Circular No.

706 Subject: Updated Regulation Anti-Money Laundering Rule and

By the authority vested to the Bangko Sentral ng Pilipinas (BSP) to issue guidelines and circulars on anti-money laundering (AML) in order to effectively implement the provisions of Repu lic Act !o" #$%&' other(ise kno(n as the )Anti-Money Laundering Act of *&&$)' as amended y Repu lic Act !o" #$#+ (AMLA' as amended)' under Rule $,"$ ( ) of the Revised -mplementing Rules and Regulations (R-RR)' the Monetary Board' in its Resolution !o" $.&$ dated $% /ecem er *&$&' approved the adoption of this 0pdated Anti-Money Laundering Rules and Regulations and the amendment of Part 1ight of the Manual of Regulations as (ell as the repeal of other BSP 2irculars that are inconsistent here(ith" Section !"0#. Declaration of Policy - 3he BSP adopts the policy of the State to protect the integrity and confidentiality of ank accounts and to ensure that the Philippines in general and the covered institutions herein descri ed in particular shall not e used respectively as a money laundering site and conduit for the proceeds of an unla(ful activity as hereto defined" Section !"0$. Scope of Regulations - 3hese regulations shall apply to all covered institutions supervised and regulated y the BSP" 3he term )covered institution) shall refer to Banks' 4ffshore anking units' 5uasi- anks' trust entities' non-stock savings and loan associations' pa(nshops' foreign e6change dealers' money changers' remittance agents' electronic money issuers and other financial institutions (hich under special la(s are su 7ect to BSP supervision and8or regulation' including their su sidiaries and affiliates as herein defined (herever they may e located9 (a) A su sidiary means an entity more than fifty percent (:&;) of the outstanding voting stock of (hich is o(ned y a ank' 5uasiank' trust entity or any other institutions supervised and8or regulated y the BSP" ( ) An affiliate means an entity the voting stock of (hich' to the e6tent of fifty percent (:&;) or less' is o(ned y a ank' 5uasiank' trust entity' or any other institution supervised and8or regulated y the BSP" Pursuant to Section *& of the <eneral Banking La( of *&&&' a ank authori=ed y BSP to esta lish ranches or other offices (ithin or outside the Philippines shall e responsi le for all usiness conducted in such ranches and offices to the same e6tent and in the same manner as though such usiness had all een conducted in the head office" A ank and its ranches and offices shall e treated as one unit"

>henever local applica le la(s and regulations of a ranch' office' su sidiary or affiliate ased outside the Philippines prohi it the implementation of these Rules or any of the provisions of AMLA' as amended' its R-RR' and the supervising authority in that foreign country issues a directive for idding said ranch' office' su sidiary or affiliate' the covered institution shall notify the BSP of this situation and furnish a copy of the supervising authority?s directive" Section !"0%. Definition of terms - 16cepts as other(ise defined herein' all terms used shall have the same meaning as those terms that are defined in the AMLA' as amended' and its R-RR" (A) Money laundering is a crime (here y the proceeds of an unla(ful activity as herein defined are transacted' there y making them appear to have originated from legitimate sources" -t is committed y the follo(ing9 ($) Any person kno(ing that any monetary instrument or property represents' involves' or relates to' the proceeds of any unla(ful activity' transacts or attempts to transact said monetary instrument or property" (*) Any person kno(ing that any monetary instrument or property involves the proceeds of any unla(ful activity' performs or fails to perform any act as a result of (hich he facilitates the offense of money laundering referred to in paragraph ($) a ove" (@) Any person kno(ing that any monetary instrument or property is re5uired under the act to e disclosed and filed (ith the Anti-Money Laundering 2ouncil' fails to do so" (B) 2overed transaction (23) is a transaction in cash or other e5uivalent monetary instrument involving a total amount in e6cess of five hundred thousand pesos (P:&&'&&&) (ithin on anking day" (2) Suspicious transactions (S3) are transactions (ith covered institutions' regardless of the amount involved' (here any of the follo(ing circumstances e6ist9 $" 3here is no underlying legal or trade o ligation' purpose or economic 7ustificationA *" 3he client is not properly identifiedA @" 3he amount involved is not commensurate (ith the usiness or financial capacity of the clientA +" 3aking into account all kno(n circumstances' it may e perceived that the client?s transaction is structured in order to avoid

eing the su 7ect of reporting re5uirements under the AMLA' as amendedA :" Any circumstance relating to the transaction (hich is o served to deviate from the profile of the client and8or client?s past transactions (ith the covered institutionA %" 3he transaction is in any (ay related to an unla(ful activity or any money laundering activity or offense under AMLA' as amended' that is a out to e' is eing or has een committedA or ," Any transaction that is similar or analogous to any of the foregoing"

(/) Monetary instrument refers to9 ($) 2oins or currency of legal tender of the Philippines' or of any other countryA (*) /rafts' check' and notesA (@) Securities or negotia le instruments' onds' commercial papers' deposit certificates' trust certificates' custodial receipts or deposit su stitute instruments' trading orders' transaction tickets and confirmations of sale or investments and money market instrumentsA (+) 2ontracts or policies of insurance' life or non-life' and contracts of suretyshipA and (:) 4ther similar instruments (here title thereto passes to another y endorsement assignment or delivery" (1) 3ransaction refers to any act esta lishing any right or o ligation or giving rise to any contractual or legal relationship et(een the parties thereto" -t also includes any movement of funds y any means (ith a covered institution"1avvphil (B) 0nla(ful activity refers to any act or omission or series or com ination thereof involving or having direct relation to the follo(ing9 ($) Cidnapping for ransom under Article *%, of Act !o" @.$:' other(ise kno(n as the Revised Penal 2ode' as amendedA (*) Section +' :' %' .' #' $&' $*' $@' $+' $:' and $% of Repu lic Act

!o" #$%:' other(ise kno(n as the 2omprehensive /angerous /rugs Act of *&&*A (@) Section @ paragraphs B' 2' 1' <' D' and - of Repu lic Act !o" @&$#' as amendedA other(ise kno(n as the Anti-<raft and 2orrupt Practices ActA (+) Plunder under Repu lic Act !o" ,&.&' as amendedA (:) Ro ery and e6tortion under Articles *#+' *#:' *#%' *##' @&&' @&$' and @&* of the Revised Penal 2ode' as amendedA (%) Eueteng and masiao punished as illegal gam ling under Presidential /ecree !o" $%&*A (,) Piracy on the high seas under Revised Penal 2ode' as amended and Presidential /ecree !o" :@*A (.) Fualified theft under Article @$& of Revised Penal 2ode' as amendedA (#) S(indling under Article @$& of the Revised Penal 2ode' as amendedA ($&) Smuggling under Repu lic Act !os" +:: and $#@,A ($$) Giolations under Repu lic Act !o" .,#*' other(ise kno(n as the 1lectronic 2ommerce Act of *&&&A ($*) Di7acking and other violations under Repu lic Act !o" %*@:A destructive arson and murder' as defined under the Revised Penal 2ode' as amended' including those perpetrated y terrorists against non-com atant persons and similar targetsA ($@) Braudulent practices and other violations under Repu lic Act !o" .,##' other(ise kno(n as the Securities Regulation 2ode of *&&&A ($+) Belonies or offenses of a similar nature that are punisha le under the penal la(s of other countries" (<) Customer - refers to any person or entity that keeps account' or other(ise transacts usiness (ith a covered institution and any person or entity on (hose ehalf an account is maintained or a transaction is conducted' as (ell as the eneficiary of said transactions" A customer also includes the eneficiary of a trust' an investment fund' a pension fund or a company or person (hose assets are managed y an asset manager' or a grantor of a trust"

