underlying legal/trade obligation, purpose, or economic justification (Rule 3.b.1(1)).
- Client not properly identified (Rule 3.b.1(2)).
- Amount not commensurate with the client’s business/financial capacity (Rule 3.b.1(3)).
- Structure to avoid reporting requirements (Rule 3.b.1(4)).
- Deviations from the client’s profile or past transactions (Rule 3.b.1(5)).
- Related to unlawful activity or money laundering activity/offense that is about to be, being, or has been committed (Rule 3.b.1(6)).
- Similar/analogous/identical to any of the listed circumstances (Rule 3.b.1(7)).
- Monetary Instrument includes cash/legal tender; drafts, checks, and notes; securities/negotiable instruments and other specified financial instruments; insurance and suretyship contracts/policies; and other similar instruments where title passes by endorsement/assignment/delivery (Rule 3.c).
- Offender means any person who commits a money laundering offense (Rule 3.d).
- Person means any natural or juridical person (Rule 3.e).
- Proceeds means amounts derived or realized from unlawful activity, including all material results and all related monetary/financial/economic means, documents, expenditures, and other listed items used in/related to financing/operations/maintenance of unlawful activity (Rule 3.f).
- Supervising Authority means BSP, SEC, and IC; where their supervision is limited to registration, BSP/SEC/IC shall have authority (within AMLA limits) to require assistance from the agency with regulatory power/licensing authority for AMLA enforcement (Rule 3.g).
- Transaction includes any act creating rights/obligations or contractual/legal relationships, and includes movement of funds by any means with a covered institution (Rule 3.h).
- Unlawful activity means any act/omission/series involving or related to specified predicate offenses, including (among others) serious crimes and specified enumerated offenses under:
- The Revised Penal Code (including kidnapping for ransom; robbery/extortion; qualified theft; swindling/estafa variations; piracy; hijacking and destructive arson and murder) (Rule 3.i(A), (E), (F), (G), (H), (I), (L)).
- Republic Act No. 9165 (Comprehensive Dangerous Drugs Act of 2002) predicate drug offenses enumerated in the Rules (Rule 3.i(B)).
- Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act) predicate graft offenses enumerated in the Rules (Rule 3.i(C)).
- Republic Act No. 7080 (Plunder) predicate offenses enumerated in the Rules (Rule 3.i(D)).
- Presidential Decree No. 1602 (jueteng and masiao as illegal gambling) (Rule 3.i(F)).
- Republic Act Nos. 455 and 1937 (smuggling and enumerated related offenses) (Rule 3.i(J)).
- Republic Act No. 8792 (Electronic Commerce Act of 2000) enumerated cyber/security, piracy, and consumer/other related offenses under the E-Commerce Act (Rule 3.i(K)).
- Republic Act No. 6235 and specified terrorism-related offenses (Rule 3.i(L)).
- Republic Act No. 8799 (Securities Regulation Code of 2000) enumerated securities offenses (Rule 3.i(M)).
- Felonies/offenses of similar nature punishable under penal laws of other countries; “similar nature” is not limited to identical nomenclature (Rule 3.i(N)).
Money laundering offense and elements
- Money laundering is a crime where proceeds of an unlawful activity, as defined, are transacted to make them appear to have originated from legitimate sources (Rule 4.1).
- Money laundering is committed by any person who:
- Knowing that a monetary instrument/property represents/involves/relates to proceeds of an unlawful activity transacts or attempts to transact the monetary instrument/property (Rule 4.1(a)).
- Knowing that a monetary instrument/property involves proceeds of an unlawful activity performs or fails to perform an act that facilitates the money laundering offense in Rule 4.1(a) (Rule 4.1(b)).
- Knowing that a monetary instrument/property is required under the AMLA to be disclosed/fil filed with the AMLC and fails to do so (Rule 4.1(c)).
- Knowledge may be established by direct evidence or inferred from attendant circumstances (Rule 6.5).
