The New Central Bank Act

RA 7653
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ARTICLE II Sec. 6 – Composition of Monetary Board

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Reasons for Bank Closure

The Bank
(a) is unable to pay its liabilities as they become due in
the ordinary course of business:
(b) has insufficient realizable assets, as determined by
the Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving
probable losses to its depositors or creditors; or

Article IV Section 30 Proceedings in Receivership and Liquidation

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Reasons for Bank Closure

The Bank
(d) has willfully violated a cease and desist order under
Section 37 that has become final, involving acts or
transactions which amount to fraud or a dissipation of
the assets of the institution

Article IV Section 30 Proceedings in Receivership and Liquidation

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 In which cases,
the Monetary Board may summarily and without need
for prior hearing forbid the institution from doing
business in the Philippines and designate the Philippine
Deposit Insurance Corporation as receiver of the
banking institution.

Article IV Section 30 Proceedings in Receivership and Liquidation

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 If the receiver determines that the institution
cannot be rehabilitated or permitted to resume
business, the Monetary Board shall notify to
proceed with the liquidation of the institution,
pursuant to a liquidation plan adopted by the
Philippine Deposit Insurance Corporation for
general application to all closed banks..

Article IV Section 30 Proceedings in Receivership and Liquidation

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THE CHARTER OF THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION (PDIC)
Act 3591
ROLE OF PDIC (Section 1)
– Insure deposits in all banks entitled to the
benefit of insurance.
– Promote and safeguard the interest of the
depositing public by providing permanent and
continuing insurance coverage, on all insured
deposits.
- Assurance of repayment in case of bank closure.

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INSURED DEPOSITS (Section 4)
Insured deposits are amounts due to any bona
fide depositor for legitimate deposits NOT
EXCEEDING P500,000.00.

A bona fide depositor is a natural or juridical

person, or entity who or which is the owner of a
deposit, and whose deposit is recorded in the
books of the bank;

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PAYMENT OF ASSESSMENT (Section 6)
• Member banks shall pay a semi-annual assessment to
PDIC for the performance of the latter’s functions.

• Assessment is the amount chargeable to banks for

deposit insurance coverage, which is computed using
the formula prescribed by Section 6(a).

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PAYMENT OF ASSESSMENT (Section 6)
• If a bank fails or refuses to pay any required
assessment and continues to fall or refuses to do so
within 30 days from written notice, PDIC may, at its
discretion, file a case for collection before the
appropriate court.

• The PDIC may likewise impose administrative

sanctions against the directors and officers of the
defaulting bank.

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 NON-TERMINATION OF PDIC STATUS (Section 6)
• The PDIC cannot terminate the insured status of any
bank which continues to operate or receive deposits
nothwithstanding non-payment of required assessments.

• This is pursuant to the State policy to promote and

safeguard the interests of the depositing public by
providing permanent and continuing insurance coverage
on all insured deposits.

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PROHIBITED ACTS OF INSURED BANKS (Section 7)
• The PDIC may institute corrective action when an insured
bank, or any of its directors or agents:
– Has committed, is committing or about to commit
unsafe or unsound practices (BSP Circular 341) in
conducting the business of the bank;
– Has violated, is violating, or about to violate any
provision of law or regulation to which the bank is
subject, including the PDIC law.

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POWER TO EXAMINE BANKS (Section 8)
• PDIC can examine banks, apart from the annual
examination of BSP, and is intended as an additional
instrument to maintain appropriate prudential
supervision over banking institutions.

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POWER TO EXAMINE BANKS (Section 8)

• The examination of PDIC cannot be considered as

similar to, or conducted in place of, the examination
by the BSP. For the purpose of counting the 12-month
interval, the reference dates should be the respective
dates of examination conducted by the BSP and the
PDIC. There are, thus, two (2) separate examinations
conducted on banks: one by BSP and the other by
PDIC.

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 REHABILITATION (Section 10)
• Rehabilitation - continuance of corporate life and activities
in an effort to restore and reinstate the corporation to its
former position of successful operation and solvency.
- bank may be permitted to resume
business with safety to its depositors, creditors and the
general public.

• PDIC has 90 days from take-over to determine whether the

bank may be rehabilitated.