(D) Shell Company - Legal entities (hich have no usiness su stance in their o(n right ut through (hich financial transactions may e conducted" (-) Shell Bank - a Shell company incorporated as a ank or made to appear to e incorporated as a ank ut has no physical presence and no affiliation (ith a regulated financial group" -t can also e a ank that (a) does not conduct usiness at a fi6ed address in a 7urisdiction in (hich the shell ank is authori=ed to engageA ( ) does not employ one or more individuals on a full time asis at this fi6ed addressA (c) does not maintain operating records at this address' and (d) is not su 7ect to inspection y the authority that licensed it to conduct anking activities" (E) Beneficial Owner - refers to natural person(s) (ho ultimately o(ns or controls a customer and8or the person on (hose ehalf a transaction is eing conducted" -t also incorporates those persons (ho e6ercise ultimate effective control over a legal person or arrangement" (C) Politically Expose Person or PEP - an individual (ho is or has een entrusted (ith prominent pu lic positions in the Philippines or in a foreign state' including heads of state or of government' senior politicians' senior national or local government' 7udicial or military officials' senior e6ecutives of government or state o(ned or controlled corporations and important political party officials" (L) Correspon ent !anking refers to activities of one ank (the correspondent ank) having direct connection or friendly service relations (ith another ank (the respondent ank)" (M) "un #wire transfer - refers to any transaction carried out on ehalf of an originator ( oth natural and 7uridical) through a financial institution (4riginating -nstitution) y electronic means (ith a vie( to making an amount of money availa le to a eneficiary at another financial institution (Beneficiary -nstitution)" 3he originator person and the eneficiary person may e the same person" (!) Cross !or er transfer - any (ire transfer (here the originating and eneficiary institutions are located in different countries" -t shall also refer to any chain of (ire transfers that has at least one crossorder element" (4) Domestic $ransfer - any (ire transfer (here the originating and eneficiary institutions are located in the same country" -t shall refer to any chain of (ire transfers that takes place entirely (ithin the orders of a single country' even though the system used to effect the fund8(ire transfer may e located in another country" (P) Originating institution - refers to the entity utili=ed y the

originator to transfer funds to the eneficiary and can either e (a) a covered institution as specifically defined y these Rules and as generally defined y the AMLA' as amended' and its R-RR' or ( ) a financial institution operating outside the Philippines that is other than covered institutions referred to in (a) ut conducts usiness operation and activities similar to them (F) Beneficiary institution - refers to the entity that (ill pay out the money to the eneficiary and can either e (a) a covered institution as specifically defined y these Rules and as generally defined y the AMLA' as amended' and its R-RR' or ( ) a financial institution operating outside the Philippines that is other than covered institutions referred to in (a) ut conducts usiness operations and activities similar to them" (R) %nterme iary institution - refers to the entity utili=ed y the originating and eneficiary institutions (here oth have no correspondent anking relationship (ith the intermediary institution" -t can either e (a) a covered institution as specifically defined y these Rules and as generally defined y the AMLA' as amended' and its R-RR' or ( ) a financial institution operating outside the Philippines that is other than covered institution referred to in (a) ut conducts usiness operations and activities similar to them" Section !"0&. Basic Principles an Policies to Com!at &oney 'aun ering - in line (ith the declaration of policy' covered institutions shall apply the follo(ing principles9 $" 2onduct usiness in conformity (ith high ethical standards in order to protect its safety and soundness as (ell as the integrity of the national anking and financial system9 *" Cno( sufficiently your customer at all times and ensure that the financially or socially disadvantaged are not denied access to financial services (hile at the same time prevent suspicious individuals or entities from opening or maintaining an account or transacting (ith the covered institution y himself or other(ise9 @" Adopt and effectively implement a sound AML and terrorist financing risk management system that identifies' assesses' monitors and controls risks associated (ith money laundering and terrorist financingA +" 2omply fully (ith these rules and e6isting la(s aimed at com ating money laundering and terrorist financing y making sure that officers and employee are a(are of their respective responsi ilities and carry them out in accordance (ith superior and principled culture of complianceA and :" Bully cooperate (ith Anti-Money Laundering 2ouncil (AML2) for

the effective implementation and enforcement of the AMLA' as amended' and its R-RR" A" R-SC MA!A<1M1!3 ' !"0(. Risk &anagement - All covered institutions shall develop sound risk management policies and practices to ensure that risks associated (ith money-laundering such as counterparty' reputational' operational' and compliance risks are identified' assessed' monitored' mitigated and controlled' as (ell as to ensure effective implementation of these regulations' to the end that covered institutions shall not e used as a vehicle to legitimi=e proceeds of unla(ful activity or to facilitate or finance terrorism" 3he four areas of sound risk management practices are ade5uate and active Board and Senior Management oversight' accepta le policies and procedures em odied in a money laundering and terrorist financing prevention compliance program' appropriate monitoring and Management -nformation System and comprehensive internal controls and audit" ' !"0(.# Boar an Senior &anagement Oversight !ot(ithstanding the provisions specifying the duties and responsi ilities of the 2ompliance 4ffice and -nternal Audit' it shall e the ultimate responsi ility of the Board of /irectors to fully comply (ith the provisions of these rules' the AMLA' as amended' and its R-RR" Bor this reason' it shall ensure that oversight on the institutionHs compliance management is ade5uate" ' !"0(.#.a. Compliance office - Management of the implementation of the covered institutionHs Money Laundering and 3errorist Binancing Prevention Program (MLPP) shall e a primary task of the 2ompliance 4ffice" 3o ensure the independence of the 4ffice' it shall have a direct reporting line to the Board of /irectors or any Board-level or approved committee on all matters related to AML and terrorist financing compliance and their risk management" -t shall e principally responsi le for the follo(ing functions among other functions that may e delegated y Senior Management and the Board' to (it9 $" 1nsure compliance y all responsi le officers and employee (ith these Rules' the AMLA as amended' the R-RR and its o(n MLPP" -t shall conduct periodic compliance checking (hich covers' among others' evaluation of e6isting processes' policies and procedures including on-going monitoring of performances y staff and officers involved in money laundering and terrorist financing prevention' reporting channels' effectivity of the electronic money laundering transactions monitoring system and record retention system through sample testing and revie( of audit or e6amination reports" -t shall also report compliance findings to the Board or any Boardlevel committeeA

*" 1nsure that infractions' discovered either y internally initiated audits or y special or regular e6amination conducted y the BSP' are immediately correctedA @" -nform all responsi le officers and employee of all resolutions' circulars and other issuance y the BSP and the AML2 in relation to matters aimed at preventing money laundering and terrorist financingA +" Alert senior management' the oard of directors' or the Boardlevel or approved committee if it elieves that the institution is falling to sensi ly address anti money laundering and terrorist financing issuesA and :" 4rgani=e the timing and content of AML training of officers and employees including regular refresher trainings as stated in Section I.&#" ' !"0(.$. &oney 'aun ering an $errorist "inancing Prevention Program - All covered institutions shall adopt a comprehensive and risk- ased MLPP geared to(ard the promotion of high ethical and professional standards and the prevention of the ank eing used' intentionally or unintentionally' for money laundering and terrorism financing" 3he MLPP shall e consistent (ith the AMLA as amended' and the provisions set out in these rules and designed according to the covered institutionHs corporate structure and risk profile" -t shall e in (riting' approved y the Board of /irectors or y the country8regional head or its e5uivalent for local ranches of foreign anks' and (ell disseminated to all officers and staff (ho are o ligated y la( and y their program to implement the same" >here a covered institution has ranches' su sidiaries' affiliates or offices located (ithin and8or outside the Philippines' it shall adopt an institution-(ide MLPP that shall e implemented on a consolidated asis" 3he MLPP shall also e readily availa le in user-friendly form' (hether in hard or soft copy" 3he 2overed institution must put up a procedure to ensure an audit trail evidencing dissemination process for ne( and amended policies and procedures" 3he program shall em ody the follo(ing at a minimum9 $" /etailed procedures of the covered institutionHs compliance and implementation of the follo(ing ma7or re5uirements of the AMLA' as amended its R-RR' and these Rules' to (it9 a) 2ustomer identification process including acceptance policies and on-going monitoring processesA ) Record keeping and retentionA

