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Anti-Money Laundering Act

of 2001
Republic Act no. 9160

Submitted by:
Kristoffer Joseph D. Villanueva
Mark Mangliwan
Anti-Money Laundering Act of 2001 (RA 9160)

Policy:
It is hereby declared the policy of the State to protect and preserve the
integrity and confidentiality of bank accounts and to ensure that the Philippines
shall not be used as a money laundering site for the proceeds of any unlawful
activity. Consistent with its foreign policy, the State shall extend cooperation in
transnational investigations and prosecutions of persons involved in money
laundering activities wherever committed.

Covered institution refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other institutions
and their subsidiaries and affiliates supervised or regulated by the Bangko
Sentral ng Pilipinas (BSP);

(2) insurance companies and all other institutions supervised or regulated by


the Insurance Commission; and

(3) (i) securities dealers, brokers, salesmen, investment houses and other
similar entities managing securities or rendering services as investment
agent, advisor, or consultant, (ii) mutual funds, close-end investment
companies, common trust funds, pre-need companies and other similar
entities, (iii) foreign exchange corporations, money changers, money
payment, remittance, and transfer companies and other similar entities, and
(iv) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by Securities and Exchange Commission and Exchange
Commission.

Obligations of Covered Transactions

Covered institutions shall:

Establish and record the true identity of their clients based on official
documents.

In case of individual clients, maintain a system of verifying the true identity of


their clients.

In case of corporate clients, require a system verifying their legal existence


and organizational structure, as well as the authority and identification of all
persons purporting to act in their behalf.
Establish appropriate systems and methods based on internationally
compliant standards and adequate internal controls for verifying and
recording the true and full identify of their customers.

Maintain and safely store all records of all their transactions for five years
from the transaction dates;

Ensure that said records/files contain the full and true identity of the owners
or holders of the accounts involved in the covered transactions and all other
identification documents;
Undertake the necessary adequate measures to ensure the confidentiality of
such files;

Prepare and maintain documentation, in accordance with client identification


requirements, on their customer accounts, relationships and transactions
such that any account, relationship or transaction can be so reconstructed as
to enable the AMLC and/or the courts to establish an audit trail for money
laundering;

Maintain and safely store all records of existing and new accounts and of new
transactions for 5 years from October 17, 2001 or from the dates of the
accounts or transactions, whichever is later;

Anent closed accounts, preserve and safely store the records on customer
identification, account files and business correspondence for at least 5 years
from the dates they were closed;

If a money laundering case based on any record kept by the covered


institution has been filed in court, retain said files until it is confirmed that the
case has been finally resolved or terminated by the court; and

Retain records as originals in such forms as are admissible in court

Covered transaction

A single, series, or combination of transactions involving a total amount in


excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent amount
in foreign currency based on the prevailing exchange rate within five (5)
consecutive banking days except those between a covered institution and a person
who, at the time of the transaction was a properly identified client and the amount
is commensurate with the business or financial capacity of the client; or those with
an underlying legal or trade obligation, purpose, origin or economic justification.

It likewise refers to a single, series or combination or pattern of unusually large and


complex transactions in excess of Four million Philippine pesos (Php4,000,000.00)
especially cash deposits and investments having no credible purpose or origin,
underlying trade obligation or contract.

Suspicious Transactions

Transactions, regardless of the amount involved, where the following circumstances


exist:
a. There is no underlying legal or trade obligation, purpose or economic
justification;

b. The client is not properly identified;

c. The amount involved is not commensurate with the business or financial


capacity of the client;

d. Taking into account all known circumstances, it may be perceived that the
clients transaction is structured in order to avoid being the subject of
reporting requirements under the Act;

e. Any circumstance relating to the transaction which is observed to deviate


from the profile of the client and/or the clients past transactions with the
covered institution;

f. The transaction is in any way related to an unlawful activity or offense


under this Act that is about to be, is being or has been committed; or

g. Any transaction that is similar or analogous to the foregoing.

When is Money Laundering committed?


Money laundering is committed when a person starts to perform a process
comprising of three (3) stages, namely, placement or the physical disposal of the
criminal proceeds, layering or the separation of the criminal proceeds from their
source by creating layers of financial transactions to disguise the audit trail, and
integration or the provision of apparent legitimacy to the criminal proceeds. Any
transaction involving such criminal proceeds or attempt to transact the same during
the placement, layering or integration stage shall constitute the crime of money
laundering.