- Every element of money laundering, including the element of knowledge, must be proved beyond reasonable doubt (Rule 6.6).
- No element of the unlawful activity—including identity of perpetrators or details of commission—must be proved beyond reasonable doubt to establish money laundering, because the money laundering elements are separate and distinct from the elements of the unlawful activity (Rule 6.7).
Court jurisdiction and investigation roles
- Regional Trial Courts have jurisdiction to try all money laundering cases (Rule 5.1).
- Money laundering cases committed by public officers and private persons who are in conspiracy with such public officers fall under the Sandiganbayan jurisdiction (Rule 5.1).
- The AMLC shall investigate:
- Suspicious transactions (Rule 5.2).
- Covered transactions deemed suspicious after AMLC investigation (Rule 5.2).
- Money laundering activities (Rule 5.2).
- Other violations of the AMLA (Rule 5.2).
- Attempted transactions are prosecuted as money laundering offenses:
- Reports required under the Rules must include those relating to attempts to transact monetary instrument/property representing/involving/relating to proceeds of an unlawful activity (Rule 5.3).
Prosecution workflow and evidentiary rules
- A person may be charged with and convicted of both money laundering and the unlawful activity as defined in the Rules (Rule 6.1(a)).
- Proceedings relating to the unlawful activity shall receive precedence over prosecution of any AMLA offense, without prejudice to applying ex parte to the Court of Appeals for a freeze order regarding the involved monetary instrument/property and to other AMLA remedies (Rule 6.1(b)).
- When the AMLC finds probable cause after investigation, it shall cause the filing of a complaint before the Department of Justice or the Ombudsman for preliminary investigation (Rule 6.2).
- After due notice and hearing in the preliminary investigation, if probable cause is found, the Department of Justice or Ombudsman shall file the necessary information before the Regional Trial Courts or Sandiganbayan (Rule 6.3).
- Trial for money laundering shall proceed under the Code of Criminal Procedure or the Rules of Procedure of the Sandiganbayan, as applicable (Rule 6.4).
AMLC creation, composition, meetings, and functions
- The Anti-Money Laundering Council (AMLC) is created and composed of:
- Governor of BSP as Chairman (Rule 7.1.a).
- Commissioner of the Insurance Commission as a member (Rule 7.1.a).
- Chairman of the SEC as a member (Rule 7.1.a).
- The AMLC shall act unanimously in discharging its functions (Rule 7.1.b).
- In case of incapacity, absence, or disability of any member, the duly designated/authorized officer of the BSP Governor, the SEC Chairman, or the Insurance Commissioner, as the case may be, shall act in his stead (Rule 7.1.b).
- AMLC functions include:
- Requiring and receiving covered or suspicious transaction reports from covered institutions (Rule 7.2(1)).
- Issuing orders to identify true owners of monetary instruments/properties subject of reports or requests for foreign assistance, based on substantial evidence that the property represents/involves/relates to proceeds of unlawful activity (Rule 7.2(2)).
- Instituting civil forfeiture and remedial proceedings through the Office of the Solicitor General (Rule 7.2(3)).
- Causing the filing of complaints with the Department of Justice or Ombudsman for prosecution of money laundering offenses (Rule 7.2(4)).
- Investigating suspicious transactions and covered transactions deemed suspicious, money laundering activities, and other violations of the AMLA (Rule 7.2(5)).
- Applying ex parte with the Court of Appeals for freezing of monetary instruments/properties alleged to be proceeds of unlawful activity (Rule 7.2(6)).
- Implementing measures inherent/necessary/incidental and justified under the AMLA to counteract money laundering, including establishing an information sharing system with a computerized information database (Rule 7.2(7)).
- Receiving and acting on requests from foreign states for assistance, including under UN resolutions and other international organizations where the Philippines is a member, and refusing where action contravenes the Constitution or likely prejudices national interest (Rule 7.2(8)).
- Developing educational programs on money laundering effects, methods/techniques, prevention, and effective prosecution/punishment (Rule 7.2(9)).
