Professional Documents
Culture Documents
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
Banks are entities engaged in the lending of funds obtained in the form of deposits (Section 3.1 of
General Banking Law of 2000 [GBL]).
“Quasi-banks" shall refer to entities engaged in the borrowing of funds through the issuance,
endorsement or assignment with recourse or acceptance of deposit substitutes as defined in
Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act") for purposes of re-
lending or purchasing of receivables and other obligations. (Section 4.6 of GBL)
• That its funds are obtained from the public which shall mean twenty or more persons; and
• That the minimum capital requirements prescribed by the Monetary Board for each category
of banks are satisfied
• The operations and activities of banks shall be subject to supervision of the Bangko Sentral
ng Pilipinas
4. Degree of Care
• Banks are expected to observe (as a fiduciary duty) the highest degree of care (extraordinary
diligence) in the conduct of their business since it is impressed with public interest. Banks are
required to exercise the highest standards of integrity and performance.
5. Classification of Banks
• (a) Universal banks – a commercial bank that has the power of an investment house and the
power to invest in the equity of allied and non-allied enterprises;
• (b) Commercial banks -accepts drafts, issued letters of credit, discount and negotiate
promissory notes, bills of exchange, accept or creates demand deposits, received deposit
substitutes, buy and sell foreign exchange or gold/silver bullions, extend credit as approved
by the Monetary Board, and etc. (do not have the power of an investment house and can only
invest in equity of allied enterprises);
• (c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock savings and loan
associations, and (iii) Private development banks – established as savings and mortgage
bank, a stock savings and loan association for the purpose of accumulating such deposits
and investing it real estate and insured improvements, loans for personal or household
finance, financing for homebuilding and home development, in commercial papers, and to
provide short term working capital and medium and long term financing;
• (d) Rural banks, as defined in Republic Act No. 7652 (hereafter referred to as the “Rural
Banks Act” – established to provide credit facilities to farmers and merchants or their
cooperatives and in general, to the people of the rural communities;
• (e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the "Cooperative
Code") – to provide financial and credit services to cooperatives;
• (f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the "Charter of Al
Amanah Islamic Investment Bank of the Philippines"; and
• (g) Other classifications of banks as determined by the Monetary Board of the Bangko
Sentral ng Pilipinas.
Distinctions:
6. Functions:
a. Loan
To grant loans and other credit accommodations only in amounts and for the periods of time
essential for the effective completion of the operations to be financed.
b. Deposit
It allows the bank to receive money from the public with the obligation of safely keeping it, and
returning the same. Fixed, savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan (Article 1980 of the Civil
Code)
7. PDIC Law
Basic Policy: promote and safeguard the interests of the depositing public by way of providing
permanent and continuing insurance coverage on all insured deposits.
PDIC is a government instrumentality created by law to insure the deposits of all banks which are
entitled to the benefits of insurance. In fact, the latest amendments empowered PDIC with
stronger authorities to protect the depositing public.
PDIC insurance covers only the risk of a bank closure ordered by Monetary Board (MB) of BSP.
PDIC is the designated receiver in the case of a bank closure. Upon appointment pursuant to
statutory grounds, the MB of BSP shall direct PDIC to proceed with the liquidation of the closed
bank pursuant to the New Central Bank Act, as amended, and R.A. No. 3591, as amended.
Principal functions are (a) deposit insurer; (b) co-regulator of banks; and (c) receiver and
liquidator of closed banks.
The term deposit means the unpaid balance of money or its equivalent received by a bank in the
usual course of business and for which it has given or is obliged to give credit to an account
(savings, deposit, etc) or other evidence of deposit issued in accordance with BSP’s rules and
regulations
The term insured deposits means the amount due to any bona fide depositor for legitimate
deposits in an insured bank net of any obligation of the depositor to the insured bank as of date of
closure but not to exceed P500,000
Note: In case of a condition that threatens the monetary and financial stability of the banking
system that may have systemic consequences as determined by the MB, the maximum deposit
insurance cover may be adjusted in such amount, for such a period, and/or for such deposit
products, as may be determined by a unanimous vote of the Board of Directors in a meeting
called for the purpose and chaired by the DOF Secretary, subject to the approval of the President
of the Philippines.