Unlawful Activities or predicate crimes

There are 14 unlawful activities or predicate crimes covered by the AMLA. These
are, in the order enumerated in the law:
Kidnapping for ransom
Drug offenses
Graft and corrupt practices
Plunder
Robbery and extortion
Jueteng and masiao
Piracy on the high seas
Qualified theft
Swindling
Smuggling
Electronic Commerce crimes
Hijacking, destructive arson and murder, including those perpetrated
against non-combatant persons (terrorist acts)
Securities fraud
Felonies or offenses of a similar nature punishable under penal laws of
other countries

The Anti-Money Laundering Council


The AMLC is the Philippines financial intelligence unit, which is tasked to
implement the AMLA. It is composed of the Governor of the Bangko Sentral ng
Pilipinas (BSP) as Chairman & the Commissioner of the Insurance Commission (IC)
and the Chairman of the Securities and Exchange Commission (SEC) as members.
The AMLC is authorized to:

Require and receive covered or suspicious transaction reports from


covered institutions.

Issue orders to determine the true identity of the owner of any monetary
instrument or property that is the subject of a covered or suspicious
transaction report, and to request the assistance of a foreign country if the
Council believes it is necessary.

Institute civil forfeiture and all other remedial proceedings through the
Office of the Solicitor General.

Cause the filing of complaints with the Department of Justice or the


Ombudsman for the prosecution of money laundering offenses.

Investigate suspicious transactions, covered transactions deemed


suspicious, money laundering activities and other violations of the AMLA.

Secure the order of the Court of Appeals to freeze any monetary


instrument or property alleged to be the proceeds of unlawful activity.

Implement such measures as may be necessary and justified to


counteract money laundering.

Receive and take action on any request from foreign countries for
assistance in their own anti-money laundering operations.

Develop educational programs to make the public aware of the pernicious


effects of money laundering and how they can participate in bringing the
offenders to the fold of the law.

Enlist the assistance of any branch of government for the prevention,


detection and investigation of money laundering offenses and the
prosecution of offenders. In this connection, the AMLC can require
intelligence agencies of the government to divulge any information that
will facilitate the work of the Council in going after money launderers.

Impose administrative sanctions on those who violate the law, and the
rules, regulations, orders and resolutions issued in connection with the
enforcement of the law.

Authority to Freeze.

Upon determination that probable cause exists that any deposit or similar
account is in any way related to an unlawful activity, the AMLC may issue a freeze
order, which shall be effective immediately, on the account for a period not
exceeding fifteen (15) days.
Notice to the depositor that his account has been frozen shall be issued
simultaneously with the issuance of the freeze order. The depositor shall have
seventy-two (72) hours upon receipt of the notice to explain why the freeze order
should be lifted.
The AMLC has seventy-two (72) hours to dispose of the depositors
explanation. If it fails to act within seventy-two (72) hours from receipt of the
depositors explanation, the freeze order shall automatically be dissolved.

The fifteen (15)-day freeze order of the AMLC may be extended upon order of
the court, provided that the fifteen (15)-day period shall be tolled pending the
courts decision to extend the period.

No court shall issue a temporary restraining order or writ of injunction against


any freeze order issued by the AMLC except the Court of Appeals or the Supreme
Court.

Authority to Inquire into Bank Deposits.

Notwithstanding the provisions of Republic Act No. 1405, as amended;


Republic Act No. 6426, as amended; 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 upon order of any competent
court in cases of violation of this Act when it has been established that there is
probable cause that the deposits or investments involved are in any way related to
a money laundering offense: Provided, That this provision shall not apply to deposits
and investments made prior to the effectivity of this Act.

Republic of the Philippines v. Hon. Antonio Eugenio, Jr.


G.R. No 174629

Facts:
Under the authority granted by the Resolution, the AMLC filed an application
to inquire into or examine the deposits or investments of Alvarez, Trinidad, Liongson
and Cheng Yong with the Makati RTC. The RTC granted the authority to inquire and
examine the subject bank accounts of Alvarez, Trinidad, Liongson and Cheng Yong,
the trial court being satisfied that there existed p]robable cause [to] believe that the
deposits in various bank accounts, details of which appear are related to the offense
of violation of Anti-Graft and Corrupt Practices Act now the subject of criminal
prosecution before the Sandiganbayan. Pursuant to the Makati RTC bank inquiry
order, the CIS proceeded to inquire and examine the deposits, investments and
related web accounts of the four.
The letter adverted to probable cause to believe that the bank accounts were
used in the commission of unlawful activities that were committed a in relation to
the criminal cases then pending before the Sandiganbayan. Attached to the letter
was a memorandum on why the investigation of the [accounts] is necessary in the
prosecution of the above criminal cases before the Sandiganbayan. The AMLC
promulgated on 9 December 2005 Resolution No. 121 Series of 2005 which
authorized the executive director of the AMLC to inquire into and examine the
accounts named in the letter, including one maintained by Alvarez with DBS Bank
and two other accounts in the name of Cheng Yong with Metrobank. Cheng Yong
refused to have the account examined on ground of the Bank Secrecy Act.

Issue: Whether or not the bank accounts of respondents can be examined.

Held:
Any exception to the rule of absolute confidentiality must be
specifically legislated. Section 2 of the Bank Secrecy Act itself prescribes
exceptions whereby these bank accounts may be examined by any person,
government official, bureau or offial; namely when: (1) upon written permission of
the depositor; (2) in cases of impeachment; (3) the examination of bank accounts is
upon order of a competent court in cases of bribery or dereliction of duty of public
officials; and (4) the money deposited or invested is the subject matter of the
litigation. Section 8 of R.A. Act No. 3019, the Anti-Graft and Corrupt Practices Act,
has been recognized by this Court as constituting an additional exception to the rule
of absolute confidentiality, and there have been other similar recognitions as well.
The AMLA also provides exceptions to the Bank Secrecy Act. Under Section
11, the AMLC may inquire into a bank account upon order of any competent court in
cases of violation of the AMLA, it having been established that there is probable
cause that the deposits or investments are related to unlawful activities as defined
in Section 3(i) of the law, or a money laundering offense under Section 4 thereof. It
cannot be successfully argued the proceedings relating to the bank inquiry order
under Section 11 of the AMLA is a litigation encompassed in one of the exceptions
to the Bank Secrecy Act which is when money deposited or invested is the subject
matter of the litigation. Nevertheless, just because the AMLA establishes additional
exceptions to the Bank Secrecy Act it does not mean that the later law has
dispensed with the general principle established in the older law that all deposits of
whatever nature with banks or banking institutions in the Philippines x x x are
hereby considered as of an absolutely confidential nature. Indeed, by force of
statute, all bank deposits are absolutely confidential, and that nature is unaltered
even by the legislated exceptions referred to above.

G.R. No. 170281


REPUBLIC OF THE PHILIPPINES, represented by the ANTI-
MONEYLAUNDERING COUNCIL VS. GLASGOW CREDIT ANDCOLLECTION
SERVICES, INC. and CITYSTATE SAVINGS BANK, INC.
FACTS:
On July 18, 2003, petitioner filed a complaint for civil forfeiture of assets with
the RTC of Manila against the bank deposits in account number CS 005-10-
000121-5 maintained by GLASGOW in CSBI. The case was filed pursuant to RA 9160
or the Anti-Money Laundering Act of 2001.On July 21, 2003, the RTC of Manila issued
a 72-hour TRO. And on August8, 2003 a writ of preliminary injunction was issued.
Meanwhile, summons to GLASGOW was returned unserved as it could no longer
be found at its last known address.

On May 31, 2004, the trial court ordered the reinstatement of the case
directing the Republic to serve the alias summons to Glasgow and CSBI within
15days.On July 12, 2004, petitioner received a copy of the sheriffs return stating
that the alias summons was returned unserved as GLASGOW was no longer
holding office at the given address since July 2002.On August 11, 2005, petitioner
filed a manifestation and ex parte motion tor esolve its motion for leave of court to
serve summons by publication. On August 12, 2005, the OSG received a copy of
GLASGOWs motion to dismiss by way of special appearance alleging that 1) the
court had no jurisdiction over its person as summons had not yet been served on it
2) the complaint was premature and stated no cause of action and 3) there was
failure to prosecute on the part of the Republic. On October 17, 2005, the trial court
dismissed the case on the grounds of 1)improper venue 2) insufficiency of the
complaint in form and substance and 3) failureto prosecute and lifted the writ of
preliminary injunction. Petitioner filed a petition for review.

ISSUE: Whether or not the complaint for civil forfeiture was properly instituted.

RULING:
Sec. 12 (a) of RA 9160 provides two conditions when applying for
civilforfeiture:1.when there is suspicious transaction report or a covered transaction
report deemed suspicious after investigation by the AMLC;2.the court has, in a
petition filed for the purpose; ordered the seizure of any monetary instrument or
property, in whole or in part, directly or indirectly, related to said report.

It is the preliminary seizure of the property in question which brings it within


the reach of the judicial process. It is actually within the courts possession when it is
submitted to the process of the court. The injunctive writ issued on August 8, 2003
removed account no. CA-005-10-000121-5 from the effective control of either
Glasgow or CSBI or their representatives or agents and subjected it to the process of
the court.

Whether or not there is truth in the allegation that account no. CA-005-10-
000121-5 contains the proceeds of unlawful activities is an evidentiary matter that
may be proven during trial. The complaint, however, did not even have to show or
allege that Glasgow had been implicated in a conviction for, or the commission of,
the unlawful activities of estafa and violation of the Securities Regulation Code.

A criminal conviction for an unlawful activity is not a prerequisite for the


institution of a civil forfeiture proceeding. Stated otherwise, a finding of guilt for an
unlawful activity is not an essential element of civil forfeiture.