- Enlisting assistance of government branches/bureaus/offices/agencies/instrumentalities including government-owned/controlled corporations, and requiring intelligence units and specified agencies/organizations to divulge information that facilitates prevention/investigation/prosecution (Rule 7.2(10)).
- Imposing administrative sanctions for violations of laws, rules, regulations, and orders/resolutions issued pursuant thereto (Rule 7.2(11)).
- The AMLC shall meet every first Monday of the month, or as often as necessary at the call of the Chairman (Rule 7.3).
AMLC Secretariat: Executive Director and confidentiality
- The Secretariat is headed by an Executive Director appointed by the AMLC for a term of five (5) years (Rule 8.1).
- The Executive Director must be a member of the Philippine Bar, at least thirty-five (35) years of age, served at least five (5) years at the BSP, SEC, or IC, and must be of good moral character, unquestionable integrity, and known probity (Rule 8.1).
- The Executive Director is a full-time permanent employee of the BSP with the rank of Assistant Governor and is entitled to and subject to rules/prohibitions applicable to similar-rank officers (Rule 8.1).
- Secretariat members are regular BSP employees and are entitled to BSP employee benefits and subject to applicable BSP rules, with selection based on service in BSP/SEC/IC for at least five (5) years continuously or cumulatively (Rule 8.2).
- The AMLC may enlist assistance by detailing or seconding personnel from BSP/SEC/IC or other government agencies subject to existing laws and Civil Service rules:
- Detailed personnel continue receiving salaries/benefits/emoluments from mother units (Rule 8.3).
- Seconded personnel receive AMLC Secretariat-position salaries/emoluments/benefits in lieu of mother-unit packages (Rule 8.3).
- AMLC members, the Executive Director, and Secretariat members (permanent, on detail, or secondment) shall not reveal any information known by reason of office, and the prohibition applies even after separation (Rule 8.4).
- Violations of confidentiality shall be punished in accordance with the pertinent provisions of the Central Bank Act (Rule 8.4).
Customer identification and recordkeeping duties
- Covered institutions shall establish and record the true identity of clients based on official documents (Rule 9.1.a).
- Covered institutions shall maintain client identity verification systems and, for corporate clients, require verification of legal existence and organizational structure, and authority/identification of persons acting on behalf (Rule 9.1.a).
- Covered institutions shall establish systems/methods based on internationally compliant standards and adequate internal controls for verifying and recording the true and full identity of customers (Rule 9.1.a).
- For trustee/nominee/agent accounts, covered institutions shall verify and record the true and full identity of the persons on whose behalf transactions are conducted, plus the true identity and capacity/duties of trustees/nominees/agents (Rule 9.1.b).
- If a covered institution doubts whether persons are used as dummies to circumvent laws, it shall immediately make inquiries to verify the status of the business relationship (Rule 9.1.b).
- For individual customers, covered institutions shall require original identity documents issued by official authorities bearing a photograph, and obtain minimum information including:
- Name; present address; permanent address; date and place of birth; nationality; nature of work and name of employer or nature of self-employment/business; contact numbers; tax identification number, Social Security System number, or Government Service and Insurance System number; specimen signature; source of fund(s); and names of beneficiaries in insurance contracts when applicable (Rule 9.1.c).
- For corporate/juridical entities, including shell companies and corporations, before establishing business relationships, covered institutions shall ensure the entity is not dissolved/wound up/voided or in process of closure/shutdown/phasing out/termination, and shall obtain minimum information including:
- Articles of Incorporation/Partnership; by-laws; official or principal business address; list of directors/partners; list of principal stockholders owning at least two percent (2%) of the capital stock; contact numbers; beneficial owners, if any; and verification of authority and identification of persons purporting to act on behalf (Rule 9.1.d).
- Covered institutions shall maintain accounts only in the true and full name of the account owner/holder, and shall absolutely prohibit anonymous accounts, accounts under fictitious names, and similar accounts notwithstanding existing laws to the contrary (Rule 9.1.e).