c) 2overed transaction reportingA and d) Suspicious transaction reporting including the adoption of a system' electronic or manual' of flagging' monitoring and reporting of transactions that 5ualify as suspicious transactions' regardless of amount or that (ill raise a )red flag) for purposes of conducting further verification or investigation or transactions involving amounts elo( the threshold to facilitate the process of aggregating them for purposes of future reporting of such transactions to the AML2 (hen their aggregated amounts reach the threshold" 3he S3 reporting shall include a reporting chain under (hich a suspicious transaction (ill e processed and the designation of a Board level or approved 2ommittee (ho (ill ultimately decide (hether or not the covered institution should file a report to the AML2" -f the resources of the covered institution do not permit the designation of a 2ommittee' it may designated the compliance officer to perform this function instead provided that the Board of /irectors is informed of his decision" *" An effective and continuous anti-money laundering and countering of terrorist financing training program for all directors' and responsi le officers and employee' to ena le them to fully comply (ith their o ligations and responsi ilities under these rules' the AMLA' as amended' its R-RR and their internal policies and procedures as em odied in the MLPP" 3he training program shall also include refresher trainings to remind these individuals of their o ligations and responsi ilities as (ell as update them of any changes in AML la(s' rules and internal policies and procedures" @" An ade5uate screening and recruitment process to ensure that only 5ualified personnel (ho have no criminal record8s are employed to assume sensitive anking functionsA +" An internal audit system in accordance (ith J I.&:"+A :" An independent audit program (ith (ritten scope of audit that (ill ensure the completeness and accuracy of the information and identification documents o tained from clients' the covered and suspicious transactions reports su mitted to the AML2' and the records retained in compliance (ith these rules as (ell as ade5uacy and effectiveness of the training program on the prevention of money laundering and terrorism financingA %" A mechanism that ensures all deficiencies noted during the audit and8or BSP regular or special e6amination are immediately corrected and acted uponA ," 2ooperation (ith the AML2A and ." /esignation of an AML compliance officer (ho shall at least e

at senior officer level' as the lead implementor of the program (ithin an ade5uately staffed 2ompliance 4ffice" 3he AML compliance officer may also e the liaison et(een the covered institution' the BSP and the AML2 in matters relating to the covered institutionHs AML compliance" >here resources of the covered institution do not permit the hiring of an AML compliance officer' the 2ompliance 4fficer shall also assume the responsi ility of the former" ' !"0(.$.a. Su!mission of the Revise an (p ate &'PP) *pproval !y the Boar of Directors or Country +ea - >ithin one hundred eighty days ($.&) days from effectivity of these Rules' all covered institutions shall prepare and have availa le for inspection an updated MLPP em odying the principles and provisions stated in these rules" 3he 2ompliance 4fficer shall su mit to the AntiMoney Laundering Specialist <roup' Supervision and 16amination Su -sector - of the BSP a s(orn certification that the revised MLPP had een prepared' duly noted and approved y the Board of /irectors or the 2ountry Dead or its e5uivalent for local ranches of foreign anks" Denceforth' each MLPP shall e regularly updated at least once every t(o years to incorporate changes in AML policies and procedures' latest trends in money laundering and terrorist financing typologies' and latest pertinent BSP issuances" Any revision or update in the MLPP shall like(ise e approved y the Board of /irectors or the country8regional head or its e5uivalent for local ranches of foreign anks" ' !"0(.%. &onitoring an Reporting $ools - All covered institutions shall adopt an AML and terrorist financing monitoring system that is appropriate for their risk-profile and usiness comple6ity and in accordance (ith these Rules" 3he system should e capa le of generating timely' accurate and complete reports to lessen the likelihood of any reputational and compliance risks and to regularly appraise the Board of /irectors and Senior Management on antimoney laundering and terrorist financing compliance" ' !"0(.%.a. Electronic monitoring an reporting System for &oney 'aun ering - 0niversal Banks (0Bs) and 2ommercial Banks (C s) shall adopt an electronic AML system capa le of monitoring risks associated (ith money-laundering and terrorist financing as (ell as generating timely reports for the guidance and information of its Board of /irectors and Senior Management in addition to the functionalities mentioned in K I.&,"* ' !"0(.%.b. &anual monitoring - Bor covered institutions other than 0Bs and CBs' it need not have an electronic system ut must ensure that it has the means of complying (ith J I.&:"@" ' !"0(.&. %nternal *u it - 3he -nternal Audit function associated

(ith money laundering and terrorist financing should e conducted y 5ualified personnel (ho are independent of the Board of /irectors and Senior Management and have a direct reporting line to the Board or a Board level Audit 2ommittee" 3he -nternal Audit shall' in addition to those specified y these rules e responsi le for the periodic and independent evaluation of the risk management' degree of adherence to internal control mechanisms related to the customer identification process' such as the determination of the e6istence of customers and the completeness of the minimum information and8or documents esta lishing the true and full identity of' and the e6tent and standard of due diligence applied to' customers' 23 and S3 reporting and record keeping and retention' as (ell as they ade5uacy and effectiveness of other e6isting internal controls associated (ith money laundering and terrorist financing" Bor 0 s and CBs (ith electronic money laundering transaction monitoring system' in addition to the a ove' the internal audit shall include determination of the efficiency of the system?s functionalities as re5uired y J I.&:"@ and J I.&,"*" 3he results of the internal audit shall e timely communicated to the Board of /irectors and shall e open for scrutiny y BSP e6aminers in the course of the regular or special e6amination (ithout pre7udice to the conduct of its o(n evaluation (henever necessary" Results of the audit shall like(ise e promptly communicated to the 2ompliance 4ffice for its appropriate corrective action" 3he 2ompliance 4ffice shall regularly su mit reports to the Board to inform them of management?s action to address deficiencies noted in the audit" B" 20S34M1R -/1!3-B-2A3-4! PR421SS Section !"06. A covered institution shall maintain a system of verifying the true identity of their customers and' in case of corporate and 7uridical entities' re5uire a system of verifying their legal e6istence and organi=ational structure as (ell as the authority and identification of all persons purporting to act on their ehalf" Along this line' it shall formulate a risk- ased and tiered customer acceptance policy' customer retention policy and customer identification process that involves reduced 2ustomer /ue /iligence (2//) for potentially lo( risk clients and enhanced 2// for higher risk accounts" ' !"06.#. Customer acceptance policy - 1very covered institution shall develop clear' (ritten and graduated acceptance policies and procedures that (ill ensure that the financially or socially disadvantaged are not denied access to financial services (hile at the same time prevent suspicious individuals or entities from opening an account"

' !"06.#.a. 2riteria for type of customers9 lo(' normal and high riskA Standards for applying reduced' average and enhanced due diligence - 2overed institutions shall specify the criteria and description of the types of customers that are likely to pose lo(' normal or high risk to their operations as (ell as the standards in applying reduced' average and enhanced due diligence including a set of conditions for the denial of account opening" 1nhanced due diligence shall e applied to customers that are assessed y the covered institution or y these Rules as high risk for money laundering and terrorist financing" Bor customers assessed to e of lo( risk such as an individual customer (ith regular employment or economically productive activity' small account alance and transactions' and a resident in the area of the covered institutions may apply reduced due diligence" Some entities may like(ise e considered as lo( risk clients' these are9 Banking institutions' trust entities and 5uasianks authori=ed y the BSP to operate as such' pu licly listed companies su 7ect to regulatory disclosure re5uirements' government agencies including government o(ned and controlled corporations (<422s)" -n designing a customer acceptance policy' the follo(ing factors shall e taken into account9 $" Background and source of fundsA *" 2ountry of origin and residence or operationsA @" Pu lic or high profile position of the customer or its directors8trustees' stockholders' officers and8or authori=ed signatoryA +" Linked accountsA :" >atch list of individuals and entities engaged in illegal activities or terrorist related activities as circulari=ed y BSP' AML2' and other international entities or organi=ations such as the 4ffice of Boreign Assets 2ontrol (4BA2) of the 0"S" /epartment of the 3reasury and 0nited !ations Sanctions ListA %" Business activitiesA and ," 3ype of service8products8transactions to e entered (ith the covered institution" -n all instances' the covered institution shall document ho( a specific customer (as profiled (lo(' normal or high) and (hat

standard of 2// (reduced' average or enhanced) (as applied" ' !"06.#.b. Enhance ue Diligence - >henever enhanced due diligence is applied as re5uired y these Rules or y the covered institution?s customer acceptance policy' the covered institution shall' in addition to profiling of customers and monitoring of their transactions' do the follo(ing9 $" 4 tain additional information other than the minimum information and8or documents re5uired for the conduct of average due diligence as enumerated under J I.&%"*"a and J I.&%"*" A (a) -n cases of individual customers' o tain a list of anks (here the individual has maintained or is maintaining an account' list of companies (here he is a director' officer or stockholder' and anking services to e availed of" ( ) Bor entities assessed as high risk customers' such as shell companies' covered institutions shall' in addition to the minimum information and8or documents enumerated a ove' o tain additional information including ut not limited to prior or e6isting ank references' the !ame' present address' date and place of irth' nature of (ork' nationality and source of funds of each of the primary officers (President' 3reasures and authori=ed signatory8ies)' stockholders o(ning at least *; of the voting stock' and directors8trustees8partners as (ell as their respective identification documents" *" 2onduct validation procedures on any or all of the information provided in accordance (ith J I.&%"$"c" @" 4 tain senior management approval for esta lishing usiness relationship" >here additional information cannot e o tained' or any information or document provided is false or falsified' or result of the validation process is unsatisfactory' the covered institution shall deny anking relationship (ith the individual or entity (ithout pre7udice to the reporting of a suspicious transaction to the AML2 (hen circumstances (arrant" ' !"06.#.c. &inimum vali ation proce ures - Galidation procedures for individual customers shall include ut is not limited to the follo(ing9 $" 2onfirming the date of irth from a duly authenticated official documentA *" Gerifying the permanent address through evaluation of utility ills' ank or credit card statement or other documents sho(ing

permanent address or through on-site visitationA @" 2ontacting the customer y phone' email or letter (such as sending of )thank you letters))A and +" /etermining the authenticity of the identification documents through validation of its issuance y re5uesting a certification from the issuing authority or y any other means" Bor corporate or 7uridical entities' validation procedures shall include ut is not limited to e the follo(ing9 $" Re5uiring the su mission of audited financial statements conducted y a reputa le accounting8auditing firmA *" -n5uiring from the supervising authority the status of the entityA @" 4 taining ank referencesA +" 4n-site visitation of the companyA and :" 2ontacting the entity y phone' email or letter (such as )thank you letters))" ' !"06.#.d. Re uce ue iligence) >henever reduced due diligence is applied in accordance (ith the covered institution?s customer acceptance policy' the follo(ing rules shall apply9 a" Bor individual customers' a covered institution may open an account under the true and full name of the account o(ner or o(ners and defer acceptance of the minimum information" /eferred acceptance of the minimum information shall mean o taining information num ers $ to , of J I.&%"*"a at the time of account opening (hile the rest' num ers . to $$' may e o tained (ithin a reasona le time ut not e6ceeding ninety (#&) days from account opening" " Bor corporate' partnership' and sole proprietorship entities' and other entities such as anking institutions' trust entities and 5uasianks authori=ed y the BSP to operate as such' pu licly listed companies su 7ect to regulatory disclosure re5uirements' government agencies including <422s' a covered institution may open an account under the official name of these entities (ith only no" + of those re5uired under J I.&%"*" (Board Resolution duly certified y the 2orporate Secretary authori=ing the signatory to sign on ehalf of the entity) - o tained at the time of account opening" ' !"06.#.e. "ace,to,face contact - !o ne( accounts shall e

opened and created (ithout face-to-face contact and personal intervie( et(een the covered institution?s duly authori=ed personnel and the potential customer e6cept under the follo(ing arrangements9 ' !"06.#.e.#. *ccount opene through a trustee- agent- nomineeor interme iary - >here the account is opened through a trustee' agent' nominee or intermediary' the covered institution shall esta lish and record the true and full identity and e6istence of oth the (a) trustee' nominee' agent or intermediary and ( ) trustor' principal' eneficial o(ner' or person on (hose ehalf the account is eing opened" 3he covered institution shall determine the true nature of the parties? capacities and duties y o taining a copy of the (ritten document evidencing their relationship and apply the same criteria for assessing the risk profile and determining the standard of due diligence to e applied to oth" -n case of several trustors' principals' eneficial o(ners' or persons on (hose ehalf the account are eing opened (here the trustee' nominee' agent or intermediary opens a single account ut keeps therein su -accounts that may e attri uta le to each trustor' principal' eneficial o(ner' or person on (hose ehalf the account is eing opened' the covered institution shall' at the minimum' o tain the true and full name' place and date of irth or date or registration' as the case may e' present address' nature of (ork or usiness' and source of funds as if the account (as opened y them separately" >here the covered institution is re5uired to report a 23 or circumstances (arrant the filing of an S3' it shall o tain such other information on every trustor' principal' eneficial o(ner' or person on (hose ehalf the account is eing opened in order that a complete and accurate report may e filed (ith AML2" -n case a covered institution entertains dou ts that the trustee' nominee' agent or intermediary is eing used as a dummy in circumvention of e6isting la(s' it shall apply enhanced due diligence in accordance (ith J I.&%"$" " ' !"06.#.e.$. Outsourcing arrangement - Su 7ect to e6isting rules on outsourcing of specified anking activities' a covered institution' (ithout prior Monetary Board approval' may outsource to a counterparty the conduct of the re5uisite face-to-face contact provided that such arrangement is formally documented and provided further that the conditions under J I.&%"*"d" are met" -f the counter party is an entity other than a covered institution as herein defined' covered institutions shall ensure that the employees or representatives of the counter-party conducting the face-to-face contact undergo e5uivalent training program as that of its frontliners undertaking a similar activity" 2overed institutions shall like(ise monitor and revie( annually the performance of the counter-party to assist it in determining (hether or not to continue

(ith the arrangement" ' !"06.#.e.%. $hir party reliance - >here a third party as defined under J I.&%"*"e"$" has already conducted the re5uisite face-toface contact on its o(n customer (ho has referred to a covered institution' the latter may rely on the representation of the third party that it has already conducted face-to-face contact provided that the pertinent re5uirements in J I.&%"*"e"$ are also met" ' !"06.$. Customer i entification - 2overed institutions shall esta lish and record the true identity of its customers ased on valid identification document8s specified in J I.&%"*"c" ' !"06.$.a. .ew in ivi ual customers - 2overed institutions shall develop a systematic procedure for esta lishing the true and full identity of ne( individual customers and shall open and maintain the account only in the true and full name of the account o(ner or o(ners" 0nless other(ise stated in these Rules' average due diligence re5uires that the covered institution o tain at the time of account opening all the follo(ing minimum information and confirming these information (ith the valid identification documents stated in J I.&%"*"c" from individual customers and authori=ed signatory8ies of corporate and 7uridical entities9 $" !ameA

$$" !ame' present address' date and place of irth' nature of (ork and source of funds of eneficial o(ner or eneficiary' (henever applica le"

and8or information shall e o tained duly authenticated y the Philippine 2onsulate (here said entities are registered" ' !"06.$.c. 0ali i entification ocuments - 3he follo(ing guidelines govern the acceptance of valid -/ cards for all types of financial transaction y a customer and the authori=ed signatory8ies of a corporate or 7uridical entity' including financial transactions involving 4verseas Bilipino >orkers (4B>s)' in order to promote access of Bilipino to services offered y formal financial institutions' particularly those residing in the remote areas' as (ell as to encourage and facilitate remittances of 4B>s through the anking system9 ($) 2ustomers and the authori=ed signatory8ies of a corporate or 7uridical entity (ho engage in a financial transaction (ith covered institutions for the first time shall e re5uired to present the original and su mit a clear copy of at least one ($) valid photo- earing -/ document issued y an official authority" Bor this purpose' the term official authority shall refer to any of the follo(ing9 a" <overnment of the Repu lic of the PhilippinesA " -ts political su divisions and instrumentalitiesA c" <422sA and d" Private entities or institutions registered (ith or supervised or regulated either y the BSP' S12 or -2"

' !"06.$.b. .ew Corporate an /uri ical Entities - 2overed institutions shall develop a systematic procedure for identifying corporate' partnership and sole proprietorship entities as (ell as the stockholders8partners8o(ners' directors' officers and authori=ed signatory of these entities" -t shall open and maintain accounts only in the true and full name of the entity and shall have primary responsi ility to ensure that the entity has not een' or is not in the process of eing' dissolved' struck-off' (ound-up' terminated' or other(ise placed under receivership or li5uidation" 0nless other(ise stated in these Rules' average due diligence re5uires that the covered institution o tain the follo(ing minimum information and8or documents efore esta lishing usiness relationships9 $" 2ertificates of Registration issued y the /epartment of 3rade and -ndustry for single proprietors' or y the Securities and 16change 2ommission' for corporations and partnerships' and y the BSP' for money chargers8foreign e6change dealers and remittance agentsA *" Articles of -ncorporation or Association and By-La(sA

*" Present addressA @" Principal usiness addressA @" /ate and place of irthA +" !ature of (ork' name of employer or nature of selfemployment8 usinessA :" 2ontact detailsA %" Specimen signatureA ," Source of fundsA ." Permanent addressA #" !ationalityA $&" 3a6 identification num er' Social Security System num er or <overnment Service -nsurance !um er' if anyA and +" Board or Partners? Resolution duly certified y the 2orporate8Partners? Secretary authori=ing the signatory to sign on ehalf of the entityA :" Latest <eneral -nformation Sheet (hich lists the names of directors8trustees8partners' principal stockholders o(ning at least t(enty percent (*&;) of the outstanding capital stock and primary officers such as the President and 3reasurerA %" 2ontact num ers of the entity and authori=ed signatory8iesA ," Source of funds and nature of usinessA ." !ame' present address' date and place of irth' nature of (ork and source of funds of eneficial o(ner or eneficiary' if applica leA and #" Bor entities registered outside the Philippines' similar documents

Galid -ds include the follo(ing9 $" Passport including those issued y foreign governments *" /river?s license @" PR2 -/ +" !B- clearance :" Police clearance %" Postal -/ ," Goter?s -/

." 3a6 -dentification !um er #" Barangay certification $&" <S-S e-2ard $$" SSS card $*" Senior 2iti=en card $@" 4>>A -/ $+" 4B> -/ $:" Seaman?s ook $%" Alien 2ertification of Registration8-mmigrant 2ertificate of Registration $," <overnment office and <422 -/ (e"g"' ABP' D/MB -/s) $." 2ertification from the !2>/P $#" /S>/ certification *&" -BP -/A and *$" 2ompany -/s issued y private entities or institutions registered (ith or supervised or regulated either y the BSP' S12 or -2" (*) Students (ho are eneficiaries of remittances8fund transfers and (ho are not yet of voting age' may e allo(ed to present the original and su mit a clear copy of one ($) valid photo- earing school -/ duly signed y the principal or head of the school" (@) >here the customer or authori=ed signatory is a non-Philippine resident' similar -/s duly issued y the foreign government (here the customer is a resident or a citi=en may e presented" (+) A covered institution shall re5uire their customers or authori=ed signatory to su mit a clear copy of one ($) valid -/ on a one-time asis only at the commencement of usiness relationship" 3hey shall re5uire their clients to su mit an updated photo and other relevant information on the asis of risk and materiality" (:) A covered institution may classify identification documents ased on its relia ility and a ility to validate the information

indicated in the identification document (ith that provided y the customer" (%) >henever it deems necessary' a covered institution may accept other -/s not enumerated a ove provided that it shall not e the sole means of identification" (,) -n case the identification documents mentioned a ove or other identification documents accepta le to the covered institution do not ear any photo of the customer or authori=ed signatory' or the photo earing -/ or a copy thereof does not clearly sho( the face of the customer or authori=ed signatory' a covered institution may utili=e its o(n technology to take the photo of the customer or authori=ed signatory" ' !"06.$.d. Outsourcing of the gathering of minimum information an #or ocuments - 16cept for deposit taking' (hich is an inherent anking function that cannot e outsourced and su 7ect to e6isting rules on outsourcing of specified anking activities' a covered institution may' (ithout prior Monetary Board approval' outsource to a counter-party' (hich may or may not e a covered institution as herein defined' the gathering of the minimum information and8or documents re5uired to e o tained y these Rules provided that the ultimate responsi ility for kno(ing the customer and for keeping the identification documents shall lie (ith the covered institution and compliance (ith the follo(ing conditions9 Bor covered institution counter-party9 $" 3here is a (ritten service level agreement approved y the oard of directors of oth covered institutionsA *" 3he counter-party has a relia le and accepta le customer identification system and training program in placeA and @" -n line (ith re5uirement no" $' all identification information and8or documents shall e turned over (ithin a period not e6ceeding ninety days (#&) calendar days to the covered institution' (hich shall carefully revie( the documents and conduct the necessary risk assessment of the customer" Bor non-covered institution counter-party9 $" All conditions re5uired for covered institution counter-partyA *" 3he covered institution outsourcing the activity shall like(ise ensure that the employees or representatives of the counter-party esta lishing the true and full identity of the customer undergo e5uivalent training program as that of the covered institution?s o(n employees undertaking a similar activity"

@" Annual monitoring and revie( y the covered institution of the performance of the counter-party to assist it in determining (hether or not to continue (ith the arrangement" ' !"06.$.e. $rustee- nominee- agent or interme iary account >here any transaction is conducted y a trustee' nominee' agent or intermediary' either as an individual or through a fiduciary relationship' a corporate vehicle or partnership' on ehalf of a trustor' principal' eneficial o(ner or person on (hose ehalf a transaction is eing conducted' covered institutions shall esta lish and record the true and full identity and e6istence of oth the ($) trustee' nominee' agent or intermediary and the (*) trustor' principal' eneficial o(ner or person on (hose ehalf the transaction is eing conducted" 3he covered institution shall determine the true nature of the parties? capacities and duties y o taining a copy of the (ritten document evidencing their relationship and apply the same standards for assessing the risk profile and determining the standard of due diligence to e applied to oth" -n case it entertains dou ts as to (hether the trustee' nominee' agent' or intermediary is eing used as a dummy in circumvention of e6isting la(s' it shall apply enhanced due diligence in accordance (ith J I.&%"$" " ' !"06.$.e.#. 1here the Customer $ransacts $hrough a $rustee.ominee- *gent or %nterme iary which is a thir party as herein efine 2$hir Party Reliance3 - A covered institution may rely on the customer identification process undertaken y a third party" Bor purposes of this Su section' the )third party) shall refer to a ($) covered institution as herein specifically defined and as generally defined y AMLA' as amended' and its R-RR' or (*) a financial institution operating outside the Philippines that is covered y e5uivalent customer identification re5uirements" A BSP-accredited custodian may like(ise rely in accordance (ith these Rules on the face-to-face contact and gathering of minimum information to esta lish the e6istence and full identity of the customer conducted y the seller or issuer of securities or y the glo al custodian provided the latter has an e5uivalent customer identification re5uirements" ' !"06.$.e.#.a. $hir Party is covere institution specifically efine !y these Rules an as generally efine !y *&'*- as amen e - an its R%RR - A covered institution may rely on the identification process conducted y this third party provided that the covered institution shall o tain from the third party a (ritten s(orn certification containing the follo(ing9 $" 3he 3hird Party has conducted the re5uisite customer identification re5uirements in accordance (ith these Rules and its o(n MLPP including the face-to-face contract re5uirement to

