Seourtios ow xchange ‘Commission SEC MEMORANDUM CIRCULAR NO. 25 Series of 2019 TO: ALL SEC REGISTERED NON-STOCK CORPORATIONS, SUBJECT: 2019 GUIDELINES FOR THE PROTECTION OF SEC REGISTERED NON- PROFIT ORGANIZATIONS FROM MONEY LAUNDERING AND TERRORIST FINANCING ABUSE ("2019 NPO Guidelines”) By the authority vested in the Securities and Exchange Commission (SEC) under Republic Act No. 11232 otherwise known as the Revised Corporation Code of the Philippines (RCC) and pursuant to its mandate to assist in the implementation of the Anti-Money Laundering Act (AMLA), as amended, and the Terrorist Financing Prevention and Suppression Act (TFPSA) and their respective Implementing Rules and Regulations, the Commission En Banc in its meeting on 10 December 2019 approved the herein amendment of SEC Memorandum Circular No. 15, Series of 2018 entitled Guidelines for the Protection of SEC Registered Non-Profit Organizations from Money Laundering and Terrorist Financing Abuse ("2018 NPO Guidelines”) CHAPTER I TITLE, SCOPE, PURPOSE AND DEFINITION OF TERMS Section 1.1. Title. These Guidelines shall be known as the "2019 Guidelines for the Protection of SEC registered Non-Profit Organizations from Money Laundering and Terrorist Financing Abuse” or the “2019 NPO Guidelines”. Section 1.2. Scope. These Guidelines shall be observed by all Non- Stock Corporations registered with the Commission unless otherwise indicated herein, Section 1.3. Purpose. In order to establish the necessary regulatory framework for the protection of SEC registered non-profit organizations from money laundering (ML) and terrorist financing (TF) abuse in accordance with the Commission's mandate under the RCC to ensure that corporate entities subject to its supervision and registration are not organized or used for purposes which are contrary to law, and pursuant to Section 2.1, Rule 7 of the 2018 IRR of the AMLA, as amended, the following Guidelines are hereby adopted, Section 1.4, Definition of Terms. Except as otherwise defined herein, all terms used shall have the same meaning as those terms that are defined in the RCC and other related laws as well as issuances by the Commission, 1.41. “COEP" - refers to the “Certificate of Existence of Program/Activity,” in accordance with the relevant guidelines prescribed by the Commission 1.4.2, “Commission” - refers to the Securities and Exchange Commission. anaes Page 1of10 Menila Bulletin, Doomber 28, 2019 Nenila Stand, Decnber 28, ‘20191.4.3. ~ refers to a non-stock, non-profit corporation established for the purpose of extending grants or endowments to support its goals and/or raising funds to accomplish charitable, religious, educational, athletic, cultural, literary, scientific. social welfare or other similar objectives and registered as a Foundation with the Commission. 1.4.4. “Non-Stock Corporation” - refers to a corporation with no authorized capital stock and no part of its income is distributable as dividends to its members, trustees, or officers. 1.4.5. “Non-Profit Organization” ("NPO") - refers to an SEC registered Non-Stock Corporation that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of good works, For purposes of these Guidelines, NPOs shall include Foundations. 1.4.6. “NPOS at Risk” - refers to the NPOs or subset of NPOs identified as at risk of ML or TF abuse based on a risk assessment of the NPO Sector conducted by the Anti-Money Laundering. Council (AMLC) and/or th 1.4.7. ‘Politically Exposed Person” (“PEP") ~ refers to an individual who is or has been entrusted with a prominent public position /function in: a) the Philippines with substantial authority over policy, operations or the use or allocation of government-owned resources; b) a foreign state, or ©) an international organization. It shall be presumed that a person who has been entrusted with a prominent public position/function as referenced above shall continue to be considered a PEP, even ifhe or she no longer holds such a position, unless itis clearly shown otherwise. The term “PEP” shall include immediate family members, and close relationships and associates that are reputedly known to have: (1) joint beneficial ownership of a legal entity or legal arrangement with the main/prineipal PEP, or: (2) sole beneticial ownership of a legal entity or legal arrangement that is known to exist for the benefit of the main/ principal PEP. Immediate family members of PEPs refer to spouse or partner, children and their spouses, parents and parents-in-law, and siblings; Close Associates of PEPs refers to persons who maintain a particularly close relationship with the PEP, and include persons who are ina position to conduct substantial domestic and international financial transactions on behalf of the PEP. Close Associates may include: (1) _ beneficial owners ofa legal entity or legal arrangement that is known to exist for the benefit of the main/ principal PEP; (2) _ business partners or associates, especially those that share beneficial ownership of legal entities or legal arrangements with the PEP; (3) _ persons who are otherwise connected to the PEP (e.g, through joint membership of a company board); Page 2of 10(4) prominent members of the same political party, civil organization, labor or employee union as the PEP; (5) persons (sexual and/or romantic) partners outside the family unit (eg girlfriends, boyfriends, mistresses, etc) 1.4.8. “SS" - refers to the "Sworn Statement by the President and Treasurer of the Sources, Amount, and Application of Funds and Program/Activity Planned, Ongoing, and Accomplished,” in accordance with the relevant guidelines and format prescribed by the Commission, 14.9. “UN Sanctions List’ ~ refers to the Consolidated United Nations Security Council (UNSC) Sanctions List related to terrorism and terrorism financing of countries, persons and/or entities, including all subsequent updates and/or amendments thereto by the UNSC CHAPTER I RISK-BASED MEASURES Section 2.1. In order to ensure that NPOs are not misused by terrorist organizations: (i) to pase as legitimate entities; (ii) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; or (iii) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes, but diverted for terrorist purposes, the Commission may apply focused measures it deems necessary in dealing with identified threats of ML and TF abuse to NPOs based ona risk assessment conducted by the AMLC and/or the SEC. Section 2.2, The following measures are hereby adopted to protect NPOs from MI. and TF abuse without being unduly disruptive of legitimate NPO activities, to wit: 22.1. Promote transparency among NPOs; 2.2.2. Adoption of good governance policies for NPOs; 223. Proportionate and risk-based supervision and monitoring; and 2.24. Sustained Outreach Programs; Section 2.3. For the purpose of applying risk-based measures, the SEC, in coordination with the AMLC, shall develop and promulgate a risk rating system for all SEC registered NPOs. Section 2.4. In the event that certain NPOs are identified as being at risk of ML or TF abuse, the Commission may adopt proportionate monitoring and supervision measures for such NPOs and require them the applicable compliance requirements under Section 6.1. of these Guidelines. CHAPTER I PROMOTING TRANSPARENCY Section 3.1. In order to promote transparency and maintain public trust in NPOs, NPOs are encouraged to make publicly accessible online, accurate, current and complete information regarding their status, finances, expenses, projects, activities, those who control or direct such activities, composition of their governing boards, and their beneficial owners among other material information. The transparency and trustworthiness of such NPOs may be used by the Commission as basis, among others, in including said NPOs in an accredited list or any similar listing. Page of 10