- No new accounts shall be opened and created without face-to-face contact and full compliance with the individual minimum identity requirements under Rule 9.1.c (Rule 9.1.f).
- Peso and foreign currency non-checking numbered accounts are allowed only if:
- True identity of customers is satisfactorily established through official and other reliable documents/records,
- Information and required documents are obtained and recorded, and
- Testing is conducted as allowed:
- BSP may conduct annual testing (Rule 9.1.g).
- SEC and IC may conduct similar testing more often than once a year (Rule 9.1.g).
- No peso and foreign currency non-checking accounts may be allowed without identity establishment and recording requirements in the manner provided (Rule 9.1.g).
- Covered institutions must retain records of all transactions for five (5) years from the date of transactions, including full and true identity of owners/holders and customer identification documents, with adequate security measures to ensure confidentiality (Rule 9.2.a).
- Records and files must be maintained so each account/relationship/transaction can be reconstructed to enable an audit trail for money laundering for the AMLC and/or courts (Rule 9.2.a).
- Records for existing and new accounts and new transactions must be stored for five (5) years from October 17, 2001 or from the dates of the accounts/transactions, whichever is later (Rule 9.2.b).
- Closed accounts require preservation of customer identification, account files, and business correspondence for at least five (5) years from the dates when they were closed (Rule 9.2.c).
- If a money laundering case based on covered-institution records has been filed in court, the concerned file must be retained beyond the retention periods until the case is finally resolved or terminated by the court (Rule 9.2.d).
- Records shall be retained as originals in forms admissible in court under existing laws and Supreme Court rules (Rule 9.2.e).
Mandatory transaction reporting and confidentiality limits
- Covered institutions must report all covered transactions and all suspicious transactions to the AMLC within five (5) working days from occurrence, unless the concerned supervising authority prescribes a longer period not exceeding ten (10) working days (Rule 9.3.a).
- If a transaction is both covered and suspicious, it must be reported as a suspicious transaction (Rule 9.3.a).
- Covered transaction reporting is deferred for sixty (60) days after the effectivity of Republic Act No. 9194 (or as determined by the AMLC) to allow covered institutions to configure systems, but covered transactions during the deferment period must be submitted thereafter (Rule 9.3.a).
- Covered institutions must use the AMLC-prescribed Covered Transaction Report (CTR) and Suspicious Transaction Report (STR) forms (Rule 9.3.b).
- Covered institutions shall use existing CTR/STR forms until AMLC issues new sets (Rule 9.3.b.1).
- CTR and STR must be submitted to the AMLC in a secured manner in electronic form via diskettes, leased lines, or internet facilities, with corresponding hard copy for suspicious transactions (Rule 9.3.b.2).
- Final reporting flow and procedures shall be mapped in the AMLC manual of operations (Rule 9.3.b.2).
- Reporting covered or suspicious transactions to the AMLC:
- Shall not be deemed a violation of the bank secrecy laws (R.A. No. 1405, R.A. No. 6426, R.A. No. 8791, and similar laws),
- But reporting persons shall be prohibited from communicating to any person the fact that a covered/suspicious transaction report was made, its contents, or any related information (Rule 9.3.c).
- Violation causes criminal liability for the concerned officer and employee (Rule 9.3.c).
- Covered institutions and their officers/employees are prohibited from communicating to any person/entity/media the fact that a covered or suspicious transaction report was made, its contents, or any related information; such reporting cannot be published/ aired by mass media, electronic mail, or similar devices (Rule 9.3.d).
- Criminal liability attaches upon violation for concerned officer/employee/media (Rule 9.3.d).
- Safe harbor: No administrative, criminal, or civil proceedings shall lie against any person for making CTR or STR in regular performance of duties and in good faith, whether or not reporting results in any criminal prosecution under the AMLA or any other Philippine law (Rule 9.3.e).
