abies Rea ee ea ha Updates on Anti- -Money Laundering Combating Terrorist Financing , ; A. What is Money Laundering? v Money Laundering i is a crime whereby the proceeds of unlawful activity are transacted, thereby making them appear to have ‘originated from legitimate sources, vY Money Laundering has been ‘generally defined as “aby act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.” (Republic of the Phils., represented by the AMLC vs Hon. Antonio M. Eugenio, Jr., et. Al, G.R. No. 174629, Feb. 14, 2008 citing Int'l. Criminal Police Organization http://www. interpol.int/Public /Financial Crime/Mone Laundering/default.asp, last visited Dec. 8, 2007) B. What is Terrorists Financing? ; : Y Terrorists Financing is the act of providing funds for terrorist activity. “¥* It may involve funds raised from legitimate sources. “vy {t may include personal donations and profits from business and charitable” ‘organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and exortion. ‘ : C._ Evils of Money Laundering and Terrorists Financing Y Enable criminals to boost their criminal/terroristic ae Sees -. activities = ae z eee(terrorists more resources to fight, vent and pursue their criminal/terror a Hy Givpgghe crit +" ‘the governm® : activities is ¥ It weakens government seriminal/terror activities institutions fighting D.Why do we need to. prevent Money Laundering and Terrorists Financing i: Y To prevent the flow of funds and property to criminals andterrorists | 2, ans ¥ To ensure that the financial system is not being 7 used by criminals and terrorists in the furtherance of their illega//terror activities“ “To help in ensuring a just, orderly and safe world for everybody 7 E. Stages of Money Laundering , Money Laundering has 3 stages, namely: 2) Placement Is a stage where money or property obtained through illegal or unlawful means are introduced to the financial system: _b) Layering Is the stage where the money launderer _ would employ different sophisticated schemes or various financial ‘transactions that are designed to obscure the audit trails and sever the link between him and the proceeds of the unlawful activity. ©) , Integration _ !s the stage where the money or proy -epained romp illegal activities retieved back by 'y launderer. This Is the final stage of : ., Money laundering, F. Evolution of Philippine Law against Money Laundering and Terrorists Financing > The original version of the Philippine Anti-Money Laundering Law is R.A. No. 9160, also known as “The Anti-Money Laundering Act of 2001”. It was signed into a law on0 Sept. 29, 2001 by former Pres. Gloria Macapagal Arroyo and became effective on Oct. 17, 2001. > On April 2, 2002, the Anti-Money Laundering Council issued the law’s Implementing Rules and .. Regulations. . > "The first amendment to R.A, 9160 was R.A. No. 9194 which was signed into law on March 7, 2003. It took effect on March 23, 2003. ~ "The. Anti-Money Laundering Council issued the revised Implementing Rules and Regulations on ‘AMLA which took on September 7, 2003. >. On_June 6, 2012, Congress passed two laws, R.A. 10167 entitled “An Act to Further Strengthen the Anti-Money Laundering Law, Amending for the purpose Secs. 10 and 11 of R.A. No. 9160” and R.A. 10168 js known as “The Terrorism Financing Prevention and Suppression Act of 2012” > ‘These law which served as the second and third améndments to. R.A. 9160 were signed into law by Pres. Benigno S. Aquino Ill on June 18, 2012. These laws became effective on July 5, 2012. > On Feb. 6, 2013, Congress enacted R.A, No. 10365 entitled “An. Act Further Strengthening the, Anti- Money Laundering Law, Amending for the Purpose R.A, No, 9160, otherwise known as the “Anti-Money Laundering Act of 2001”, as amended, It was signed into law by Pres. Benigno S. Aquino on Feb. 15, 2013 and became effective on Mar. 7, 2013.G. Significant Changes in the Phil AMLA $ CTF “ 7 : 1) Onthe concept of “Covered Institution” ; © 1 (1) Banks, :.non-banks, .. quasi-banks, a is trust BO ted erat es, X x xeSupervised or regulated by . a s refers to: oe . (2) Insurance companies x x x.... and all other : (1) banks, non-banks, quasi-banks, trust entities, _Petsons supervised or regulated by the ta Insurance Commission; ys, mone) or foreign exchange dealers, pawnshop: y (3).