ANTI-MONEY LAUNDERING ACT OF 2001

REPUBLIC ACT NO. 1960

MONEY LAUNDERING
A. CONCEPT
Generally, it is a process whereby proceeds of unlawful activities are transacted to make it
appear that the money came from legitimate sources.

B. DEFINITION OF MONEY LAUNDERING

Money Laundering is a crime whereby proceeds of an unlawful activity as herein defined are
transacted thereby making them appear to have originated from legitimate source.

Money laundering is committed by any person who, knowing that any monetary instrument
or property represents, involves, or relates to the proceeds of any unlawful activity:
1. Transacting or attempting to transact money laundering
a) Transacts said monetary instrument or property;
b) Converts, transfers, disposes of, moves, acquires, possesses or uses 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;
d) Attempts or conspires to commit money laundering offenses referred to in
paragraphs (a), (b) or (c) above.
2. Facilitating money laundering
a) Aids, abets, assists in or counsels the commission of the money laundering offenses
referred to in paragraphs (a), (b) or (c) above; and
b) Performs or fails to perform any act as a result of which he facilitates the offense of
money laundering referred to in paragraphs (a), (b) or (c) above.
3. Failure to report
a) Money laundering is also committed by any covered person who, knowing that a
covered or suspicious transaction is required under this Act to be reported to the
Anti-Money Laundering Council (AMLC), fails to do so.

C. ESSENTIAL ELEMENTS OF MONEY LAUNDERING

1) Unlawful activity (as defined in the AMLA)
2) Monetary instrument or property (MI/P)
3) Transaction/Attempted transaction of MI/P
4) Knowledge that the MI/P represents, involves, or relates to the proceeds of the
unlawful activity

D. MODES OF MONEY LAUNDERING

a) Mix with legitimate funds
b) Use for legitimate purpose(s)
c) Invest in legitimate business(es)

E. STAGES OF MONEY LAUNDERING

1. Placement – involves initial placement or introduction of the illegal funds into the
financial system. Banks and other financial institutions are usually used at this point.
Examples -
 deposit of cash in bank
 convert cash into financial instruments, such as money orders or checks
 purchase of an insurance policy or shares of stock
2. Layering – involves a series of financial transactions during which the dirty money is
passed through a series of procedures, putting layer upon layer of persons and financial
activities into the laundering process.
Examples:
 transfer the funds electronically to other accounts in various jurisdictions
 disguise the transfer as payment for goods or services or loans
 transfer the funds to shell corporations
3. Integration – the money is once again made available to the criminal with the
occupational and geographic origin obscured or concealed. The laundered funds are now
integrated back into the legitimate economy through the purchase of properties, businesses
and other investments.
Example:
 purchase of properties and businesses/investments

How is money laundered?

A typical money laundering scheme:

F. WHAT HAVE COUNTRY’S DONE TO FIGHT MONEY LAUNDERING?

Financial Action Task Force:
 An inter-governmental body whose purpose is the development and promotion of
policies versus money laundering and terrorist financing
 Established in 1989 G-7 Summit, in Paris
 In April 1990, issued a set of Forty Recommendations
 2000: at least fifteen (15) non-cooperative countries and territories (NCCTs), which
included the Philippines
 In 2001, development of standards versus terrorist financing was added to its mission
Anti-Money Laundering Laws:
 Republic Act No. 9160 - Anti-Money Laundering Act (AMLA) of 2001
 Republic Act No. 9194 - Amending the AMLA
 Republic Act No. 10167 - Strengthening the AMLA
 Republic Act No. 10365 - Further Strengthening the AMLA
 Republic Act No. 10927 - Designating Casinos as Covered Persons under the AMLA
 Republic Act No. 10168 - Terrorism Financing Prevention and Suppression Act of 2012

ANTI-MONEY LAUNDERING COUNCIL (AMLC)

The AMLC Philippines is the government agency tasked to implement the provisions of
Republic Act No. 9160, also known as the “Anti-Money Laundering Act of 2001” (AMLA), as
amended, and Republic Act No. 10168, also known as the “Terrorism Financing Prevention
and Suppression Act of 2012” (TFPSA). It is the Philippines’ central anti-money
laundering/counter-terrorism financing (AML/CTF) authority, and financial intelligence unit
(FIU).