(Under Section 22 of the PDIC Charter, a systemic risk refers to the possibility of failure of one
bank to settle net transactions with other banks will trigger a chain reaction, depriving other banks
of funds leading to a general shutdown of normal clearing and settlement activity. It also means
the likelihood of a sudden, unexpected collapse of confidence in a significant portion of the
banking or financial system with potentially large real economic effects.)
MEMAID: E500-Out-BTS-Dep-FFUUUn-SPLIT
• Investment products such as Bonds and Securities, Trust accounts, and other similar
instruments
• Deposit accounts or transactions which
• ARE UNFOUNDED OR THAT ARE FICTITIOUS OR FRAUDULENT
• CONSTITUTES AND OR EMANATING FROM UNSAFE AND UNSOUND
BANKING PRACTICE
• ARE DETERMINED TO BE THE PROCEEDS OF UNLAWFUL ACTIVITY AS
DEFINED UNDER AMLA LAW
• RESULTED FROM SPLITTING OF DEPOSITS
• Deposit products or money placements by the head office of a foreign bank in its branch in
the Philippines. Said branch entity is considered as part of one and the same juridical entity
to its head office. Thus, not covered since it is payable outside the Philippines.
• NOTES: Inter-branch deposits are also not covered by deposit insurance. The same
refers to funds of one branch or the Head Office of a bank in another branch.
• Occurs when a deposit account with an outstanding balance of more than P500,000 is
broken down and transferred to 2 or more accounts in the name of persons or entities who
have no beneficial ownership (the “dummy-transferee”) in the transferred deposits in their
names
• Made within 120 days immediately preceding or during a bank declared holiday (e.g.,
suspends payment of deposit liabilities continuously for > 30 days) or immediately preceding
a closure order issued by MB for the purpose of availing the maximum deposit insurance
coverage
Determination of Amount Due (Per Bank/ Per Depositor, and Per Capacity Rule)
Claims
• Depositors have two (2) years from PDIC's takeover of the closed bank to file their deposit
insurance claims.
• However, should the depositor fail to file within the said period, the claim may be filed with the
Liquidator of the closed bank within 60 days from publication of notice of closure (payment
will depend on the bank’s available assets and approval of Liquidation court).
• Claims should be settled within 6 months from date of filing with complete requirements
• Depositors with valid deposit accounts with balances of P100,000.00 and below are not
required to file claims, provided they:
(1) have no obligations with the closed bank, or have not acted as co-makers of these
obligations, or are not spouses of the borrowers;
(2) have complete mailing address found in the bank records or have updated their addresses
through the MAUF of PDIC before the start of the onsite claims settlement operation; and
(3) have not maintained the account under the name of business entities
• Original evidence of deposit (passbook, certificate of time deposit, bank statement, ATM card,
etc)
• Notarized Special Power of Attorney for claimants that are not signatories in the bank records
or for minors
• Claim form
All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions (local
government units), instrumentalities, and trust funds or any sum of money invested in the bank
which may be used for loans or similar transactions are considered ABSOLUTELY
CONFIDENTIAL and may not be examined, inquired or looked into by any person, government
official, bureau or office.
4. Upon inquiry by CIR for the purpose of determining net estate of decedent-depositor for estate
tax purposes.
5. Upon order of competent court (Court of Appeals) in proper cases by the AMLC where there is
PROBABLE CAUSE (conviction not required) of money laundering (deposits or investments are
related to unlawful activity) and in some cases even without court order (Section 11 of RA
9160, as amended).
Note: AMLC cannot order a bank to inquire into the bank account of any depositor on mere
suspicion of acts of graft and bribery without depositor’s written consent or a bank inquiry issued
by a competent court
6. Disclosure to the Treasurer for dormant deposits for at least 10 years under Unclaimed
Balances law.