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 LIQUIDATION (Section 10)

• Liquidation - settlement of the corporation’s affairs

which consists in collecting all that is due the
corporation and adjusting and settling its just debts
and claims.

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 LIQUIDATION (Section 10)

• Liquidation also involves the winding up of the

corporation’s affairs and the distribution of its
remaining assets, if any, among its stockholders in
accordance with their contracts, or on the basis of
their respective interests in the absence of a special
contract.

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RECEIVERSHIP AND LIQUDATION EXPENSES
(Section 10)
• In its performance of its duties as receiver, the PDIC is
authorized to periodically charge reasonable
receivership and administrative expenditures against
the closed bank’s assets.
• The PDIC may also charge and collect reasonable
liquidation expenses from the available assets of the
closed bank, subject to approval by the court.

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The Anti-Money Laundering Act of 2001
RA 9160
What is Money Laundering?

A crime whereby the

proceeds of an unlawful
activity are transacted thereby
making them appear to have
originated from legitimate
sources.

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 Three Stages of Money Laundering

Placement is when the dirty money initially enters

the financial system, such as with banks and
other financial institutions.
Layering is exactly what it sounds like: putting layer
after layer of transactions on top of each other
to hide the dirty money.
Integration is when all the dirty money, now „clean”
because it is no longer directly traceable, is
brought back together by the money
laundered and used again to earn “legitimate
"personal gain or to finance other criminal
acts.

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Why money laundering is outlawed?

• The money enters the financial system without being taxed

• The money is the fruit of illegal activity, therefore an
extension of that same crime.
• Money laundering forces legitimate business to deal with
inflated or undercut transaction because of the layering
effect.
• Criminal elements become more comfortable conducting
their activities, knowing that they have resources available.
• The financial system is manipulated, and the factual, just
management of national economies is put in danger

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How does money laundering link to other
crimes?

Money laundering is connected to a criminal act

or illegal activity. Before the crime of money
laundering can take place, a previous crime or illegal
activity would have already taken place. This
preliminary act is referred to as the “predicate crime’
of money laundering.
Substantial dirty money may be gained from
such high-paying crimes, like kidnapping for ransom,
which is one of predicate crimes identified under the
law.

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The 14 Predicate Crimes
1. Kidnapping for ransom 10. Electronic Commerce crimes
2. Drug offenses 11. Hijacking, destructive arson
3. Graft and corruption and murder, including those
4. Plunder perpetrated against non-
5. Robbery and extortion combatant persons (terrorist
6. Jueteng and masiao acts)
7. Piracy on the high seas 12. Securities fraud
8. Qualified theft 13. Felonies or offenses of a
8. Swindling similar nature punishable
9. Smuggling under penal laws of other
countries.

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REPUBLIC ACT 9160
“Anti-Money Laundering Act of 2001” (AMLA)
• to protect 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.

• the Philippines’ Financial Intelligence Unit (FIU) tasked to

implement the AMLA, as amended by Republic Act Nos.
9194, 10167, and 10365, as well Republic Act No. 10168,
otherwise known as the “Terrorism Financing Prevention
and Suppression Act of 2012”.

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Rationale for Enacting the Law
The Philippines, while striving to sustain economic
development and poverty alleviation through, among others,
corporate governance and public office transparency, must
contribute its share and play a vital role in the global fight
against money laundering. Hence, the compelling need to
enact responsive anti-money laundering legislation in order to
establish and strengthen an anti-money laundering regime in
the country which will not only increase investor’s confidence
but also ensure that the Philippines is not used as a site to
launder proceeds of unlawful activities.

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History of the Act

Republic Act No. 9160 otherwise known as The

Anti-Money Laundering Act of 2001 was signed into
law on September 29, 2001 and took effect on October
17, 2001. The implementing Rules and Regulations
took effect on April 2, 2002. On March 7, 2003, R.A.
No. 9194 (An Act Amending R.A. No. 9160) was signed
into law and took effect on March 23, 2003. The
revised Implementing Rules and Regulations took
effect on September 7, 2003.

