Garnishment of deposits including foreign deposits

Peso bank deposits may be subject to garnishment to

ensure satisfaction of a judgment creditor. This can be
gleaned from the fact that RA 1405 or the bank secrecy
law does not contain such prohibition.

On the other hand, Section 8 of RA 6426 or

The Foreign Currency Deposit Act of the Philippines
provides that foreign currency deposits shall be exempt
from attachment, garnishment, or any other order or
process of any court, legislative body, government
agency or any administrative body whatsoever.
EXAMPLE

Abet lost in a P1,000,000 collection case filed by his

judgment creditor, Marilou. Abet has a P250,000 balance
in his BPI Account and a $ 100,000 balance in his foreign
currency deposit in the same bank. Can Marilou go after
both the peso and dollar accounts of Abet?

Suggested Answer:

No, Marilou can only go after the peso account of Abet

but not on the latter’s foreign currency. The Bank Secrecy
Law does not prohibit the garnishment of a depositor’s
peso deposit. However, the Foreign Currency Deposit Act
of the Philippines explicitly provides foreign currency
deposits shall be exempt from garnishment.

What are UNCLAIMED BALANCES?

"Unclaimed balances" shall include credits or deposits of

money, bullion security or other evidence of
indebtedness of any kind and interest thereon with banks,
as hereinafter defined, in favor of any person unheard
from for a period of ten years or more. (Section 1, Act No.
3936)

What will happen to unclaimed balances?

Such unclaimed balances, together with the increase and

proceeds thereof, shall be deposited with the Insular
Treasurer to the credit of the Government of the
Philippine Islands to be used as the Philippine Legislature
may direct.

What is the duty of the bank?

All banks shall forward to the insular Treasurer a

statement, under oath of their respective managing
officers, 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 ten
years or more, arranged in alphabetical order according
to the names of depositors, and showing:

a. The names and last known place of residence or

post-office addresses of the persons in whose favor
such credit or deposits stand;

b. The amount and date of the outstanding credit or

deposit and whether the same is in money or in
security, and if the latter, the nature of the same;

c. The date when the person in whose favor the credit

or deposit stands died, if known, or the date when
he made his last deposit or withdrawal; and

d. The interest due on such credit or deposit, if any,

and the amount thereof.
 Anti-Money Laundering Act (AMLA)
Declaration of Policies and Principles

It is the policy of the State to:

1. Protect and preserve the integrity and confidentiality of bank

accounts;
2. Ensure that the Philippines shall not be used as a money
laundering site for the proceeds of any unlawful activity;
3. Extend cooperation in transnational investigations and
prosecutions of persons involved in money laundering
activities wherever committed;
4. Implementation of targeted financial sanctions related to the
financing of the proliferation of weapons of mass
destruction, terrorism and financing of terrorism, pursuant to
the resolutions of the United Nations Security Council.
(Section 2 of RA 9160 as amended by RA 11521)

Definition of Terms

For purposes of the Anti-Money Laundering Act, the following terms are hereby
defined as follows:

“Covered transaction” is a transaction in cash or other equivalent monetary instrument

involving a total amount in excess of P500,000 within one (1) banking day; for covered
persons under Section 3(a)(8), a single casino cash transaction involving an amount in
excess of P5,000,000 or its equivalent in any other currency.

For covered persons under Section 3(a)(9), a single cash transaction involving an amount
in excess of P7,500,000 or its equivalent in any other currency.

PROBLEM NO. 1

Ephraim deposited P500,000 cash in Sed’s BDO Account. Is this a covered transaction?
PROBLEM NO. 2

Ephraim deposited in Sed’s BDO Account an amount of P300,000 cash in the morning
of Dec. 1, 2023 and another P300,000 in the afternoon of the same date. Is this a covered
transaction?

What is a Suspicious Transaction?

Suspicious Transactions are transactions with covered persons, regardless of the

amounts involved, where any of the following circumstances exist:

1. There is no underlying legal or trade obligation, purpose or economic justification;

2. The client is not properly identified;
3. The amount involved is not commensurate with the business or financial capacity
of the client;
4. 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 AMLA;
5. Any circumstance relating to the transaction which is observed to deviate from
the profile of the client and/or the client’s past transactions with the covered
person;
6. The transaction is in any way related to an unlawful activity or offense under AMLA
that is about to be, is being or has been committed;
7. Any transaction that is similar or analogous to any of the foregoing.

Notwithstanding the foregoing, the term ‘covered persons’ shall exclude lawyers and
accountants acting as independent legal professionals in relation to information
concerning their clients or where disclosure of information would compromise 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.

PROBLEM NO. 1

Arnaldo made the following series of deposits in the following dates:

December 1, 2023 P 100,000

December 2, 2023 P 200,000

December 3, 2023 P 300,000

Are these deposits considered as COVERED transactions?

Are the above deposits considered as SUSPICIOUS transactions?

PROBLEM NO. 2

Raymart’s bank transaction for the past 3 years mainly consisted with deposits and
withdrawals ranging from P1,000 to P20,000. On November 30, 2023, an employee of
the bank noticed a P450,000 wire transfer to Raymart’s account. The bank immediately
reported this transaction to the AMLC. Raymart contended that it should not have been
reported since the transaction did not exceed P500,000. Is Raymart correct?

What is a Targeted Financial Sanction?

Targeted Financial Sanctions refer to both asset freezing and prohibition to

prevent funds or other assets from being made available, directly or indirectly, for
the benefit of any individual, natural or legal persons or entity designated pursuant
to relevant United Nations Security Council resolutions and its processes.

What is Proliferation Financing?

“Proliferation Financing” refers to a person who:

(1) Makes available an asset; or

(2) Provides a financial service; or
(3) Conducts a financial transaction; and

the person knows that, or is reckless as to whether, the asset, financial service or
financial transaction is intended to, in whole or in part, facilitate proliferation of
weapons of mass destruction in relation to United Nations Security Council
Resolution Numbers 1718 of 2006 and 2231 of 2015;

What is Probable Cause?

Probable Cause refers to such facts and circumstances which would lead a
reasonably discreet, prudent or cautious man to believe that:

1. Any monetary instrument or property sought to be frozen, inquired into or

preserved is in any way related to any unlawful activity and/or money
laundering offense; or

2. ML/TF has been committed and that the respondent is probably guilty thereof.
Unlawful Activities
‘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 under Article 267 of Act No. 3815, otherwise known as the
Revised Penal Code, as amended;

(2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise
known as the Comprehensive Dangerous Drugs Act of 2002;

(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended,

otherwise known as the Anti-Graft and Corrupt Practices Act;

(4) Plunder under Republic Act No. 7080, as amended;

(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the
Revised Penal Code, as amended;

(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;

(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential
Decree No. 532;

(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;

(9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of the
Revised Penal Code, as amended;

(10) Smuggling under Republic Act Nos. 455 and 1937;

(11) Violations of Republic Act No. 8792, otherwise known as the Electronic Commerce
Act of 2000;

(12) Hijacking and other violations under Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal Code, as amended;

(13) Terrorism and conspiracy to commit terrorism as defined and penalized under
Sections 3 and 4 of Republic Act No. 9372;

(14) Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6,
7 and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing
Prevention and Suppression Act of 2012:
(15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as amended,
and Corruption of Public Officers under Article 212 of the Revised Penal Code, as
amended;

(16) Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216
of the Revised Penal Code, as amended;

(17) Malversation of Public Funds and Property under Articles 217 and 222 of the Revised
Penal Code, as amended;

(18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the
Revised Penal Code, as amended;

(19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-
Trafficking in Persons Act of 2003;

(20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705,

otherwise known as the Revised Forestry Code of the Philippines, as amended;

(21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise
known as the Philippine Fisheries Code of 1998;

(22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise
known as the Philippine Mining Act of 1995;

(23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147, otherwise
known as the Wildlife Resources Conservation and Protection Act;

(24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National
Caves and Cave Resources Management Protection Act;

(25) Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of
2002, as amended;

(26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended,

otherwise known as the decree Codifying the Laws on Illegal/Unlawful Possession,
Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or
Explosives;

(27) Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing Law;

(28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022;
(29) Violation of Republic Act No. 8293, otherwise known as the Intellectual Property
Code of the Philippines;

(30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo
and Video Voyeurism Act of 2009;

(31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child
Pornography Act of 2009;

(32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic Act No.
7610, otherwise known as the Special Protection of Children Against Abuse, Exploitation
and Discrimination;

(33) Fraudulent practices and other violations under Republic Act No. 8799, otherwise
known as the Securities Regulation Code of 2000;

(34)Violation of Section 19 (a)(3) of Republic Act No. 10967, otherwise known as the
‘Strategic Trade Management Act’, in relation to the proliferation of weapons of mass
destruction and its financing pursuant to United Nations Security Council Resolution
Numbers 1718 of 2006 and 2231 of 2015;

(35) Violations of Section 254 of Chapter II, Title X of the National Internal Revenue Code
of 1997, as amended, where the deficiency basic tax due in the final assessment is in
excess of P25 Million per taxable year, for each tax type covered and there has been a
finding of probable cause by the competent authority:

Provided, further, That there must be a finding of fraud, willful misrepresentation or

malicious intent on the part of the taxpayer:

Provided, finally, That in no case shall the AMLC institute forfeiture proceedings to
recover monetary instruments, property or proceeds representing, involving or relating to
a tax crime, if the same has already been recovered or collected by the Bureau of Internal
Revenue (BIR) is a separate proceeding

(36) Felonies or offenses of a similar nature that are punishable under the penal laws of
other countries.

Covered Persons
‘Covered persons’, natural or juridical, refer to:

1. Banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,

pawnshops, money changers, remittance and transfer companies and other
similar entities and all other persons and their subsidiaries and affiliates supervised
or regulated by the Bangko Sentral ng Pilipinas (BSP);
2. Insurance companies, pre-need companies and all other persons supervised or
regulated by the Insurance Commission (IC);

3. (i) Securities dealers, brokers, salesmen, investment houses and other similar
persons managing securities or rendering services as investment agent, advisor,
or consultant, (ii) mutual funds, close-end investment companies, common trust
funds, and other similar persons, and (iii) other entities administering or otherwise
dealing in currency, commodities or financial derivatives based thereon, valuable
objects, cash substitutes and other similar monetary instruments or property
supervised or regulated by the Securities and Exchange Commission (SEC);

4. Jewelry dealers in precious metals, who, as a business, trade in precious metals,

for transactions in excess of One million pesos (P1,000,000.00);

5. Company service providers which, as a business, provide any of the following

services to third parties:

(i) acting as a formation agent of juridical persons;

(ii) acting as (or arranging for another person to act as) a director or corporate
secretary of a company, a partner of a partnership, or a similar position in
relation to other juridical persons;
(iii) providing a registered office, business address or accommodation,
correspondence or administrative address for a company, a partnership or
any other legal person or arrangement; and
(iv) acting as (or arranging for another person to act as) a nominee shareholder
for another person; and

6. Persons who provide any of the following services:

I. managing of client money, securities or other assets;

II. management of bank, savings or securities accounts;
III. organization of contributions for the creation, operation or management of
companies; and
IV. creation, operation or management of juridical persons or arrangements,
and buying and selling business entities.

7. Casinos, including internet and ship-based casinos, with respect to their casino
cash transactions related to the gaming operations.

8. Real estate developers and brokers;

 9. Offshore gaming operators, as well as their service providers, supervised,
accredited or regulated by the Philippine Amusement and Gaming Corporation
(PAGCOR) or any government agency;

Money Laundering, terrorism and financing and asset forfeiture

Money Laundering is committed by:

(a) Any person who, knowing that any monetary instrument or property
represents, involves, or relates to the proceeds of any unlawful activity:

(1) Transacts said monetary instrument or property;

(2) Converts, transfers, disposes of, moves, acquires, possesses or uses said
monetary instrument or property;
(3) Conceals or disguises the true nature, source, location, disposition,
movement or ownership of or rights with respect to said monetary
instrument or property;
(4) Attempts or conspires to commit ML offenses referred to in (1), (2), or
(3) above;
(5) Aids, abets, assists in or counsels the commission of the ML offenses
referred to in (1), (2), or (3) above; and
(6) Performs or fails to perform any act as a result of which facilitates the
offense of ML referred to in items (1), (2), or (3) above.

(b) Any covered person who, knowing that a covered or suspicious transaction
is required under the AMLA to be reported to the AMLC, fails to do so.

PROBLEM NO. 1

Almer sold prohibited drugs with a market value of P1,000,000 to local dealers. He
then used the money to invest in real estate business. Is Almer liable for money
laundering?
PROBLEM NO. 2

Raymart’s bank transaction for the past 3 years mainly consisted with deposits and
withdrawals ranging from P1,000 to P20,000. On November 30, 2023, an employee of
the bank noticed a P600,000 wire transfer to Raymart’s account. The bank did not report
this transaction to the AMLC. Did the bank committed a money laundering offense?

Authority to Investigate Financing of Terrorism.

The AMLC, either upon its own initiative or at the request of the ATC, is hereby authorized
to investigate:

(a) any property or funds that are in any way related to financing of terrorism or acts of
terrorism;

(b) property or funds of any person or persons in relation to whom there is probable cause
to believe that such person or persons are committing or attempting or conspiring to
commit, or participating in or facilitating the financing of terrorism or acts of terrorism as
defined herein.

The AMLC may also enlist the assistance of any branch, department, bureau, office,
agency or instrumentality of the government, including government-owned and -
controlled corporations in undertaking measures to counter the financing of terrorism,
which may include the use of its personnel, facilities and resources.

For purposes of this section and notwithstanding the provisions of Republic Act No. 1405,
otherwise known as the “Law on Secrecy of Bank Deposits”, as amended; Republic Act
No. 6426, otherwise known as the “Foreign Currency Deposit Act of the Philippines”, as
amended; Republic Act No. 8791, otherwise known as “The General Banking Law of
2000” and other laws, the AMLC is hereby authorized to inquire into or examine deposits
and investments with any banking institution or non-bank financial institution and their
subsidiaries and affiliates without a court order.

PROBLEM NO. 1

Miss L has several millions in her bank account. She obtained this money from several
unknown sponsors abroad for the sole purpose of financing terrorist activities to be
conducted in Mindanao. The AMLC inquired and examined the bank account of Miss L
without seeking prior approval from the Anti-Terrorism Council. Was the bank inquiry and
examination of AMLC legally conducted?
PROBLEM NO. 2

Miss L has several millions in her foreign currency bank account. She obtained this money
from several unknown sponsors abroad for the sole purpose of financing terrorist activities
to be conducted in Mindanao. The AMLC seeks to inquire and examine the bank account
of Miss L. The latter objected raising the defense that her foreign currency deposit is
absolutely confidential and may not be examine or inquired into without her express
approval or without court approval. Is Miss L correct?

Preventive measures and obligations of covered persons (subtopics:

prohibited accounts and customer due diligence)

Prohibited Accounts

General Rule:

Covered persons shall maintain customers’ account only in the true and full
name of the account owner or holder. Anonymous accounts, accounts under
fictitious names, and all other similar accounts shall be absolutely prohibited. In
addition, numbered accounts shall not be allowed except non-checking numbered
accounts.

Exception:

Peso and foreign currency non-checking numbered accounts shall be allowed:

Provided, that the true identity of the customer is satisfactorily established

based on official and other reliable documents and records required under Section 1
(b) and (c) of Rule 5 are obtained and recorded by the covered institution. These
information include the individual customer’s name, address, date and place of birth,
nationality…….

Problem No. 1

Asyong Salonga wants to open a checking account in BPI. However, he does

not want such account to be bearing his name. Instead, he only wants that the account
be identified by mere account number. BPI refused such request. Is the refusal of
BPI valid?
Problem No. 2

Asyong Salonga wants to open a non-checking account in BPI. However, he

does not want such account to be bearing his name. Instead, he only wants that the
account be identified by mere account number. BPI refused such request. Is the
refusal of BPI valid?

Customer Due Diligence

Covered persons shall conduct CDD for the following purposes:

(a) To identify the customer, and its agents and beneficial owners;
(b) To determine the risk posed by each customer;
(c) To establish, maintain, close or terminate the account or business relationship;
and
(d) To assess the level of monitoring to be applied.

When is CDD required?

