Rules on administrative sanctions under AMLA

Legal basis and coverage

The AMLC promulgated these rules under Sections 7(7), 7(11), and 14(f) of Republic Act No. 9160 (the Anti-Money Laundering Act of 2001, as amended).
These rules apply to “covered persons” for violations of the Anti-Money Laundering Act and the Revised Implementing Rules and Regulations (RIRR), and for violations of all AMLC issuances, under Section 3.
A “violation” means non-compliance with any provision of the AMLA, its RIRR, and all AMLC issuances, and is committed either on an “order/resolution” basis, “account” basis, “transaction” basis, “customer” basis, “examination” basis, or “daily” basis, with one violation considered as one count under Section 8 (definition of Violation).
Proceedings under these rules are initiated by referral of a Report of Compliance (ROC) or a Report of Examination (ROE) to the AMLC Secretariat’s Litigation and Evaluation Unit under Rule III, Section 1.

Policy and procedural character

The State declares a policy to protect and preserve the integrity and confidentiality of bank accounts and to ensure the Philippines is not used as a money laundering site for proceeds of unlawful activity under Section 2.
Administrative sanctions are designed to encourage covered persons’ adherence to the AMLA, its RIRR, and all AMLC issuances under Section 2.
Administrative sanctions proceedings are non-litigious and summary, while still requiring due process and substantial evidence under Section 4.
Administrative cases are decided based on substantial evidence, and the AMLC issues a resolution imposing appropriate sanctions when substantial evidence supports the charged violations under Rule III, Sections 8 and 9.
The rules treat the administrative process as composed of (1) preliminary fact-finding, (2) filing of a formal charge, (3) notice and answer, (4) clarification meeting if needed, (5) adjudication and AMLC resolution, and (6) execution for fines/restoration.

Definitions that govern sanctions

Administrative Sanction means action taken by the AMLC against a respondent found to have committed a violation, including penalty and non-penalty measures such as fine, reprimand, warning, or other necessary and justified preventive/counteractive measures under Section 8.
Covered Person refers to the persons and entities enumerated under Section 3(a) of the AMLA under Section 8.
Fine refers to the monetary penalty imposed under Rule V under Section 8.
Formal Charge means the administrative “indictment” upon a finding by the Litigation and Evaluation Unit of the existence of a prima facie case under Section 8.
Report of Compliance (ROC) is the Compliance Unit’s findings on compliance issues identified during money laundering investigation and compliance checking functions under Section 8.
Report of Examination (ROE) is the findings of Supervising Authorities during their compliance checking functions under Section 8.
Reprimand is formal censure or reproof under Section 8.
Respondent is a covered person subject of a Formal Charge under Section 8.
Restoration is restitution of value of a monetary instrument or property released in violation of a freeze order, provisional asset preservation order, or asset preservation order under Section 8.
Substantial Evidence means such evidence a reasonable mind accepts as adequate to justify that a specific violation was committed under Section 8.
Warning is placing the covered person on guard against consequences of impending or future violations under Section 8.

AMLC units and their functions

The Litigation and Evaluation Unit receives ROCs and ROEs, conducts a preliminary administrative investigation, files Formal Charges before the Administrative Adjudication Unit, and sets aside ROCs/ROEs for lack of prima facie case while notifying the Compliance Unit and Supervising Authorities under Rule II, Section 1.
The Administrative Adjudication Unit receives and dockets Formal Charges, issues Notices of Formal Charge requiring filing of an Answer, conducts clarificatory meetings as deemed necessary, evaluates motions for reconsideration, dismisses for insufficiency of evidence, recommends administrative sanctions to the AMLC, and issues Notices for implementation of AMLC resolutions under Rule II, Section 2.
The AMLC determines whether substantial evidence shows a violation was committed, imposes administrative sanctions, and resolves motions for reconsideration under Rule II, Section 3.
Administrative cases may be initiated upon referral of ROC or ROE to the Litigation and Evaluation Unit under Rule III, Section 1.
Formal Charges follow a determination of a prima facie case under Rule III, Section 3.