9. Power of the Ombudsman in certain cases against government officials pending in court.
Otherwise, if no pending case, the criminal investigation of the Ombudsman via examination of
bank account is premature (Marquez vs Desierto G.R. No. 135882 dated June 27, 2001)
10. Inquiry of PDIC and/or BSP in case there is a finding of unsafe and unsound banking
practices.
• Covered by the law on secrecy of bank deposits except upon written permission of the
depositor
• Exempt from attachment, garnishment, or any other order or process of any court, legislative
body, government agency, or administrative body.
• Unclaimed balances shall include credits or deposits of money, bullion, security or other
evidence of indebtedness of any kind, and interest thereon with banks, buildings and loan
associations, and trust corporations, as hereinafter defined, in favor of any person known to
be dead or who has not made further deposits or withdrawals during the preceding 10 years
or more.
• Such deposits that have become dormant for a period of 10 years may be escheated in favor
of the government. To be deposited with the Treasurer of the Philippines to the credit of the
Government of the Republic of the Philippines.
• The disclosure to the Treasurer of the information on unclaimed balances for the purpose of
initiating escheat proceedings does not violate the bank secrecy law since the duty is
imposed by operation of law.
There should be a notice from the bank to the depositor of the unclaimed balance (last known
place of residence or post office address;
Bank to report, in sworn statement, to the Treasurer of the Philippines (who will, in turn,
inform the Solicitor General) of deposits that have not been touched (no deposit or withdrawal
made) for a period of 10 years or held in favor of persons known to be dead. A copy of the
sworn statement shall be posted in conspicuous place in the premises of the bank for at least
60 days from the date of filing thereof.
Proper publication will then be made and if the depositors make no claim, escheat
proceedings (action initiated by Solicitor General in the name of the People of the Republic of
the Philippines) will result in the unclaimed balances being deposited (after judgment in the
proceedings) with the Treasurer of the Philippines to the credit of the Republic to be used and
appropriated by Congress.
Procedure for reactivation (pursuant to Treasury Circular 01-No. 2010 dated April 8, 2010)
How committed:
1. Any person knowing that any monetary instrument or property represents, involves or relates
to, the proceeds of any unlawful activity:
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 (a), (b) or
(c);
e. Aids, abets, assists in or counsels the commission of the money laundering offenses
referred to in (a), (b) or (c); and
f. performs or fails to perform any act as a result of which he facilitates the offense of
money laundering referred to in (a), (b) or (c).
2. By any covered person who knowing that a covered or suspicious transaction is required
under the law to be reported to the AMLC, fails to do so.
a. Customer identification
Covered persons shall establish and record the true identity of its clients based on official
documents.
b. Record keeping
All records of all transactions shall be maintained and safely stored for 5 years.
For real estate brokers and developers, a single cash transaction involving an amount in excess
of P7,500,000 or its equivalent in any other currency.
1. Banks, non-banks, quasi-banks, trust entities, foreign exchange dealers, pawnshops, money
changers, remittance and transfer companies and other similar entities and other similar
entities and all other persons and their subsidiaries and affiliates supervised or regulated by
the BSP;
2. Insurance companies, pre-need companies and other persons supervised or regulated by the
Insurance Commission;
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 and regulated by SEC;
4. Jewelry dealers in precious stones/metals, who, as a business, trade in precious
stones/metals, for transactions in excess of P1,000,000;
5. Company service provides 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;
Excluded Persons: 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
1. Customer identification: Covered persons shall establish and record the true identity of its
clients based on official documents.
2. Record keeping: All records of all transactions of covered institutions shall be maintained and
safely stored for 5 years from the date of transactions.
3. Reporting of covered and suspicious transactions: Covered persons shall report to the AMLC
all covered transactions and suspicious transactions within 5 working days from occurrence
thereof, unless the AMLC concerned prescribes a different period not exceeding 15 working
days.