{i) securities dealers, brokers, salesmen xxx changers, remittance and transfer companies super and other similar entities and all other persons oie eee (sec); and their subsidiaries and affiliates supervised ' ern in precious stones, who, as or regulated by the - usiness, trade in precious stones, for peta mu yee 1 site foeaeton in excess of One million pesos g saree (P1,000,000.00); i | ,000, ; (2) insurance companies, pre-need companies and t (Ee eenety desiex Meese er all other persons supervised or regulated by the @ business, trade in precious metals, for Insurance Commission; ro transactions in excess of One Million pesos. (3) (i) securities dealers, brokers, salesmen, > rs graiess>'s! 9-7 (P1,000,000.00), investment houses and other similar persons 15x (6) Company service. providers which, as a managing securities or'rendering services as | sqahn, business, provide any. of the following investment agent, advisor, or consultant dint solr services to third parties: : (ii) mutual’ funds, close-end~ investment zeny di) 4 acting as. a. formation agent of _ "companies, common ‘rust funds, and other juridical persons; » et similar persons, and : a i vs Loo @ (li). acting as (or arranging for another yesucly person, to act as a director or 4) corporate secretary of a company, a (iii) other entities administering or otherwise | ye dealing in currency, commodities or financial 1 Abus 7 » .» partner of :a- partnership, or a © derivatives’ based thereon, valuable objects, | imilar position in relation to other cash substitutes and other similar monetary juridical persons; cs instruments or property’ supervised of (iii) providing a registered office, . “regulated by the SEC; * i » business address or ; be dee " rau accommodation, correspondence Under R.A. 10365, Sec. 3 (a) of R.A. No. 9160 was amended to ~ of administrative address for a fot read as follows: company, a partnership or any £0 ie i other legal person or arrangements tar . rit and Se “a aes Persons’, natural or juridical refer ae (iv). acting as (or arranging) for another «person to act. aS .a nomineeShareholder for anotherO person; and | 1 (persons whoprovide any of the following services: <(i) \comanagings) of (client money, securities or other assets; (i) management of bank, savings or : tod securities accounts; 32 (iii! organization “of contributions for * wthe “creation, ‘-)operation — or + ©* management of companies; and +35 fiv) © creation, operation or management of. juridiéal —persons_—or arrangements; and buying and a OF selling business entities. Notwithstanding the foregoing, the = 2% term’ ‘covered ‘persons’ shall exclude lawyers and accountants acting’s independent legal professionals in’ relation to _ information concerning their clients or where disclosure of information * would cdmpromise client confidences or the attorney-client relationship: » Provided, That these lawyers and accountants are authorized to practice in the Philippines and shall continue to be subject to the provisions of their respective codes of conduct and/or professional . responsibility or any of its amendments.” 2) Onthe concept of “covered transaction” Under Sec-3 (b) of RA, 9160, a “covered transaction” refers to: ‘a single, -series, or combination of “transactions involving a total amount in excess Of —— Four Million Philippines Pesos (PhP4,000,000.00) or in foreign currency based on Ne rate within five (5) tive 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 of financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin oF economic justification” an equivalent amount i the prevailing exchay Consecutive banking Under R.A. 9194, Sec. 3(b) of RA. No. 9160 was ‘amended to read as follows: ‘Covered transaction’ is a transaction in cash or other equivalent monetary instrument involving a total amount in excess of Five hundred thousand pesos (P500,000.00) within one (1) banking day.” " * s 1-3) On the concept of “suspicious transaction” R.A. 9160 does'not have a provision on “Suspicious transactions”, : Under R.A. 9194, Sec. 3 (b) of R.A. No. 9160 was amended to read as follows: © 24 °M(b-1) ‘Suspicious transaction’ are transactions with covered. institutions, regardless -of the, amounts cceinvolved, where any of the following circumstances “exist: Peas 1) There is no’ underlying legal’ or trade ‘obligation, purpose’ of ~~’ economic 2 Justification," > Ince 2. The client is not properly identified; oeSrount involved Is not commensurate 3. The ameuusiness of financial, capacity of with the lent: * smedient account all known 4 Tatumstances, may Be perceWed that the client's transaction Is structured in order to seid being the subject of reporting ~ Fequirements under the law; 5. any. excumstance. felating to the transaction which is observed to deviate from the profile of the client, and/or the client's past transactions with the covered institution; < 21 ; 6, The transaction is in any way related to an unlawful activity or offense that is about to be, is being or has been committed; or _ 5. Any transaction that is similar or analogous to any of the foregoing.” 4) Onthe concept of “Unlawful Activity”, under Sec 3 (i) of R.A 9160, an “unlawful activity” refers to any act or omission or series oF combination thereof involving or having relation to the following: . (1) Kidnapping for ransom under Art. 267, of the RPC. 3 amende (2) secs.3, 4, 57/8, and 9 of Artull of No: 6425, oF the Dangerous Drugs Act of 1972; ovo (3) Sec. 3 pars. B, C, E, G, H, arid I of R.A No. 3029, oF ‘Anti-Graft and Corrupt Practices Act; 2 (4) Plunder under R.A No. 7080, as amended; ""(6) Robbery and extortion under Arts, 294, 295, 2 300, 301, and 302 of the RPC, as amended; the 96, 29% step I See (6) Jueteng and Masi asian punished a P.0.No. 160: 3s illegal gambling under (7) Piracy on the high seas under P.D. No. $32; i ‘the RPC, as amended and a eet be 310 of the RPC, as amended; - 310 of the RPC, as amended; (10) Smuggling under R.A. Nos. 455 and 1937; (21) Violations under’ RA No. 8792 or the Electronic Commerce Act of 2000; (12) Hijacking and other violations under R.A No. 6235; destructive arson and murder, as defined under the RPC,’ as amended, including’ those ‘perpetrated by terrorists against non-combatant’ persons and similar targets; a (13) Fraudulent practices and other violations ‘under R.A No. 8799 or the Securities Regulation Code of 2000; (14YFelonies or offenses ‘of a similar nature ‘that are punishable under the penal laws of other countries. Under R.A 10365,Sec. 3(i) of, R.A No. 9160 was amended to read as follows: sntorts 26 OSH a “Unlawful activity” tefers to, any act or omission or series or combination thereof involving of having direct relation to the following: vi 0 (i) ‘Kidnapping for tansom under Art. 267 of Act No. 3815 of thé RPC, as amended; "9" * 11 {4 (2) Violation of the Comprehensive Dangerous Drugs {9 Ret 2002; Messe)7 Visation of the AnirGraft and Corrupt Practica, (3) Violati Acti “ te . (4) Plunder under R.A. No. 7080, as amended; catortion under the RPC, a5 amendeg, 6 ener son ” peo the high seas under the RPC, as amendeg and P.D No. 532; : (8) Qualified theft under Art.310 of the RPC, ay amended; (9) Swindling under Art.,.315 and other forms of |... Swindling under Art. 316 of the RPC, as amended; |, (10)Smuggling under R.A Nos. 455 and 1937; ‘ " "(11)Violations, of RA No. 8792 or the Electronic Commerce Act of 2000; «. (12)bijacking and other violations under RA No. 6235; destructive arson and murder; : . (43]Terrorism and conspiracy to commit terrorism as sos» under Secs. 3and 4ofR.A,No.9372; (14)Financing of terrorism under the Terrorism Financing Prevention and Suppression Act of 2012; (15)Bribery and Corruption of Public Officers under the RPC, as amended; » (16}Frauds and illegal Exactions and Transactions urider the RPC, as amended; Venue (17)Malversation of Public Funds and Property under __ the RPC, as amended. We {B}Forgeries and Counterfeiting ‘under the RPC, 3s amended; ‘ of s1-(19)Violations of Secs. 4 to 6 of RA No, 9208 or the Anti-Traffcking in Persons-Act of 2003; (20WViclations of Secs. 78 to 79 of Chap. IV of the Revised Forestry Code of the Phils: As amended; Om Com ” SaaS (21) Vicar ione ar case 24)Violations of Secs. 86 to 106 of Chap. Viv of RA No. 8550 or the Phil. Fisheries Code of 1998, (22)Violations of Secs. 101 to 107, and 110 of R.A No. 7942 or the Phil. Mining Act of 1995; (23)Violations of Sec 27(c}, (e), (N, (8) and (i) of the Wildlife Resources Conservation and Protection Act; (24)Violation of Sec.7 (b) of the National Caves and Cave Resources Management Protection Act; (25)Violation ‘of Anti-Carnapping Act. Of 2002, as amended, (26}Violations of secs. 1, 3, and 5 of P.D No. 1866, as amended, or the decree Codifying the laws on. Wlegal/Unlawful Possession, Manufacture, Dealing In, Acquisition of Disposition of Firearms, Ammunition or Explosives; (27)Violation of P.O No. 1612 of the Anti-Fencing Law; (28)Violation of Sec. 6 of R.A No. 8042 or the Migrant. Workers and Overseas ‘Filipino Act of 1995, as amended; " . (29)Violation of RA No. 8293 of the Intellectual Property Code of the Phils; (30)Violation of Sec. 4 of R.A No. 9995 or the Anti-Photo. and Video Voyeurism Act of 2009; (31)Violation of Sec.’4 of R.A No. 9775 or ‘the Anti-Child Pornography Act of 2009; (32)Violation of secs. 5, 7, 8, 9, 10{c), (d) and (e), 11, 12 and 14 of R.A No. 7610 or the Special Protection of the Children Against Abuse, Exploitation and * Discrimination; {33)Fraudulent practices and other violation under RA No, 8799 or the Securities Regulation Code of 2000; and” = A etn eaten tone ato pate en EAL Hats134)Felonies or offences of a similar ature that are punishable under the penal laws of other countries, 5) On the definition of “Money Laundering” aS a criminal Qffense \ Under Sec. 4 of R.A 9160, money laundering has been defined as: “a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources, It's committed by the following: 4 {2} Any person knowing. that, any. monetary instrument or property represents, involves, : or relates to, the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property. (©) 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 facilitate the offense of. money, laundering referred to in paragraph (a) above. +(¢) Any. person knowing that any monetary instrument or property is required the law to be disclosed and filed with the Anti-money Laundering Council (AMLC), fails to do so. to read as follows: Money laundering is committed by any _ Person who, knowing that’ any’-monetary instrument or property represents, involves, of relates to 'the proceeds of any unlawful activity. (2) Transacts said_monetary instrument or Property; . (b) Converts, transfers, disposes’ of,’ moves, " achuires, posiesses or usés said monetary instrument or property; (c} "Conceals ‘or’ disguises the true nature, * source, location, disposition, movement or "ownership of or rights with respect to said monetary instrument or property. (@Y Attempts or conspires to commit money lalindering' offenses’ referred’ to in “°° paragraphs (a), (b), oF (c). (e) Aids, abets;” assists’ in’ our counsels the commission of ‘the’ money’ laundering, ‘offenses referred to in pars. (a), (b), or (c) above; and 0 3 (hY Performs’ or fails to perform any act as a \ “results of which he facilitates the offense of money laundering teferred to in pars. (a), {b), or (c) above. *< “Money laundering is also committed by any ‘covered’ ‘person who, “knowing that a covered or suspicious transaction is fequired ‘under this Act to be reported to the Anti- ‘Money Laundering Council (AMLC), fails to do so.” “‘ MLC has the followin, f R.A, 9160, Al ; 8 Under Sec..7 of powers: (4) To require and receive covered transaction reports from sce ees oaee\ sored fol tel epeeontcr Supervising Authority or the covered institutions to determine the true identity of the owner of any ‘monetary instrument or property subject of a covereg transaction report or request for assistance from 4 foreign tate , or believed by the Council, on the basig -», Of substantial evidence, to be, jp whole or in part, of any ‘branch, department, Bency,, oF, instrumentality of the Bovernment-owned and + -money laundering operations, which. May include the *use af its. personnel, facilities and resources for the i more resolute prevention, detection and investigation 1° of smoney laundering -offenses. and. prosecution at offenders,» = sexs 4 Bayley wherever located, representing, involving, or related to, Unde''R’A 9194, sec. 7'of'R ‘A. No. 3160 was amended to read directly or indirect, in any manner or by any means, se talibee: Pein bast yi the proceeds of an unlawful activity; " mo e a " (3) To institute civil forfeiture proceedings and all other (1) To require and receive covered ot ' suipidious remedial proceedings through the Office of the Solicitor transaction reports from covered institutions; General; i : (2) To issue orders addressed ‘to the appropriate + (4), To cause the filing of complaints with the Department oe Supervising Authority, or the covered institution to ‘of Justice or the Ombudsman for the prosecution of any determine the true. identity of the owner of any -money laundering offenses; monetary instrument or property subject of a covered (5) To initiate investigations of covered : transactions, transaction or suspicious trangaction report or request ‘money laundering activities and other violations of the for assistancé from a foreign State, or believed by the ee AMLA; . Council, on the basis of substantial evidence, 'to be, in (6) To freeze any Monetary instrument or Property alleged Whole ‘or'in part, wherever located, Tepresenting, ‘0 be proceeds of any Unlawful activity; involving , or related ‘to, directly ‘or indirectly, In’ any (7) To implement such measures as may be necessary and Manner or by any means,'the Proceeds of an unlawful justified under the law to -¢ounter-act money * activity. i me laundering; E f an tile, ; owaed: Moreover, under R.A, 10365, Sec. 7 of RA. 9160 was further € actions in respects of, any request amended to read:TRE AMIE shall act unanimously in the discharge of its functions as defined hereunder: (6) To apply before the Court of Appeal, ex parte, for the freezing of any monetary instrument or property alleged to or instrumentalities used in be laundered, proceeds from, j of intended for use in any unlawful activity as defined in Sections 3(i) hereof; ; eee - (42) To require the Land Regtstration' Authority and all its Registries of Deeds to submit to the:AMLC, reports on ali sreat estate transactions involving an-amount in excess of Five hundred thousand pesos (PS00,000.00) within fifteen (15) days from the date of registration of the-transaction, in a form to be prescribed by the AMLC. The AMLC may also *Fequire the Land Registration Authority and all its Registries of Deeds to submit copies of relevant documents of all real estate transaction. ? bi 7) On the Authority to Freeze a 7 Under Sec. 10 of R.A 9160, the authority to freeze was granted to the AMLC which reads: ws 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 /-» Mot exceeding fifteen (15) days, Notice to the depositor that 1 his account has been frozen shall be issued simultaneously with the issuance of the freeze order. The depositor shall have seventy-two (72) hours receipt of the notice to explain why the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of the depositor’s tf it fails to act within seventy-two (72) hours hom receipt of the depositor’s explanation, the freeze order shal 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 court’s decision to extend the period, No court shall issue a temporary restraining order or writ of injunction against any freeze issued by the AMLC except the Court of Appeals or the Supreme Court. Sec. 10 of R.A. No. 9160, as amended by R.A. 10167, was further R.A. 10365 which now read as follows: Upon a verified ex parte petition by the AMLC and after determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity as defined in Sec. 3(i) hereof, the Court of Appeals may issue a freeze order which shall be effective immediately, and which shall not exceed six (6) months