Administrative case process and deadlines

Upon receipt of ROC or ROE, the Litigation and Evaluation Unit conducts a fact-finding investigation involving ex parte evaluation of documents to determine whether a prima facie case exists under Rule III, Section 2.
If there is no prima facie case, the ROC or ROE is set aside and the Compliance Unit and Supervising Authorities are notified under Rule III, Section 2.
When a prima facie case exists, the Litigation and Evaluation Unit files a Formal Charge containing: Statement of Facts, Statement of Attendant Circumstances, Statement of Findings, a statement that a prima facie case exists for a specific violation, and relevant documents under Rule III, Section 3.
The Administrative Adjudication Unit notifies the respondent of the Formal Charge by personal delivery, courier service, or registered mail, and orders the filing of an Answer within ten (10) working days from receipt under Rule III, Section 4.
No motions or requests for extension of time to file the Answer, clarification, bills of particulars, dismissal, quashal, or reconsideration on the Formal Charge are entertained under Rule III, Section 5.
The Answer must be written, under oath, must indicate the date of receipt of the Notice, and must contain all material facts and certified true copies of supporting evidence; noncompliance renders the Answer insufficient in form and substance under Rule III, Section 6.
An Answer filed by personal delivery or courier service is deemed filed on the date stamped “Received” by the AMLC Secretariat; an Answer filed by registered mail is deemed filed on the date shown by the postmark on the envelope under Rule III, Section 6.
If the respondent fails to file an Answer within the period, files an insufficient Answer, or submits any document other than an Answer, the respondent is deemed to have waived the right to file an Answer and the case is submitted for resolution based on available records under Rule III, Section 6.
The Administrative Adjudication Unit may call a clarificatory meeting at its discretion; no motion or request for postponement or resetting is allowed under Rule III, Section 7.
After giving all parties opportunity to be heard, the Administrative Adjudication Unit may dismiss the case or recommend sanctions to the AMLC; dismissal notice is sent by personal delivery, courier service, or registered mail under Rule III, Section 8.
The AMLC issues a Resolution imposing proper administrative sanctions when substantial evidence supports the violations, setting out factual and legal basis; notice to the respondent is made by personal delivery, courier service, or registered mail under Rule III, Section 9.
A respondent may file a motion for reconsideration within ten (10) working days from receipt of the AMLC Resolution under Rule III, Section 10.
No extension of time to file a motion for reconsideration is allowed under Rule III, Section 10.
A motion for reconsideration filed by personal delivery or courier service is deemed filed on the date stamped “Received” by the AMLC Secretariat; if filed by registered mail, it is deemed filed on the date shown by the postmark on the envelope under Rule III, Section 10.
Filing a motion for reconsideration stays the execution of the Resolution being reconsidered under Rule III, Section 10.
A second motion for reconsideration is not allowed under Rule III, Section 10.
A motion for reconsideration must be based only on: (i) newly-discovered evidence that could not have been discovered and produced earlier and that would materially affect the Resolution; (ii) substantial mistake in appreciation of evidence; or (iii) erroneous computation of fines under Rule III, Section 11.
The AMLC Resolution becomes final and executory immediately if no motion for reconsideration is filed within the prescribed period under Rule III, Section 12.

Execution, payment form, and surcharge

When a Resolution involves payment of fine and restoration (if applicable), the Administrative Adjudication Unit issues a Notice of Execution directing payment and restoration within ten (10) working days from receipt under Rule III, Section 13.
Fine payment must be made in the form of Manager’s Check payable to the account of the Anti-Money Laundering Council under Rule III, Section 13.
In restoration cases, the respondent must submit proof of compliance within the same ten (10) working days period under Rule III, Section 13.
If the respondent fails to pay the fine within the prescribed period, a surcharge of ten percent (10%) of the outstanding fine is imposed under Rule III, Section 14.

Sanction standards and fine limits

The AMLC may impose administrative sanctions on covered persons for violations of the AMLA and its RIRR, or for failure/refusal to comply with orders, resolutions, and other AMLC issuances, under Rule V, Section 1.
Fine amounts are determined by the AMLC and cannot exceed PHP 500,000.00 per violation under Rule V, Section 1.
The aggregate fine cannot exceed 5% of the asset size of the respondent under Rule V, Section 1.
The AMLC determines sanctions based on entity size and gravity of violations using the fine schedule in Rule V, Section 2.
A fine schedule provides these amounts per violation:
- Micro: Grave PHP 50,000; Major PHP 30,000; Serious PHP 20,000; Less Serious PHP 10,000; Light PHP 5,000.
- Small: Grave PHP 125,000; Major PHP 75,000; Serious PHP 50,000; Less Serious PHP 25,000; Light PHP 12,500.
- Medium: Grave PHP 250,000; Major PHP 150,000; Serious PHP 100,000; Less Serious PHP 50,000; Light PHP 25,000.
- Large A: Grave PHP 375,000; Major PHP 225,000; Serious PHP 150,000; Less Serious PHP 75,000; Light PHP 37,500.
- Large B: Grave PHP 500,000; Major PHP 300,000; Serious PHP 200,000; Less Serious PHP 100,000; Light PHP 50,000.
The rule expressly ties counting and computation to specific bases for each violation such as “per resolution (freeze order) basis,” “per account basis,” “per customer basis,” “per transaction basis,” “per year basis,” “per examination period,” “per daily basis,” or “per violation basis” under Rule V, Section 3 and the violation table.