esta lish the e6istence of the ultimate customer and has in its custody all the minimum information and8or documents re5uired to e o tained from the customerA and *" 3he relying covered institution shall have the a ility to o tain identification documents from the 3hird Party upon re5uest (ithout delay" ' !"06.$.e.#.b. $hir Party is a financial institution operating outsi e the Philippines that is other than covere institutions referre to in 4 5678)9)e)1)a) !ut con ucts !usiness operations an activities similar to them - All the contents re5uired in the s(orn certification mentioned in J I.&%"*"e"$"a" shall apply (ith the additional re5uirement that the la(s of the country (here the third party is operating has e5ual or more stringent customer identification process re5uirement and that it has not een cited in violation thereof" -t shall' in addition to performing normal due diligence measures' do the follo(ing9 (a) <ather sufficient information a out the third party and the group to (hich it elongs to understand fully the nature of its usiness and to determine from pu licly availa le information the reputation of the institution and the 5uality of supervision' including (hether it has een su 7ect to money laundering or terrorist financing investigation or regulatory actionA ( ) /ocument the respective responsi ilities of each institutionA and (c) 4 tain approval from senior management at inception of relationship efore relying on the third party" ' !"06.$.). Private !anking# 1ealth management operations 3hese services' (hich y their nature involve high measure of client confidentiality' are more open to the elements of reputational risk especially if the customer identification process is not diligently follo(ed" 2overed institutions therefore shall endeavor to esta lish and record the true and full identity of these customers and esta lish a policy on (hat standard of due diligence (ill apply to them" 3hey shall also re5uire approval y a senior officer other than the private anking8(ealth management8 similar activity relationship officer or the like for acceptance of customers of private anking' (ealth management and similar activities" ' !"06.$.g. Politically Expose Person - A covered institution shall endeavor to esta lish and record the true and full identity of P1Ps as (ell as their immediate family mem ers and the entities related to them and esta lish a policy on (hat standard of due diligence (ill apply to them taking into consideration their position and the risks attendant thereto"

' !"06.$.*. Correspon ent !anking - Because of the risk associated (ith dealing (ith correspondent accounts (here it may unkno(ingly facilitate the transmission' or holding and management of proceeds of unla(ful activities or funds intended to finance terrorist activities' covered institutions shall adopt policies and procedures for correspondent anking activities and designate an officer responsi le in ensuring compliance (ith these policies and procedures" A covered institution may rely on the customer identification process undertaken y the respondent ank" -n such case' it shall apply the rules on 3hird Party reliance under J I.&%"*"e"$"' treating the respondent ank as the 3hird Party as defined therein" -n addition' the correspondent ank shall9 (a) <ather sufficient information a out the respondent institution to understand fully the nature of the respondent?s usiness and to determine from pu licly availa le information the reputation of the institution and the 5uality of supervision' including (hether it has een su 7ect to money laundering or terrorist financing investigation or regulatory action" ( ) Assess the respondent institution?s anti-money laundering and terrorist financing controls" (c) 4 tain approval from senior management efore esta lishing correspondent relationships" (d) /ocument the respective responsi ilities of each institution" (e) >ith respect to )paya le-through accounts)' e satisfied that the respondent ank has verified the identity of' and performed ongoing due diligence on' the customers having direct access accounts of the correspondent and that it is a le to provide relevant customer identification data upon re5uest y the correspondent ank" 2orrespondent anking customers presenting greater risk' including shell companies' shall e su 7ect to enhanced due diligence" ' !"06.$.i. "un #1ire transfer - Because of the risk associated (ith dealing (ith fund8(ire transfers' (here a covered institution may unkno(ingly transmit proceeds of unla(ful activities or funds intended to finance terrorist activities' it shall esta lish policies and procedures designed to prevent it from eing utili=ed for that purpose (hich shall include' ut not limited to' the follo(ing9 (a) 3he eneficiary institution shall not accept instructions to payout fund transfers to non-customer eneficiary' unless it has conducted the necessary customer due diligence to esta lish the true and full identity and e6istence of said eneficiary" Should the

originator and eneficiary e the same person' the eneficiary institution may rely on the customer due diligence conducted y the originating institution provided the rules on 3hird Party reliance under J I.&%"*"e"$" are met' treating the originating institution as 3hird Party as therein definedA ( ) 3he originating institution shall not accept instructions to fund8(ire transfer from a non-customer originator' unless it has conducted the necessary customer due diligence to esta lish the true and full identity and e6istence of said originatorA (c) -n cross order transfers' if the originator is a high risk customer as herein descri ed' the eneficiary institution shall conduct enhanced due diligence on the eneficiary and the originator" >here additional information cannot e o tained' or any information or document provided is false or falsified' or result of the validation process is unsatisfactory' the eneficiary institution shall refuse to effect the fund8(ire transfer or the pay-out of funds (ithout pre7udice to the reporting of a suspicious transaction to the AML2 (hen circumstances (arrantA (d) >henever possi le' manually initiated fund transfer (M-B3) instructions should not e the primary delivery method" 1very effort shall e made to provide client (ith an electronic anking solution" Do(ever' (here M-B3 is utili=ed' the e6isting rules on validation procedures as prescri ed y 2ircular !o" +@% dated $. Eune *&&+ shall applyA (e) 2ross order and domestic fund8(ire transfers and related message amounting to P:&' &&& or more or its e5uivalent shall include accurate and meaningful originator information" 3he follo(ing are the originator information that shall remain (ith the transfer or related message through the payment chain9 $" !ame of the originatorA *" Address or in its a sence the national identity num er or date and place of irth of the originatorA and @" Account num er of the originator or in its a sence' a uni5ue reference num er must e included" (f) Should any (ire transfer amounting to P:&' &&& or more or its e5uivalent e unaccompanied y the re5uired originator information' the eneficiary institution shall e6ert all efforts to esta lish the true and full identity and e6istence of the originator y re5uiring additional information from the originating institution or intermediary institution" -t shall like(ise apply enhanced due diligence to esta lish the true and full identity and e6istence of the eneficiary" >here additional information cannot e o tained' or

any information or document provided is false or falsified' or result of the validation process is unsatisfactory' the eneficiary institution shall refuse to effect the fund8(ire transfer or the pay-out of funds (ithout pre7udice to the reporting of a suspicious transaction to the AML2 (hen circumstances (arrant" ' !"06.$.j. Buyers of cashier:s- manager:s or certifie Checks - A covered institution may sell 2ashier?s' Manager?s or 2ertified 2hecks only to its e6isting customers and shall maintain a register of said checks indicating the follo(ing information9 $" 3rue and full name of the uyer or the applicant if uying on ehalf of an entityA *" Account num erA @" /ate of issuance and the num er of the checkA +" !ame of the payeeA :" AmountA and %" Purpose of such transaction"