4. Should a transaction be determined to be both a covered and a suspicious transaction, it
shall be reported as a suspicious transaction.
5. When reporting, it shall not be considered a violation of bank secrecy laws and similar laws. It
shall be prohibited from communicating, directly or indirectly, in any manner or by any means,
to any person the fact that a covered or suspicious transaction report was made, the content
thereof, or any other information in relation thereto.
NOTE: Safe Harbor: No administrative, criminal, or civil proceedings, shall lie against any person
for having made a transaction report in the regular performance of his duties and in good faith,
whether or not such results in any criminal prosecution.
Suspicious Transaction: transactions with covered institutions, regardless of the amount involved,
where any of the following circumstances exist:
Unlawful activities: Any act or omission or series or combination thereof involving or having relation to
the following (Predicate Crimes):
1. Kidnapping for ransom under Article 267 of RPC – (e.g., if kidnapper will deposit the ransom
money with a bank to make it appear it originated from legitimate sources, the crime of
money laundering is committed)
2. Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 and 16 of Comprehensive Dangerous Drugs Act (RA
9165)
a. Importation of prohibited drugs
b. Sale of prohibited drugs
c. Administration of prohibited drugs
d. Distribution of prohibited drugs
Functions of AMLC as the government agency tasked to carry out the implementation of the AMLA:
Freeze order (FO) – 20 days unless extended by court for a period not exceeding 6 months
A freeze order is an extraordinary and interim relief issued by the Court of Appeals to prevent
dissipation, removal, or disposal of properties that are suspected to be the proceeds of, or related
to, unlawful activities as defined in the AMLA. Primary objective is to temporarily preserve
monetary instruments or property that are in any way related to an unlawful activity or money
laundering by preventing the owner from utilizing them during the duration of the freeze order.
Probable Cause
The probable cause required for the issuance of a freeze order refers to such facts and
circumstances which would lead a reasonably discreet, prudent or cautious man to believe an
unlawful activity and/or a monetary instrument is about to be, is being or has been committed.
The CA, upon application ex parte by AMLC and after determination that probable cause exists
that any monetary instrument or property is in any way related to an unlawful activity, may issue a
freeze order which shall be effective immediately (for a period of 20 days unless extended by the
court upon application by the AMLC; total period shall not exceed 6 months).
Note: Considering the intricate and diverse web of related and interlocking accounts pertaining to
the monetary instruments or properties that any person may create in the different covered
institutions, their branches and/or other units, AMLC may apply to freeze monetary instruments or
properties in the names of the reported owners/holders, and monetary instruments or properties
named in the application of the AMLC, including all other related web of accounts pertaining to
other monetary instruments and properties, the funds and sources of which originated from or are
related to the monetary instruments or properties subject of the freeze orders.
Related Web of Accounts: those accounts, the funds and sources of which originated from and/or
are materially linked to the monetary instruments or properties subject of the freeze orders.
Authority to inquire into bank deposits: The AMLC may inquire into deposits upon order of the
court when there is probable cause that the deposits are related to the crime or unlawful
activities.
The freeze order shall be effective until the basis for its issuance shall have been lifted. During
the effectivity of the freeze order, the aggrieved party may, within twenty (20) days from issuance,
file with the Court of Appeals a petition to determine the basis of the freeze order according to the
principle of effective judicial protection: Provided, That the person whose property or funds have
been frozen may withdraw such sums as the AMLC determines to be reasonably needed for
monthly family needs and sustenance including the services of counsel and the family medical
needs of such person.
"The AMLC, if circumstance warrant, may initiate civil forfeiture proceedings to preserve the
assets and to protect it from dissipation.ℒαwρhi৷ No court shall issue a temporary restraining
order or a writ of injunction against the freeze order, except the Court of Appeals or the Supreme
Court (Section 10, as amended by R.A. No. 11521).
However, a court order is not even necessary when the offense or unlawful activity involved is
any of the following: