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ANTI-MONEY LAUNDERING ACT

By: ATTY. JACINTO D. JIMENEZ

I. Money Laundering

Definition

Money laundering is a crime whereby the proceeds of an unlawful activity are


transacted, thereby making them appear to have originated from legitimate sources.
It is committed by:

1. Any person knowing that any monetary instrument or property relates to the
proceeds of any unlawful activity, transacts it.

2. Any person knowing that any monetary instrument or property involves the
proceeds of any unlawful activity, performs or fails to perform any act as a
result of which he facilitates its transaction.

3. Any person knowing that any monetary instrument or property is required to


be disclosed and filed with the Anti-Money Laundering Council, fails to do so.
(Section 4)

Institutions Covered

1. Banks, non-banks, quasi-banks, trust entities and all other institutions and
their subsidiaries and affiliates supervised by the Bangko Sentral ng Pilipinas.

2. Insurance companies and all other institutions supervised by the Insurance


Commission.

Securities dealers, brokers, salesmen, investment houses, and other similar entities
managing securities or rendering services as investment agent, advisor or
consultant.

Mutual funds, close-end investment companies, common-trust funds, pre-need


companies and other similar entities.

Foreign exchange corporations, money changers, money payment, remittance and


transfer companies and other similar entities.

Other entities dealing in currency, commodities or financial derivatives, valuable


objects, cash substitutes and other similar monetary instruments or property
regulated by the Securities and Exchange Commission. [Section 3 (a)]

Covered Transactions
Any transaction in cash or other equivalent monetary instrument involving a total of
more than P500,000.00 in one banking day is covered. [Section 3(B)]

Suspicious Transactions

Suspicious transactions are transactions with covered institutions, regardless of


amount, where any of the following circumstances exists:

There is no underlying legal or trade obligations, purpose or economic justification.

The client is not properly identified.

The amount involved is not commensurate with the business or financial capacity of
the client.

It may be perceived that the transaction is structured to avoid being the subject of
reporting requirements.

Any circumstance which deviates from the profile of the client or the client's past
transactions with the covered institution.

The transaction is related to an unlawful activity.

The transaction is similar or analogous to any of the foregoing (Section 2 [b-1)]

Unlawful Activity

Kidnapping for ransom


Sections 3, 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 or 16 of the Comprehensive Dangerous
Drugs Act
Section 3, paragraphs B, C, D, E, G, H and I of the Anti-Graft and Corrupt Practices
Act
Plunder
Robbery and extortion
Jueteng and masiao
Piracy on the high seas
Qualified theft under Article 310 of the Revised Penal Code
Swindling under Article 315 of the Revised Penal Code
Smuggling
Violation of the Electronic Commerce Act
Hijacking, destructive arson and murder
Fraudulent practices under the Securities Regulation Code
Offenses of a similar nature punishable under the penal laws of other countries.
[Section 3 (i)]
II. Antil-Money Laundering Council

A. Composition

Governor of the Bangko Sentral ng Pilipinas


Insurance Commissioner
Chairman of the Securities and Exchange Commission

Requirement for Discharge of Functions: - Unanimity

C. Important Functions

To require and receive covered or suspicious transaction reports from covered


institutions.

To issue orders to the Supervising Authority or covered institution to determine the


true identity of the owner of any monetary investment or property subject of a
covered transaction or suspicious transaction report or request for assistance
from a foreign state, or believed on the basis of substantial evidence be the
proceeds of an unlawful activity.

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

To cause the filing of complaints with the Department of Justice or the Ombudsman
for the prosecution of money laundering offense.

To investigate suspicious transactions and covered transactions deemed suspicious


after an investigation, money laundering activities, and other violations of this
Act.

To apply before the Court of Appeals ex parte for the freezing of any monetary
instrument or property alleged to be proceeds of any unlawful activity.

To implement measures to counteract money laundering

To take action on any request from foreign states for assistance in their anti-money
laundering operations.

To develop educational programs on money-laundering.

To enlist assistance of any instrumentality of the government.

To impose administrative sanctions for violation of laws, rules, order and resolutions
(Section 7)
III. Prevention of Money Laundering

A. Covered institutions shall establish and record the true identity of their clients based
on official documents.

Anonymous accounts, accounts under fictitious names, and all other similar
accounts are prohibited.

Non-checking numbered accounts are allowed.

B. All records of all transactions of covered institutions shall be maintained for five
years from their dates.

C. Covered institutions shall report to the Anti-Money Laundering Council all covered
and suspicious transactions within five working days from their occurrence, unless
the Supervising Authority prescribes a longer period not exceeding ten working
days.

Reporting covered transactions are not covered by Republic Act 1405, Republic Act
6426, Republic Act 8741 and other similar laws.

No proceeding shall lie against a person for making a covered or suspicious


transaction report in the regular performance of his duties and in good faith.
(Section 9)

IV. Authority to Freeze

The Court of Appeals, upon application ex parte by the Anti-Money Laundering Council,
and after determination that probable cause exists that any monetary instrument or
property is related to an unlawful acting may issue a freeze order for twenty days unless
extended by it. (Section 10)

V. Inquiry into Bank Deposits

The Anti-Money Laundering Council may inquire into any deposit or investment with any
bank or financial institution upon order of a court in case of violation of this Act if there is
probable cause that it is related to an unlawful activity or a money laundering activity, but
no court order is required in cases involving unlawful activities in Section 3 (i) (1) (2) and
(12), i.e. kidnapping for ransom, violation of the Comprehensive Dangerous Drugs Act,
and hijacking, destructive arson and murder.

To ensure compliance with this Act, the Bangko Sentral ng Pilipinas may inquire at any
deposit or investment with any bank or financial institution in the course of a periodic or
special examination (Section 11).