@" A register of said checks indicating all the information re5uired under J I.&%"*"7" +" A covered institution (hich issues as (ell as those (hich accepts as deposits' said cashier?s' manager?s or certified checks or other similar instruments issued in lank or paya le to cash' earer or num ered account shall take such measure(s) as may e necessary to ensure that said instruments are not eing used8resorted to y the uyer or depositor in furtherance of a money laundering activityA :" 3he deposit of said instruments shall e su 7ect to the same re5uirements of scrutiny applica le to cash depositsA and %" 3ransactions involving said instruments should e accordingly reported to the AML2 if there is reasona le ground to suspect that said transactions are eing used to launder funds of illegitimate origin" ' !"06. $.+. Secon ,en orse Checks - A covered institution shall enforce stricter guidelines in the acceptance of second-endorsed checks including the application of enhanced due diligence to ensure that they are not eing used as instruments for money laundering or other illegal activities" Bor this purpose' a covered institution shall limit the acceptance of second-endorsed checks from properly identified customers and only after esta lishing that the nature of the usiness of said customer 7ustifies' or at least makes practical' the deposit of second-endorsed check" -n case of isolated transactions involving deposits of second-endorsed checks y customer (ho are not engaged in trade or usiness' the true and full identity of the first endorser shall e esta lished and the record of the identification shall also e kept for five (:) years" ' !"06.$.l. "oreign exchange ealers# &oney changers# Remittance agents - A covered institution shall re5uire their customers (ho are foreign e6change dealers' money changers and remittance agents to su mit a copy of the certificate of registration issued to them y the BSP as part of their customer identification document" 3he certificate of registration shall e for each head office' ranch' agent' su -agent' e6tension office or usiness outlet of foreign e6change dealers' money changers and remittance agents" Boreign e6change dealers' money changers and remittance agents customers presenting greater risk' such as shell companies shall e su 7ect to enhanced due diligence" ' !"06.$.,. +igh risk customer - A customer from a country that is

recogni=ed as having inade5uate internationally accepted antimoney laundering standards' or does not sufficiently apply regulatory supervision or the Binancial Action 3ask Borce (BA3B) recommendations' or presents greater risk for crime' corruption or terrorist financing is considered a high risk customer" -nformation relative to these are availa le from pu licly availa le information such as the (e sites of BA3B' BA3B Style Regional Bodies (BSRB) like the Asia Pacific <roup on Money Laundering and the 1gmont <roup' national authorities like the 4BA2 of the 0"S" /epartment of the 3reasury' or other relia le third parties such as regulators or e6changes' (hich shall e a component of a covered institution?s customer identification process" >hen dealing (ith high risk customers' a covered institution should take e6treme caution and vigilance" -n no case shall reduced diligence e applied to high risk customers" 4n the other hand' in case the covered institution determines' ased on its standards' that dealing (ith the high risk customer calls for' or these rules re5uire' the application of enhanced due diligence' it shall apply the minimum re5uirements for enhanced due diligence in accordance (ith J I.&%"$" " -n all instances of acceptance of a high risk customer' approval of the covered institution?s senior officer shall e necessary" ' !"06.$.n. Shell company# Shell !ank - A covered institution shall undertake anking relationship (ith a shell company (ith e6treme caution and al(ays apply enhanced due diligence on oth the entity and its eneficial o(ner8s" Because of the du ious nature of shell anks' no shell ank shall e allo(ed to operate or e esta lished in the Philippines" A covered institution shall refuse to enter into' or continue' correspondent anking relationship (ith them" -t shall like(ise guard against esta lishing relations (ith foreign financial institutions that permit their accounts to e used y shell anks" ' !"06.$.o. .um!ere accounts - !o peso and foreign currency non-checking num ered accounts shall e allo(ed (ithout esta lishing the true and full identity and e6istence of customers and applying enhanced due diligence in accordance (ith J I.&%"$" " Peso and foreign currency non-checking num ered accounts e6isting prior to $, 4cto er *&&$ shall continue to e6ist ut the covered institution shall esta lish the true and full identity and e6istence of the eneficial o(ners of such accounts and applying enhanced due diligence in accordance (ith J I.&%"$" " ' !"06.$.p. Prohi!ite accounts - A covered institution shall maintain accounts only in the true and full name of the account o(ner" 3he provisions of e6isting la( to the contrary

' !"06.$.j.#. Buyers of cashier:s- manager:s or certifie checks other than its existing Customer - >here an individual or any entity other than an e6isting customer applies for the issuance of 2ashier?s' Manager?s or 2ertified 2hecks' the covered institution shall' in addition to the information re5uired in J I.&%"*"7"' o tain all the identification documents and minimum information re5uired y these rules to esta lish the true and full identity and e6istence of the applicant" -n no case shall reduced due diligence e applied to the applicant and' (here circumstances (arrant' enhanced due diligence should e applied" ' !"06.$.j.$. Buyers of cashier:s- manager:s or certifie checks in !lank or paya!le to cash- !earer or num!ere account - A covered institution may issue cashier?s' manager?s or certified checks or other similar instruments in lank or paya le to cash' earer or num ered account su 7ect to the follo(ing conditions9 $" 3he amount of each check shall not e6ceed P$&' &&&A *" 3he uyer of the check is properly identified in accordance (ith its customer acceptance and identification policies and as re5uired under J I.&%"*"7" and J I.&%"*"7"$" of these RulesA

not(ithstanding' anonymous accounts' accounts under fictitious names' num ered checking accounts and all other similar accounts shall e a solutely prohi ited" ' !"06.%. On,going monitoring of customers- accounts an transactions - 2overed institutions shall ensure that they have esta lished the true and full identity of their customers and shall update all identification information and documents re5uired to e o tained y the AMLA' as amended' its R-RR and these Rules of e6isting customers on the asis of materiality and risk" >ith a respect to monitoring of transactions' in order that a covered institution may e a le to control and reduce risk associated (ith money laundering and terrorist financing' it is necessary that it has a system that it (ill ena le it to understand the normal and reasona le account activity of customers and detect unusual or suspicious patterns of account activity" 3hus' a risk-and-materialityased on-going monitoring of customer?s accounts and transactions should e part of a covered institution?s customer due diligence" ' !"06.%.a. Enhance ue iligence - 2overed institutions shall apply enhanced due diligence on its customer in accordance (ith J I.&%"$" " if it ac5uires information in the course of its customer account or transaction monitoring that9 $" Raises dou t as to the accuracy of any information or document provided or the o(nership of the entityA *" Eustifies re-classification of the customer from lo( or normal risk to high-risk pursuant to these Rules or y its o(n criteriaA or @" Any of the circumstance for the filing of a suspicious transaction e6ists such as ut not limited to the follo(ing9 a" 3ransacting (ithout any underlying legal or trade o ligation' purpose or economic 7ustificationA " 3ransacting an amount that is not commensurate (ith the usiness or financial capacity of the customer or deviates from his profileA c" Structuring of transactions in order to avoid eing the su 7ect of covered transaction reportingA or d" Cno(ing that a customer (as or is engaged or engaging in any unla(ful activity as herein defined" >here additional information cannot e o tained' or nay information or document provided is false or falsified' or result of

the institution shall immediately close the account and refrain from further conducting usiness relationship (ith the customer (ithout pre7udice to the reporting of a suspicious transaction to the AML2 (hen circumstances (arrant" 2" 24G1R1/ A!/ S0SP-2-40S 3RA!SA23-4! R1P4R3-!< Section !"07. Covere an Suspicious $ransaction Reporting 2overed institutions shall report to the AML2 all covered and suspicious transactions (ithin ten ($&) (orking days from occurrence thereof" Should a transaction e determined to e oth a covered and suspicious transaction' the covered institution shall e re5uired to report the same as a suspicious transaction" ' !"07.# Deferre reporting of certain covere transactions Pursuant to AML2 resolution !o" :. dated *: Eune *&&: as amended y AML2 Resolution !o" *+ dated $. March *&&#' the follo(ing are considered as )non-cash' no8lo( risk covered transactions) the reporting of (hich to the AML2 are deferred9 $" 3ransactions et(een anks and the BSPA *" 3ransactions et(een anks operating in the PhilippinesA @" -nternal operating e6penses of anksA +" 3ransactions involving transfer of funds from one deposit account to another deposit account of the same person (ithin the same ankA :" Roll-overs of placement of time depositA and %" Loan8-nterest principal payment de ited against deposit account maintained (ith the lending ank" orro(er?s