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Salient Features
• Criminalizes money laundering
• Creates a financial intelligence unit
• Imposes requirements on customer identification, record
keeping and reporting of covered and suspicious
transactions
• Relaxes strict bank deposits secrecy laws
• Provides for bank inquiry and freeze ex parte
petition/seizure/forfeiture/recovery of dirty
money/property
• Provides for international cooperation

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AMLC Vision and Mission
Vision
To be a world-class financial intelligence unit that will help establish and maintain an
internationally compliant and effective anti-money laundering regime which will
provide the Filipino people with a sound, dynamic, and strong financial system in an
environment conducive to the promotion of social justice, political stability, and
sustainable economic growth. Towards this goal, the AMLC shall, without fear or
favor, investigate and cause the prosecution of money laundering offenses.

Mission
• To protect and preserve the integrity and confidentiality of bank accounts
• To ensure that the Philippines shall not be used as a money laundering site for
proceeds of any unlawful activity
• To extend cooperation in transnational investigation and prosecution of persons
involved in money laundering activities, wherever committed

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What is the Anti-Money Laundering Act
(AMLA)?

• AMLA is the legal basis for making money laundering a

criminal offense in the Philippines, and money launderer
a criminal upon which criminal penalties can be imposed
under the AMALA.
• AMLA is the Philippine government’s response to the
concerns of the Financial action Task force-an
international group dedicated to hunting down and
stopping money laundering wherever it may transpire.

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 Composition of AMLC

• Bangko Sentral ng Pilipinas (BSP) BSP Governor

• Securities and Exchange Chairman

Commission (SEC)
• Insurance Commission (IC) SEC Chairman
Insurance
Commissioner
Member
Member

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Covered Institutions
BSP
Banks, offshore banking units, quasi-banks, trust entities, non-stock
savings and loan associations, including their subsidiaries and affiliates,
as well as pawnshops, foreign exchange dealers/money changers and
remittance agents

SEC
Securities dealers, brokers, pre-need companies, foreign exchange
corporations, investment houses, trading advisors and all other
entities dealing in currency, commodities or other monetary
properties.

IC
Insurance companies. Insurance agents, insurance brokers,
professional reinsurers, reinsurance brokers and holding companies

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Covered Transaction

A single transaction involving a total amount

in excess of PHP500,000.00 within one
banking day.

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 What is a Suspicious Transaction

• There is no underlying legal or trade reason or purpose

for the transaction.
• The individual making the transaction has no proper
identification.
• The amount involved does not correspond with the
expected business or financial capacity of the individual
making transaction.
• The transaction is done in a way to avoid being reported
as covered transaction to the AMLC.

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What is a Suspicious Transaction

• The transaction is a major shift from the usual

transaction history of the individual.
• The transaction is in ay way related to an unlawful
activity or a money laundering offense
• Any transaction that is familiar or analogous to the
foregoing

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AMLC Secretariat
Executive
Director

Compliance and Information Administrative

Legal Evaluation
Investigation Management and and Financial
Group
Group Analysis Group Services Group

Operating Departments:
• Compliance and Investigation group
• Legal Evaluation Group
• Information Management and Analysis Group
• Administrative and Financial Services Group

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Functions of the AMLC
1. Require and receive covered or suspicious transaction
reports from covered institutions
2. Issue orders to determine the true identity of the owner of
any monetary instrument or property, that is the subject of a
report, and to request the assistance of foreign country if
necessary.
3. Institute civil forfeiture and all other remedial proceedings
through the Office of the Solicitor General.
4. Cause the filing of complaints with the Department of Justice
or the Ombudsman for the prosecution o money laundering
offenses.
5. Investigate suspicious transactions, covered transactions
deemed suspicious, money laundering activities and other
violations of the AMLA.

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Functions of the AMLC
6. Secure the order of the Court of Appeals to freeze any monetary
instrument or property alleged to be the proceeds of unlawful
activity.
7. Implement necessary and justified measures to counteract money
laundering
8. Received and act on any requests from foreign countries for
assistance in their own anti-money laundering operations.
9. Develop education programs to make the public aware of the
pernicious effects of money laundering and how they can
participate in bringing offenders to justice.
10. Enlist the assistance of any branch of government, including
intelligence agencies, for the prevention, detection and
investigation of money laundering offenses and the prosecution of
offenders.
11. 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
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UNCLAIMED BALANCES LAW
Act 3936
UNCLAIMED BALANCES LAW

An act requiring banks, trust corporation, building

and loan associations, to transfer unclaimed
balances held by them to the treasurer of the
Philippines and for other purposes.