Attendant circumstances affecting fines

The rules require consideration of attendant circumstances in determining the imposition of administrative sanctions under Rule IV, Section 1.
Asset size is based on financial capability:
- For juridical persons: total assets in audited financial statement or equivalent as of the year of the violation.
- For natural persons: gross income in the income tax return for the year of the violation.
Covered persons are classified by asset size as:
1. Micro: Php3,000,000.00 and below
2. Small: Php3,000,000.01 to Php15,000,000.00
3. Medium: Php15,000,000.01 to Php100,000,000.00
4. Large A: Php100,000,000.01 to Php500,000,000.00
5. Large B: Php500,000,000.01 and above
Gravity of violations is classified as: Grave, Major, Serious, and Less serious, and Light, under Rule IV, Section 1, with gravity descriptions tied to particular AMLC remedies, customer due diligence/record-keeping/reporting requirements, core provisions’ impact, and compliance-investigation functions.
Violations of similar nature previously sanctioned within the two (2)-year period immediately preceding the examination/investigation are aggravating under Rule IV, Section 1.
Concealment or deliberate effort to hide intended to deceive is an aggravating circumstance, and concealment is presumed when officers/employees complicate transactions, refuse to provide information/documents supporting liability, or use other means to cover up a violation under Rule IV, Section 1.
Material misrepresentation is an aggravating circumstance where facts are misstated knowingly or with uncertainty but passed off as true and likely to induce assent under Rule IV, Section 1.
Voluntary disclosure before the offense/violation is discovered by the Compliance Unit or Supervising Authorities is a mitigating circumstance under Rule IV, Section 1.
Corrective measures taken to correct findings before referral of ROC/ROE to the Litigation and Evaluation Unit are mitigating under Rule IV, Section 1.
Attendant circumstances affect fines by adjusting the imposable fine by twenty-five percent (25%): aggravating circumstances increase and mitigating circumstances decrease the imposable fine by 25%, applied on the fine for the specific violation committed, not the total fine after considering all violations under Rule IV, Section 2.