Freeze orders: application, probable cause, duration, duties
- After AMLC investigation, if probable cause exists that a monetary instrument/property is in any way related to an unlawful activity as defined, the AMLC may file an ex parte application before the Court of Appeals for a freeze order:
- For property subject before or in the course of criminal proceedings involving the unlawful activity (Rule 10.1(a)).
- The AMLC may apply for freezing not only for instruments/properties in the names of reported owner(s)/holder(s), but also for related web of accounts pertaining to other monetary instruments/properties where funds/sources originated from and/or are related to the subject of freeze orders (Rule 10.1(b)).
- A freeze order is effective for twenty (20) days, unless extended by the Court of Appeals upon AMLC application (Rule 10.1(c)).
- Probable cause means facts/circumstances that would lead a reasonably discreet/prudent/cautious person to believe the unlawful activity and/or money laundering offense is about to be, being, or has been committed, and that the sought-to-be-frozen account/monetary instrument/property is in any way related to the unlawful activity and/or money laundering offense (Rule 10.2).
- Upon receipt of the Court of Appeals freeze order notice, the covered institution shall immediately freeze the monetary instrument/property and the related web of accounts subject of the order (Rule 10.3.a).
- The covered institution shall immediately furnish a copy of the freeze order notice to the owner or holder of the monetary instrument/property or related web of accounts (Rule 10.3.b).
- Within twenty-four (24) hours from receipt, the covered institution shall submit to the Court of Appeals and AMLC, by personal delivery, a detailed written return specifying:
- Account number(s); name(s) of account owner(s)/holder(s); amount as of time frozen; relevant nature of the instrument/property; information on related web accounts; and the time the freeze took effect (Rule 10.3.c).
- Related web of accounts means those accounts, funds, and sources materially linked to the monetary instrument/property subject of the freeze order; once verified as originating from and/or materially linked, the covered institution shall freeze those related web accounts wherever the funds may be found (Rule 10.4).
- The return required must include the fact of such freezing and the grounds for identification of the related web of accounts (Rule 10.4).
- Extension: Before the twenty (20) day period expires, the AMLC may apply in the same Court for an extension; upon timely filing and pending decision, the period is deemed suspended and the freeze order remains effective (Rule 10.5).
- The covered institution shall not lift the effects of the freeze order without securing official confirmation from the AMLC (Rule 10.5).
- Freeze orders cannot be issued to freeze assets to the prejudice of a candidate for an electoral office during an election period (Rule 10.6).
AMLC inquiries into bank deposits
- The AMLC may inquire into/examine particular deposits or investments with banking institutions or non-bank financial institutions and their subsidiaries/affiliates upon order of any competent court in cases of violation of the Act, upon probable cause that the deposits/investments are related to an unlawful activity (as defined) or a money laundering offense (as defined), subject to the exception in Rule 11.2 (Rule 11.1).
- The AMLC may inquire into/examine deposits and investments without a court order where the unlawful activities involved are enumerated, including:
- Kidnapping for ransom under Article 267 of Act No. 3815 (Revised Penal Code) as amended (Rule 11.2(a)).
- Predicate drug offenses under Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15 and 16 of Republic Act No. 9165 (Rule 11.2(b)).
- Hijacking under Republic Act No. 6235, and destructive arson and murder as defined under the Revised Penal Code as amended, including terrorist offenses against non-combatant persons and similar targets (Rule 11.2(c)).
- Where a Rule 11.2 unlawful activity is involved and there is probable cause that deposits/investments are related to such unlawful activity, the AMLC shall issue a resolution authorizing the inquiry into/examination of the deposit or investment with the concerned banking/non-banking institution and subsidiaries/affiliates (Rule 11.2.a).
- Upon receipt of the AMLC resolution, the banking institution or non-banking financial institution and their subsidiaries/affiliates shall immediately allow the AMLC and/or its authorized representatives full access to all records pertaining to the deposit or investment account (Rule 11.2.b).