Covered person shall undertake CDD measures when:

1. Establishing business or professional relationship;

2. Carrying out occasional transactions above P100,000;
3. Wire transfer from a non-customer originator for occasional transactions
exceeding the set threshold;
4. There is a suspicion of ML/TF, regardless of any exemptions or thresholds;
or
5. The covered person has doubts about the veracity or adequacy of previously
obtained identification information and document obtained.

What are the common Customer Due Diligence Measures?

a. Customer Identification Process

b. Customer Verification Process
c. Identification and Verification of Agents
d. Beneficial Ownership Verification
e. Determination of the Purpose of Relationship
f. Ongoing Monitoring Process
What are the PRIMARY DUTIES of Covered Persons?

A. Covered persons shall, comply with all the requirements under AMLA and TFPSA,
their respective IRR, and other AMLC issuances. They shall have the duty to
cooperate with the AMLC in the discharge of the latter’s mandate and execution
of its lawful orders and issuances, to protect their businesses or professions from
being used in ML/TF activities.

B. The covered persons’ board of directors, partners or sole proprietors shall

ultimately be responsible for the covered persons’ compliance with the AMLA and
TFPSA, their respective IRR, and other AMLC issuances.

Beneficial Ownership
Who is a beneficial owner?

A beneficial owner refers to a natural person who:

(1) Ultimately owns or controls the customer and/or on whose behalf a

transaction or activity is being conducted;
(2) Has ultimate effective control over a juridical person or legal arrangement;
(3) Owns, at least 20% shares, contributions or equity interest in a juridical
person or legal arrangement.

Control includes whether the control is exerted by means of trusts, agreements,

arrangements, understandings, or practices, and whether or not the individual can
exercise control through making decisions about financial and operating policies.

What is Beneficial Ownership Verification?

Beneficial Ownership Verification (BOV) is the process of taking reasonable

measures to identify and verify the beneficial owner, including the determination of
the true nature of the beneficial owner’s capacities and duties vis-à-vis his agent,
nominee or trustee.

How is BOV done?

For Natural Persons, covered persons shall determine the nature if the beneficial
owner’s capacities and duties vis-à-vis his agent by obtaining a copy of the written
document evidencing their relationship and apply the same standards for assessing
the risk profile and determining the standard of CDD to be applied to both.

For customers that are juridical persons, the covered persons shall identify and take
reasonable measures to verify the identity of beneficial owners through the following
information:

(a) The identity of the natural persons, if any, who ultimately have controlling
ownership interest in a juridical person;
(b) To the extent that there is a doubt under item (a) above, as to whether the
persons with the controlling ownership interest are the beneficial owners or
where no natural person exerts control through ownership interests, the
identity of the natural persons, if any, exercising control over the juridical
person through other means; and
(c) Where no natural person is identified under items (a) or (b) above, the identity
of the relevant natural persons who hold senior management positions.

BOV for Legal Arrangements

For customers that are legal arrangements, the covered person shall identify and take
reasonable measures to verify the identity of beneficial owners through the following
information:

§ For TRUST AGREEMENTS – The identity of the trustors/grantors/settlors,

the trustees, the beneficiaries or class of beneficiaries, the protector, if any,
and any other natural person exercising ultimate effective control over the
trust agreement.

§ For Beneficiaries of Trust Agreements that are designated by characteristics

or by class: sufficient information concerning the beneficiary to satisfy the
covered person that it will be able to establish the identity of the beneficiary
at the time of the payout or when the beneficiary intends to exercise vested
rights.

§ For other types of legal arrangements: the identity of persons in equivalent or

similar positions.
Record keeping requirements

General Rule:

Covered persons shall maintain and safely store for five (5) years from the dates of
transactions all customer records and transaction documents.

Exception:

If a case has been filed in court involving the account, records must be retained and
safely keep beyond the five (5) year period, until it is officially confirmed by the
AMLC Secretariat that the case has been resolved, decided or terminated.

Safe Harbor Provision

No administrative, criminal or civil proceedings shall lie against any person for
having made a covered transaction report or a suspicious transaction report in the
regular performance of his duties and in good faith, whether or not such reporting
results in any criminal prosecution under AMLA or any other Philippine Law.