(hen the transaction that pass through them are deemed suspicious" 3he BSP may consider other transactions as )no8lo( risk covered transactions) and propose to the AML2 that they e like(ise su 7ect to deferred reporting y covered institutions" ' !"07.$. Electronic &onitoring Systems for &oney 'aun ering 0Bs and CBs are re5uired to adopt an electronic money laundering transaction monitoring system (hich at the minimum shall detect and raise to the ank?s attention' transactions and 8 or accounts that 5ualify either as 23s or Sts as herein defined" 3he system must have at least the follo(ing automated functionalities9 $" 2overed and suspicious transaction monitoring - performs statistical analysis' profiling and a le to detect unusual patterns of account activityA *" >atch list monitoring - checks transfer parties (originator' eneficiary' and narrative fields) and the e6isting customer data ase for any listed undesira le individual or corporationA @" -nvestigation - checks for given names throughout the history of payment stored in the systemA +" 2an generate all the 23Rs of the covered institutions accurately and completely (ith all the mandatory field properly filled upA :" Must provide a complete audit trailA %" 2apa le of aggregating activities of a customer (ith multiple accounts on a consolidated asis for monitoring and reporting purposesA and ," Das the capa ility to record all S3s and support the investigation of alerts generated y the system and rought to the attention of Senior Management (hether or not a report (as filed (ith the AML2" 0Bs and CBs (ith e6isting electronic system of flagging and monitoring transactions already in place shall ensure that their e6isting system is updated to e fully compliant (ith functionalities as those re5uired herein" Bor this purpose' they shall e given ninety (#&) days from effectivity of this 2ircular (ithin (hich to make their system fully operational and automated (ith all the functionalities stated a ove"

-n addition' pursuant to AML2 Resolution !o" *#* dated *+ 4cto er *&&@' covered institutions' other than anks' shall file covered transaction reports (23Rs) on transactions in cash or foreign currency or other monetary instruments (other than checks) or properties" /ue to the nature of the transactions in the stock e6change' only the rokers-dealers shall e re5uired to file 23Rs and Suspicious 3ransaction Reports (S3Rs)" 3he Philippine Stock 16change' Philippine 2entral /epository (P2/)' Securities 2learing 2orporation of the Philippines (S22P) and transfer agents are e6empt from filing 23Rs" 3hey are ho(ever re5uired to file S3Rs

' !"07.%. &anual monitoring - Bor covered institutions other than 0Bs and CBs" -t need not have an electronic system of flagging and monitoring transactions ut shall ensure that it has the means of flagging and monitoring the transactions mentioned in J I.&,"*" -t shall maintain a register of all Sts that have een rought to the attention of Senior Management (hether or not the same (as reported to the AML2" ' !"07.&. Electronic Su!mission of reports - 3he 23R and S3R shall e su mitted to the AML2 in a secured manner' in electronic form and in accordance (ith the reporting procedures prescri ed y the AML2" 3he covered institutions shall provide complete and accurate information of all the mandatory fields re5uired in the report" -n order to provide accurate information' the covered institution shall regularly update customer identification information at least once every three (@) years" Bor the purpose or reporting in a secured manner' all covered institutions shall register (ith the AML2 (ithin ninety (#&) days from effectivity of this 2ircular y directly coordinating (ith that office for the proper assignment of their institution code and facilitation of the reporting process" All covered institutions that have previously registered need not re-register" ' !"07.(. Exemption from Bank Secrecy 'aws - >hen reporting covered or suspicious transactions to the AML2' covered institutions and their officers and employees shall not e deemed to have violated Repu lic Act !o" .,#$ and other similar la(s' ut are prohi ited from communicating' directly or indirectly' in any manner or y any means to any person' the fact that a covered or suspicious transactions report (as made' the contents thereof' or any other information in relation thereto" -n case of violation thereof' the concerned officer and employee of the covered institution shall e criminally lia le in accordance (ith the provisions of the AMLA' as amended" ' !"07.6. Confi entiality Provision - >hen reporting 23s and Sts to the AML2' covered institutions' their directors' officers and employees are prohi ited from communicating directly or indirectly' in any manner or y any means' to any person or entity' the media' the fact that a covered or suspicious transaction report (as made' the contents thereof' or any other information in relation thereto" !either may such reporting e pu lished or aired in any manner or form y the mass media' electronic mail' or other similar devices" -n case of violation thereof' the concerned officer and employee of the covered institution and media shall e held criminally lia le" ' !"07.7. Safe +ar!or Provision - !o administrative' criminal or civil proceedings' shall lie against any person for having made a 23R or an S3R in the regular performance of his duties in good faith' (hether or not such reporting results in any criminal

prosecution under the AMLA' as amended' its R-RR or any other la(" /" R124R/ C11P-!< A!/ R131!3-4! Section !"0". Recor ;eeping - All customer identification records of covered institutions shall e maintained and safely stored as long as the account e6ists" All transaction records' including all unusual or suspicious patterns of account activity (hether or not an S3R (as filed (ith the AML2' of covered institutions shall e maintained and safely stored for five (:) years from the date of transaction" Said records and files shall contain the full and true identity of the o(ners or holders of the accounts involved in the transactions such as the -/ card and photo of individual customers and the documents mentioned in Section I.&%"*" " for entities' customer information file' signature card of authori=ed signatory8ies' and all other pertinent customer identification documents as (ell as all factual circumstances and records involved in the transaction" 2overed institutions shall undertake the necessary ade5uate security measures to ensure the confidentiality of such file" 2overed institutions shall prepare and maintain documentation' in accordance (ith the aforementioned client identification re5uirements' on their customer accounts' relationships and transactions such that any account' relationship or transaction can e reconstructed as to ena le the AML2' and 8 or the courts to esta lish an audit trail for money laundering" >henever a ank engaged in micro-finance operations has tagged a micro-finance client' as defined under BSP regulations' as lo( risk in accordance (ith J I.&%"$"a" the customer?s identification and transaction records shall e retained for five (:) years e6cept that said retention period may e reduced to three years provided that sufficient documents duly support the lo( risk profile of said customer and the covered institutions keep a record of the names of these lo( risk customers after the lapse of three (@) years" 3his Provision is su 7ect to J I.&."*" (hen a money laundering case is filed in court" ' !"0".#. Close *ccounts - >ith respect to closed accounts' the records on customer identification' account files and usiness correspondences' shall e preserved and safely stored for at least five (:) years from the date of closure" ' !"07.$. Retention of Recor s in Case a &oney 'aun ering Case has !een file in Court - -f a money laundering case ased on any report kept y the covered institution concerned has een filed in court' said file must e retained eyond the five (:) year retention period and until it is confirmed that the case has een finally resolved or terminated y the court"

' !"0".%. Safekeeping of recor s an ocuments - 3he covered institution shall designate at least t(o (*) officers (ho (ill e 7ointly responsi le and accounta le in the safekeeping of all records and documents re5uired to e retained y the AMLA' as amended' its R-RR and these Rules" 3hey shall have the o ligation to make these documents and records readily availa le (ithout delay during BSP regular or special e6aminations" ' !"0".&. "orm of Recor s - Records shall e retained as originals or copies in such forms as are admissi le in court pursuant to e6isting la(s' such as the e-commerce act and its implementing rules and regulations' and the applica le rules promulgated y the Supreme 2ourt"