A. NATURE OF AMLC FUNCTIONS

 A financial intelligence unit (FIU)
 An investigative and asset discovery agency
 An asset recovery unit
 A mutual legal assistance office
 A support agency to the Anti-Terrorism Council (ATC)
 A support agency to the Office of the Ombudsman

B. SPECIAL POWERS
1. Inquiry Into/Examination of Bank Deposits/Investments
2. Freeze of Dirty Money/Property
3. Forfeiture of Dirty Money/Property

ANTI-MONEY LAUNDERING ACT OF 2001

R.A. No. 9160 - took effect on October 17, 2001

R.A. No. 9194 (amendatory law) - took effect on March 23, 2003
R.A. No. 10167 (amendatory law) - signed on June 6, 2012
Revised IRRs -took effect on September 7, 2003

A. STATE POLICIES
1. To ensure that the Philippines shall not be used as a money laundering site for the
proceeds of any unlawful activity.
2. To extend cooperation in transnational investigations and prosecutions of persons
involved in money laundering activities wherever committed.
3. To protect and preserve the integrity and confidentiality of bank accounts.

B. SALIENT FEATURES OF AMLA

1. Criminalizes money laundering
2. Creates an AMLC to oversee the implementation of the law & to act as financial
intelligence unit
3. Requires reporting of covered and suspicious transactions & to cooperate with the
government in prosecuting offenders
4. Establishes procedures for international cooperation and assistance in the apprehension
and prosecution of ML suspects
5. Inclusion of the designed non-financial businesses and professions as covered person
6. AMLC’s ex parte bank inquiry
7. Requires Land Registration Authority and all its Registries of Deeds to report all real
estate transaction with an amount of more than P500,000 to the AMLC
8. Hefty fines and imprisonment imposed upon covered person who knowingly participated
in the commission of the crime of money laundering
9. Prohibition against discrimination on certain customer types
10. Non-intervention by the AMLC in the operations of the Bureau of Internal Revenue (BIR)

C. COMPOSITION OF AMLC
The AMLC is composes of:
1. The Governor of the Bangko Sentral ng Pilipinas (BSP) as Chairman
2. The Commissioner of the Insurance Commission (IC) as member
3. The Chairperson of the Securities and Exchange Comission (SEC) as member

It acts unanimously in the discharge of its functions.

D. PROCEEDS
 It refers to an amount derived or realized from an unlawful activity.
 Includes:
- all material results, profits, effects and any amount realized from any unlawful activity;
- all monetary, financial or economic means, devices, documents, papers or things used
in or having relation to any unlawful activity;
-all moneys, expenditures payments, disbursements, costs, outlays, charges, accounts,
refunds and other similar items for the financing, operations, and maintenance of any
unlawful activity.

E. TRANSACTION
 refers to any act establishing any right or obligation or giving rise to any contractual or
legal relationship between the parties thereto.
 includes any movement of funds by any means with a covered institution.

F. REPORTABLE TRANSACTIONS
a. Covered transaction is a transaction in cash or other equivalent monetary instrument
involving a total amount in excess of Five Hundred Thousand Pesos (Php500,000.00)
within one (1) banking day.
b. Suspicious transaction is a transaction with a covered institution, regardless of the
amount involved, where any of the following circumstances exist(s):
 There is no underlying legal or trade obligation, 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;
 Taking into account all known circumstances, it may be perceived that the client’s
transaction is structured in order to avoid being the subject of reporting
requirements under the AMLA, as amended;
 Any circumstances relating to the transaction which is observed to deviate from
the profile of the client and/or client’s past transactions with the covered
institution person;
 The transaction is in any way related to an unlawful activity or any money
laundering activity or offense under the AMLA, as amended, that it about to be, is
being or has been committed; or
 Any transaction that is similar, or analogous or identical to any of the foregoing.
G. UNLAWFUL ACTIVITIES CONSIDERED UNDER ALMA (AS AMENDED)
‘Unlawful activity’ refers to any act or omission or series or combination thereof
involving or having direct relation to the following:
1. Kidnapping for ransom
2. Drug Trafficking and other violations of the Comprehensive Dangerous Drugs Act of
2002
3. Graft and Corruption under R.A. No. 3019, as amended
4. Plunder (R.A. No. 7080 as amended)
5. Robbery and extortion
6. Jueteng and Masiao (PD 1602)
7. Piracy on the high seas (RPC) and in inland waters (PD 532)
8. Qualified Theft under Art. 310, RPC
9. Swindling under Art. 315, RPC
10. Smuggling under RA 455 & 1937
11. Violations of the Electronic Commerce Act of 2000
12. Hijacking, destructive arson and murder, including those perpetrated by terrorists
against non-combatant persons and similar targets
13. Fraudulent practices and other violations under the Securities Regulation Code of
2000 (RA 8799)
14. Felonies or offenses of a similar nature that are punishable under the penal laws of
other countries
15. Terrorism and conspiracy to commit terrorism
16. Financing of terrorism, attempt of conspiracy to commit terrorism financing,
accomplice to terrorism financing offense, accessory to terrorism financing offense
17. Bribery and corruption of public officers
18. Frauds and illegal exaction and transactions
19. Malversation of public funds and property
20. Forgeries and counterfeiting
21. Violations of the Anti-Trafficking in Persons Act of 2003
22. Violations of the Revised Forestry Code
23. Violations of the Philippine Fisheries Code of 1998
24. Violations of the Philippine Mining Act of 1995
25. Violations of the Wildlife Resources Conservation and Protection Act
26. Violations of the National Caves and Cave Resources Management Protection Act
27. Violations of the Anti-Carnapping Act
28. Violations of the Decree Codifying the laws on illegal/unlawful possession,
manufacture, dealing in, acquisition or disposition of firearms, ammunition or
explosives
29. Violations of the Anti-Fencing Law
30. Violations of the Migrant Workers and Overseas Filipinos Act of 1995, as amended

H. MONEY LAUNDERING OFFENSES (Sec. 4, AMLA)

OFFENDER PENALTIES
Money Launderer 7 to 14 years imprisonment and a fine of not less
than P3,000,000 but not more that twice the value of
the monetary instrument (MI)/property (P)
The person who assists the Money 4 to 7 years imprisonment and a fine of P1,500,000
Launderer to P3,000,000
Those required to report covered & 6 months to 4 years imprisonment or P100,000 to
suspicious transaction P500,000 fine, or both
I. OTHER OFFENSES PUNISHABLE UNDER THE AMLA, AS AMENDED

OFFENDER
Knowing participating in
commission of ML
Failure to keep records
Malicious Reporting
Breach of Confidentiality
Administrative Offenses
PENALTIES
the 4 to 7 years imprisonment and a fine corresponding
to not more that 200% of the value of the ML/P
6 months to 1 year imprisonment or P100,000 to
P500,000 fine
6 months to 4 years imprisonment or P100,000 to
P500,000 fine; provided that the offender is not
entitled to the benefits of the Probation Law
3 to 8 years imprisonment or P500,000 to P1,000,000
fine
P100,000 to P500,000 on officers and employees of
covered institution who violates the provisions of
AMLA, as amended, the IRRs and orders and
resolutions issued

J. JURISDICTION OVER MONEY LAUNDERING CASES

 For Preliminary Investigation
- Department of Justice
- Office of the Ombudsman – where a public official or employee is involved
 For Trial
- Regional Trial Courts (Special AML Courts) shall have jurisdiction to try all cases on
money laundering.
- Sandiganbayan shall try and decide violations of R.A. 9160, as amended,
committed by public officers or private persons who are in conspiracy with such public
officers.
- Trial for the money laundering offense shall proceed in accordance with the Code
of Criminal Procedure or the Rules of Procedure of the Sandiganbayan, as the case may be.
(Rule 6.4, RIRRs)

K. OTHER RELEVANT PROVISIONS

1. Exemption from the Bank Secrecy Law
Reporting covered or suspicious transactions to the AMLC, shall not deemed to be in
violation of R.A. 1405, R.A. 6426 and R.A. 8791 and other similar laws.
2. Confidentiality Provision
When reporting covered or suspicious transactions to the AMLC, covered institutions and
their offices/staff are prohibited form communicating to any person, entity or media that a
covered or suspicious transaction report was made.
3. Safe Harbor Provision
No administrative, criminal or civil proceedings, shall lie against any person for having made
a covered or suspicious transaction report in the regular performance of his duties in good
faith, whether or not such reporting results in any criminal prosecution under the AMLA or
any other law.
DESIGNATING CASINOS AS COVERED PERSONS UNDER THE AMLA (REPUBLIC ACT NO.
10927)
1. Persons additionally included as Covered Persons under AMLA
a. Casino refers to a business authorized by the appropriate government agency to
engage in gaming operations.
b. Internet-based casino shall refer to casinos in which persons participate by the use
of remote communication facilities such as, but not limited to, internet, telephone,
television, radio or any other kind of electronic or other technology for facilitating
communication.
c. Ship-based casino shall refer to casinos, the operation of which is undertaken on
board at vessel, ship, boat, or any other water-based craft wholly or partly intended for
gambling.
2. Inclusion of Casino Cash Transaction as Reportable Transaction under AMLA
a. Casino Cash Transaction refers to transactions involving the receipt of cash by a
casino paid by or on behalf of a customer; or transactions involving the payout of cash by a
casino to a customer or to any person in his/her behalf.
3. Casino Cash Transaction as Covered Transaction under AMLA
a. Covered Transaction now includes a Single Casino Cash Transaction involving an
amount in Excess of Five Million Pesos (P5,000,000.00) or its equivalent in any other
currency.

AMLA’s 3 MAJOR COMPLIANCE REQUIREMENTS

These are the basic duties of a financial institution (FI):
1. Customer Identification and Due Diligence
- Identifying the customers and verifying his/her identity through reliable and
independent documents, data and information. By identifying customers effectively, the
business is able to deal with them in the appropriate manner. Prospective clients without
acceptable IDs shall not be allowed to transact with the FI. Covered institutions must know
fully and truly their customers. Hence, they shall:
 Require their customers to submit one (1) valid photo-bearing ID issued by an
official authority.
 Maintain accounts only in the true and full name of the account owner or holder.
 Not allow opening and creation of new accounts without face-to-face contact and
full compliance with the requirements on minimum information/ documents, for
individual customers.
- Prohibited accounts –
a. Anonymous accounts
b. Accounts under fictitious names
c. Numbered checking accounts
d. Other similar accounts
2. Record Keeping/Retention
All covered institutions shall:
- Maintain and safely store all records of all their transactions for at least 5 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 transactions and all other identification documents.
- Undertake the necessary adequate measures to ensure the confidentiality of such file.
- anent closed accounts, preserve and safely store the records on customer identification,
account files and business correspondence for at least 5 years from closure dates.
- If a money laundering case based on any record kept by the covered institution has
been filed in court, retain said file until it is confirmed that the case has been finally
resolved or terminated by the court.
- Retain records as originals in such forms as are admissible in court.
3. Reportorial Duty
- The Covered Transaction Report (CTR) and Suspicious Transaction Report (STR) shall be
in the form prescribed by the appropriate supervising authority and approved by the AMLC.
- Period of Reporting of Covered and Suspicious Transactions – within five (5) working
days from occurrence thereof.
- Should a transaction be determined to be both a covered transaction and a suspicious
transaction, the covered institution shall be required to report the same as a suspicious
transaction.
- Administrative sanction for violation is up to P300,000 on a per transaction basis but
not more that P500,000 per violation.

MAJOR COMPONENTS OF MONEY LAUNDERING PREVENTION

1. Customer Due Diligence (Know Your Customer)
2. Record keeping
3. Reporting of Covered and Suspicious Transactions
4. Training
5. Periodic Assessment

The S.A.F.E. Approach

Screen the customer’s background transactions
Ask for appropriate questions
Find our records for review
Evaluate by asking yourself:
 Are all steps in “Screen”, “Ask”, “Find” were completed?
 Is the transaction suspicious?
 Having considered all circumstances, can the suspicious be eliminated?
 In conclusion = genuinely suspicious
 File STR (Suspicious Transactions Report)

What are the minimum information that should be obtained when establishing business
relationship with a potential customers?
1. Complete name including middle/maiden name;
NOTE: Middle name of client must be required except on those clients whose middle name
is not part of their legal name.
2. Complete present address;
3. Complete permanent address (P.O. Box is not sufficient);
4. Nature of work, name of employer or nature of self-employment/business;
5. Date and place of birth;
6. Nationality;
7. Source of funds;
8. Contact number or information (business/residential tel. No., fax no., email-address);
9. Tax Identification Number (TIN) and Social Security System or Government Service and
Insurance System number, if any;
10. Specimen signature; and
11. Name, present address, date and place of birth, nationality, nature of work and source
of funds of beneficial owner, whenever applicable.