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UNCLAIMED BALANCES (Section 1)
• It shall include
• credits or deposits of money,
• bullion,
• security or
• other evidence of indebtedness of any kind,
• interest thereon with banks, buildings and loan
associations, and trust corporations,

All are in favor of any person known to be dead or who

has not made further deposits or withdrawals during
the preceding ten years or more.
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UNCLAIMED BALANCES

• Such unclaimed balances, shall be deposited with the

Treasurer of the Philippines to the credit of the
Government of the Philippines

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ESCHEAT OF UNCLAIMED BALANCES
• Escheat involves the right of the State to acquire
abandoned property or those left without an
owner.

• There is abandonment when, after an owner dies

or after the lapse of a prescribed period, no one
asserts any legal right or interest in the property.

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ESCHEAT OF UNCLAIMED BALANCES
• However, if there are interested parties who lay
claim to the property, the courts must decide
whether the credit or deposit should be awarded
to the claimants or be escheated in favor of the
State.

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DORMANT OR INACTIVE ACCOUNTS (Section 2)
• Dormant or Inactive Accounts are:
– Current or checking accounts without activity, or
no deposits or withdrawals, for a period of one (1)
year
– Savings accounts without activity for a period of
(2) years

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PROCEDURAL REQUIREMENTS ON DORMANT
ACCOUNTS (Section 2)
• At least once a year, confirm through direct verification
with its clients and depositors their inactive, dormant
or closed accounts;
• Verify and approve entries to dormant accounts;
• Segregate dormant accounts from active account
ledgers with a separate subsidiary control;
• Prepare daily reports on closed accounts and returned
checks;
• Review and segregate dormant accounts at least once
in every semester;

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PROCEDURAL REQUIREMENTS ON DORMANT
ACCOUNTS (Section 2)
• Place segregated dormant accounts under joint
custody of two (2) responsible officers or employees;
• Maintain separate ledger control for dormant
accounts;
• Segregate signature cards of dormant accounts from
active files and place them under joint custody of two
(2) responsible officers or employees;
• Designate an officer to handle and sufficiently verify all
inquiries on dormant accounts;

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PROCEDURAL REQUIREMENTS ON DORMANT
ACCOUNTS (Section 2)

• Periodically take trial balance of dormant account

ledgers and balances with the general control account
by an employee other that the bookkeeper;
• Subject all transactions affecting dormant accounts to
audit by the internal auditor;
• Render to bank management a semestral report on
deposit accounts transferred to dormant accounts.

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PROCEDURAL REQUIREMENTS ON UNCLAIMED
BALANCES (Section 2)
• Within the month of January of every odd year,
forward to the Treasurer of the Philippines a
statement under oath a list of all credits and deposits
held by them in favor of persons known to be dead,
or who have not made further deposits or
withdrawals during the preceding 10 years or more;
• Arrange the credits and deposits in alphabetical order
according to the names of creditors and depositors,
showing the following;
– Names and last known place of residence or post
office addresses of persons in whose favor such
unclaimed balances stand;
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PROCEDURAL REQUIREMENTS ON UNCLAIMED
BALANCES (Section 2)
– Amount and date of the outstanding unclaimed
balance and where it is in money or in security; if
the latter, the nature of the balance;
– Date when the person in whose favor the
unclaimed balance stands died, if known, or the
date of last deposit or withdrawal, and
– Amount of interest due on such unclaimed
balance, if any;

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PROCEDURAL REQUIREMENTS ON UNCLAIMED
BALANCES (Section 2)
• Communicate with the person in whose favor the
unclaimed balance stands at his last known place of
residence or post office address immediately before
filing the above sworn statement with the Treasurer
of the Philippines;
• Post a copy of filed sworn statement
– In a conspicuous place in the premises of the bank,
building and loan association, or trust corporation
concerned;
– For at least 60 days from the date of filing; and

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PROCEDURAL REQUIREMENTS ON UNCLAIMED
BALANCES (Section 2)
• Transfer and reclassify all reported unclaimed
balances from the deposit liability or other credit
accounts to the liability account, “due to the
Treasurer of the Philippines”. The unclaimed balances
remain in such account until ordered by a court to be
escheated and turned over to the Treasurer of the
Philippines.