Violation categories and corresponding fines

The rules set a table of specific violations and corresponding sanctions with different fine bases and amounts depending on size and gravity under Rule V, Section 3.
For Grave violations, the per-entity fine amounts are Grave: Micro PHP 50,000; Small PHP 125,000; Medium PHP 250,000; Large A PHP 375,000; Large B PHP 500,000, with these specific grave violations:
- Non-compliance with immediate freezing upon receipt of a freeze order: fine on per Resolution (Freeze Order) basis, plus restoration.
- Lifting effects of the freeze order during effectivity: fine on per account basis, plus restoration.
- Non-compliance with immediate full access to information/documents/objects pertaining to the deposit/investment/account/transaction/person subject of inquiry or investigation: fine on a per account basis.
For Major violations, the per-entity fine amounts are Major: Micro PHP 30,000; Small PHP 75,000; Medium PHP 150,000; Large A PHP 225,000; Large B PHP 300,000, with these specific major violations:
- Non-compliance with establishing and recording true identity of each customer/person on whose behalf the transaction is conducted: fine on a per customer basis.
- Non-compliance with retaining and safely keeping records beyond the five (5)-year period where the account is subject of a case until officially confirmed by the AMLC Secretariat that the case is resolved/decided/terminated with finality: fine on a per account basis.
- Non-compliance with reporting covered and suspicious transactions to the AMLC: fine on a per transaction basis.
For Serious violations, the per-entity fine amounts are Serious: Micro PHP 20,000; Small PHP 50,000; Medium PHP 100,000; Large A PHP 150,000; Large B PHP 200,000, and the serious violations include:
- Non-compliance with Face-to-Face Contact: fine on a per account basis.
- Non-compliance with Risk Assessment: fine on a per account basis.
- Non-compliance with requirements on PEPs: fine on a per customer basis.
- Non-compliance with requirements on Correspondent Banking: fine on a per transaction basis.
- Non-compliance with requirements on Shell Company/Bank and Bearer Share Entities: fine on a per transaction basis.
- Non-compliance with requirements on Wire/Fund Transfers: fine on a per transaction basis.
- Non-compliance with requirements on Customer from High-Risk Jurisdiction: fine on a per customer basis.
- Non-compliance with requirements on Foreign Branches and Subsidiaries: fine on a per customer basis.
- Non-compliance with monitoring/updating existing customers’ information and identification documents: fine on a per customer basis.
- Non-compliance with establishing a transaction monitoring system: fine on a per year basis reckoned from the effectivity of the 2016 RIRR or 07 January 2017.
- Allowing opening of anonymous accounts, accounts under fictitious names, and similar accounts: fine on a per account basis.
- Allowing opening of checking numbered accounts: fine on a per account basis.
- Non-compliance with maintaining and safely storing for five (5) years from transaction dates or account closure dates all transaction records including customer identification documents: fine on a per account basis.
- Non-compliance with registering with the AMLC electronic reporting system within ninety (90) days from the effectivity of the 2016 RIRR or until 07 April 2017: fine on a daily basis after the 90-day effectivity date or 07 April 2017.
- Non-compliance with freezing related accounts subject of the freeze order: fine on a per account basis, plus restoration.
- Non-compliance with securing written AMLC confirmation upon expiration of the freeze order: fine on a per account basis, plus restoration in cases where there is civil forfeiture or money laundering case filed and monetary instruments were withdrawn, transferred, or dissipated.
- Non-compliance with submitting certified true copies of documents within five (5) working days from receipt of court order or AMLC Resolution: fine on a per account basis.
- Non-compliance with formulating a Money Laundering Prevention Program consistent with the AMLA, its RIRR, AMLC issuances, and supervising authorities’ guidelines/circulars: fine on a per examination period.
- Violation of orders, resolutions, and other AMLC issuances: fine on a per resolution, rule, regulation, circular, order, and guideline basis.
For Less Serious violations, the per-entity fine amounts are Less Serious: Micro PHP 10,000; Small PHP 25,000; Medium PHP 50,000; Large A PHP 75,000; Large B PHP 100,000, and the less serious violations include:
- Non-compliance with obtaining minimum information required from individual customers and juridical entities: fine on a per account basis.
- Non-compliance with indicating true name of the account holder in CTRs and STRs involving non-checking numbered accounts: fine on a per transaction basis.
- Non-compliance with accuracy and completeness of covered and suspicious transaction reports: fine on a per transaction basis.
- Non-compliance with submitting to the AMLC within twenty-four (24) hours a detailed written return on freeze-order accounts (or related accounts): fine on a per Resolution (Freeze Order) basis.
- Non-compliance with providing AML training and continuing education to responsible officers/personnel: fine on a per examination period.
For Light violations, the per-entity fine amounts are Light: Micro PHP 5,000; Small PHP 12,500; Medium PHP 25,000; Large A PHP 37,500; Large B PHP 50,000, and the light violations include:
- Non-compliance with complete information on the detailed return on the freeze order: fine on a per account basis.
- Non-compliance with submitting an electronic detailed return in a prescribed format: fine on a per Resolution (Freeze Order) basis.
- Non-compliance with keeping electronic copies of CTRs or STRs for at least five (5) years from dates of submission to the AMLC: fine on a per violation basis.

AMLC discretion and waivable imposition

The AMLC may dispense with the imposition of administrative sanctions in these cases under Rule V, Section 4:
- Where a light violation was committed and corrective action was immediately taken after its attention was called by the Compliance Unit or Supervising Authorities.
- Where a less serious violation was committed, it is a first time violation, and corrective action was immediately taken after its attention was called by the Compliance Unit or Supervising Authorities.
- Where a serious violation was committed, it is a first time violation, and corrective action was immediately taken after its attention was called by the Compliance Unit or Supervising Authorities, and there is no aggravating circumstance.
In the foregoing cases, the AMLC may impose reprimand, a warning that another violation shall be sternly dealt with, or both under Rule V, Section 4.

Administrative rule status and approval

These rules were approved by the AMLC on May 24, 2017 in Manila, Philippines under the approval clause.
The approval clause identifies the AMLC Chairman and members by position as Amando M. Tetangco, Jr. (Chairman, Governor, Bangko Sentral ng Pilipinas), Teresita J. Herbosa (Member/Chairperson, Securities and Exchange Commission), and Dennis B. Funa (Member/Commissioner, Insurance Commission).