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ESCHEAT IN REM PROCEEDINGS
• Escheat proceedings are actions in rem, whereby an
action is brought against the thing itself, or res,
instead of the person.
• Procedure for escheat is both substantive and
procedural. It is substantive as it defines unclaimed
balances, the rights and obligations of covered
institutions, the Bureau of Treasury and the State in
the matter of escheats of unclaimed balances.
• It is procedural since it outlines the procedure to be
observed in the escheat proceedings before the
courts.

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PENALTY FOR NON-FILING OF STATEMENT
(Section 4)
• The covered institution may be subject to a penalty
of fine for refusal or neglect of its president, cashier
or managing officer to make and file the required
sworn statement.
• The fine shall be P500.00 for each month or a fraction
thereof that the default continues.

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IMMUNITY FROM LIABILITY (Section 5)
• The covered institution which deposited unclaimed
balances with the Treasurer of the Philippines cannot
be held liable for any action brought by any person in
connection with such unclaimed balances. The
Solicitor General shall, without cost, act in defense of
the covered Institution.
• The Treasurer of the Philippines cannot be held liable
for the return of validly escheated unclaimed
balances.

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THE LAW ON SECRECY OF BANK DEPOSITS
RA 1405
BANK SECRECY LAW
Secrecy of bank deposits or bank secrecy is a
legal principle that prevents unrestricted
access to a depositor’s financial information,
subject to limited exceptions.

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BANK SECRECY LAW
• Encourage people to deposit in banking institutions
and discourage private hoarding (Section 1)

• All deposits of whatever nature with banks or

banking institutions in the Philippines including
investments in bonds issued by the Philippine
Government are hereby considered as ABSOLUTELY
CONFIDENTIAL in nature and may not be examined
(Section 2)

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EXCEPTIONS TO CONFIDENTIALITY
• Bank deposits and investments in government
bonds may only be examined, looked and inquired
into under the following exceptions:
– Upon written permission of the depositor
– In cases of impeachment
– Upon order of a competent court in cases of
bribery or dereliction of duty of public officials;
and
– In cases where the money deposited or invested
is the subject matter of litigation (Section 2)

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BANK SECRECY LAW
• It shall be unlawful for any official or employee of a
banking institution to disclose to any person other
than those mentioned in Section 2 hereof any
information concerning said deposits. (Section 3)

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TRACING OF BANK DEPOSITS
• BSP does not have the power to issue a general
directive to banks to produce accounts or records of
wards or certain persons.

• BSP is generally prohibited from making inquiries

with respect to requests from the public to trace
bank deposits of deceased or incompetent persons
pursuant to this law.

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TRACING OF BANK DEPOSITS
• As deposits are private contracts between the banks
and their depositors, duly authorized representatives
of deceased or incompetent persons may inquire
directly from their depositary bank on the
requirements of tracing deposits.

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PROHIBITED ACTS AND PERSONS LIABLE (Section 5)

• The following are liable:

– Any person or government official who, or any
government bureau or office that, examines,
inquires or looks into bank deposits or government
bond investments in any of the instances not
allowed in Section 2

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PROHIBITED ACTS AND PERSONS LIABLE (Section 5)
• The following are liable:
– Any official or employee of a banking institution
who makes a disclosure concerning bank deposits
to another in any instance not allowed by law;
– Any person who commits a violation of any
provision of this law.

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PENALTIES (Section 5)
• Violation of any provision of this law will subject the
offender, upon conviction, to the following penalties:
– Imprisonment of not more than five (5) years
– Fine not more than P20,000; or,
– Both imprisonment and fine.

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PENALTIES (Section 5)
• Any bank official, director, employee or agent who
discloses information relative to funds or
properties in the custody of the bank may also be
held liable under the applicable provisions of the
General Banking Law, Thrift Banks Act and Rural
Banks Act.

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Truth in Lending Act
RA 3765
• The Truth in Lending Act was created with the
objective of protecting Filipinos from lack of
awareness of the true cost of credit.
• Creditors are required to fully disclose to the
debtors the true cost of credit “with a view of
preventing the uninformed use of credit to the
detriment of the national economy”.

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• The creditors’ full disclosure enable debtors to fully
appreciate the true cost of their loan and properly
evaluate their options in arriving at business
decisions before giving full consent to the contract.

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Contents of Disclosure Statement
Cash Price or Delivered Price
• In Trade – cash or delivered price is the amount of
money constituting full payment upon delivery of
the property or service purchased at the creditor’s
place of business

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Contents of Disclosure Statement
• In financial transactions – the cash price represents
the amount of money received by the debtor upon
consummation of the credit transaction, net of any
finance charges collected at the time the credit is
extended.

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Contents of Disclosure Statement
Amounts Credited as Down Payment or trade-in
• Down Payment is the amount paid by the
debtor at the time of the transaction in
partial payment for the property or service
purchased.

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Contents of Disclosure Statement
Individually Itemized Charges
• Should include charges, individually itemized,
which are paid or to be paid by the debtor in
connection with the transaction but which are
not incident to the extension of credit.

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Contents of Disclosure Statement

Total Amount to be Financed

• The total amount to be financed consists of
Total Amount to be Financed = (CP+NFC) – (DP+TI)

Where:
cash price (CP) plus non-finance charges (NFC) less
the amount of down payment (DP) and value of the
trade-in (TI)

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Contents of Disclosure Statement
Finance Charges
•Simple Annual Rate
•Effective Interest Rate
•Charges Deemed as Finance Charges

Schedule of Payments – it must contain a

distinction between the cost of credit in a
single payment and in installment payments
must be disclosed.

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Contents of Disclosure Statement
Additional Charges – any additional or conditional
charge that may be collected in case certain
stipulations in the contract are not met by the
debtor must be specified.

Disclosures in Promissory Notes – penalty charges,

which are not stated in the main disclosure
statement, but disclosed in the promissory note
signed by the borrower, constitutes sufficient
disclosure of the cost of credit.

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 Bouncing Checks Law
Batas Pambansa Blg. 22
Elements of the Case

• Any person
– makes or draws and issues any check to
apply on account or for value,
– knows at the time of issue that he does not
have sufficient funds in or credit with the
drawee bank for the payment of such check
in full upon its presentment,

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Elements of the Case
– which check is subsequently dishonored by
the drawee bank for insufficiency of funds
or credit or
– would have been dishonored for the same
reason had not the drawer, without any
valid reason, ordered the bank to stop
payment.

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Sanction
– shall be punished by imprisonment of not
less than thirty days but not more than one
(1) year or by a fine of not less than but not
more than double the amount of the check
which fine shall in no case exceed Two
Hundred Thousand Pesos, or both such fine
and imprisonment at the discretion of the
court.

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 EVIDENCE OF KNOWLEDGE OF INSUFFICIENT
FUNDS
• The making, drawing and issuance of a check payment of
which is refused by the drawee because of insufficient
funds in or credit with such bank, when presented within
ninety (90) days from the date of the check, shall be prima
facie evidence of knowledge of such insufficiency of funds
or credit unless such maker or drawer pays the holder
thereof the amount due thereon, or makes arrangements
for payment in full by the drawee of such check within (5)
banking days after receiving notice that such check has
not been paid by the drawee.

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 EXCEPTION TO EVIDENCE OF KNOWLEDGE OF
INSUFFICIENT FUNDS
• Unless such maker or drawer pays the holder thereof the
amount due thereon, or makes arrangements for
payment in full by the drawee of such check within (5)
banking days after receiving notice that such check has
not been paid by the drawee.

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DUTY OF DRAWEE BANK
• It shall be the duty of the drawee of any check,
when refusing to pay the same to the holder
thereof upon presentment, to cause to be written,
printed, or stamped in plain language thereon, or
attached thereto, the reason for drawee's dishonor
or refusal to pay the same.

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THANK YOU!

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