ATTACH PRIMER:

1. What is anti-money laundering?

What are the elements here?
a. Previous illegal activity which is no longer the concern
b. The illegal activity has proceeds. Its not like murder. You cannot make money out of a dead
body unless you give to a medical school. Here, there are proceeds to the crime
c. The interest in ML begins when there are proceeds because to make the proceeds appear to
have originated from legitimate sources is the crime of money laundering. When you transform
proceeds of a crime an dmake it appear as coming from legitimate sources, that is money
laundering.

There are 3 stages of ML. these 3 stages answer the question as to how ML is carried out.
1. Placementthe money launderer places the proceeds from illegal activity into financial
institutions like banks through deposits, money orders or wire transfers or other means. the
Money may be mixed with legitimate deposits or large amounts are broken up into smaller
sums which are either depositedin various bank accounts or used ot buy monetary
instruments. These are then collected and depsited to another valuation.

Clear picture is like this. Drop money in Chicago. Its collected by the mafia. They are in
wheels. They are counted and accounted fro by the different mafia Trapos. They are cashed.
They unbundle that. you think about money coming from cockpit or money from bankerohan.
Thats like the same money the money launderer collects. They are street monies. Itipon na
nimu. When you have as much cash as can fill the baggage compartment of a car, thats when
1
st
step of ML occurs. You have 3 people. You buy a 2
nd
hand car. You put all the money at the
bank. These people stop driving the car from Chicago down south all the way to mexico. As
they drive, they stop by post offices along the way. If theres a town, and theres a post office.
They stop. If there are 3 post offices, they spread. The other guys go there. They get money
from the luggage and they buy money orders in various sums. 1K dollar, 500 dollars and they
send them into 1 address in Mexico. Buhaton na nimu magsunod2x ka, huna2x lang. paingon
ka sa laoag, gikan diri magkotse ka..kada lungsod and kada agi nimu sa post office,
magpadala ka sa padulong sa address in manila. By the time you hit the borders of mexico,
nahurot na dapat ang katong money nimu sa luggage compartment. Empty na dapat. Nahurot
na ug palit ug money order. That is what is called PLACEMENT. Tigumon nimu aron maabot
didto sa account sa mexico.
2. LAYERINGthe stage involves FURTHER DISTANCING THE PROCEEDS OF CRIMINAL
ACTIVITY from their origin through complex and multiple financial transactions. These may be
done through purchase and sale of investment securities, wiring of funds though number of
acoutns worldwide or the disguise transfer of payments on non existent goods and services.

The source of htemoney is drug money from the __ of Chicago. Yo have distanced the
money from Chicago. Ni abot ug post office, then you have distanced further. Niabot ug
mexico. Theres already a layering. You have layere dint in the process. Niadto pa sila
ug lahi na medium, gi agi pa gyud ug post office.
3. Integrationthe ML re enters the funds to legitimate circulation by investing it for example, real
estate or other business ventures. The money by then would appear to be entirely clean,
hence, money laundering is consummated.

What do they do with money in mexico after all the money orders are received? They wire the
money back to first bank of Chicago to the account of let us say, a mutual fund. So it buys
units in a mutual fund. This fund invests in securities, bonds. So now the money is integrated
and it is now made clean. It would seen that its back to its origin but no more, its very far from
it. You cannot bring the money back to the streets. By the time it reaches Chicago, coz it has
been wired, the money laundering cycle has been completed and the crime is now
consummated.

Why is ML a problem?
- It allows criminals to preserve and enjoy the rpocees of th crime thus providing them with the incentives and
means to continue their illegal activities. At the same time, it provides them the opportunity to appear in
public like legitimate entrepreneurs. Organized crime, through money laundering is known to have the
capacity to destabilize governments and undermine their financial system. It is thus a threat to national
security.
- In response to this, Philippines just like many countries passed the AMLA of 2001, RA 9160 which took
effect October 17, 2001 to enable the country to participate in the global campaign to fight against Money
laundering because the Philippines response to the desire of the Paris based financial action task force and
implement anti money laundering measures.

But it was just 1 year and they had to amend it because RA 9160 was inadequate. So they had to pass in 2005. It
tookthem a long time an amendmentRA 9194. Just yesterday, theres another amendment.

Lets take a look at the original AMLA law. RA 9160 salietn features:

1. It criminalizes money laundering, meaning it makes ML a crime and provides penalties for its commission
including fines and imprisonment.
2. It states clearly the determination of the government to prevent but you know, even after this law was
passed, we were still in the blacklist. Why did we remain in the blacklist? One of the problems was--what
was considered as transactions that should be reported to the AMLA as a possible AMLA transaction had a
very high threshold. P4million. The international standard was P500, 000 equivalent or $10,000. The
problem was that congress did not want to do that coz many congressmen would still travel around brining
more than $3,000. You remember that time when this group of police was deported in Russia brining more
than $10,000. Lahi sa Pilipinas because you could still travel and trasact and it would not be reported to
AMLA. But that was a problem. Senators and congressmen briniging more than $10,000! Thats why they
did not want to bring it down to $10,000.
3. It creates an Anti0money laundering council that is tasked to oversee the implementation of the law and to
act as a financial intelligence t---the ex officio chairperson of the AMLC is the BSP Governor. Of course,
secretary of finance is part of that, sEC. of justice, etc. you can see there more positions in ra 9194. There is
a body that looks into the implementation of the anti money laundering legislation
4. It establishes the rules--
5. Relaxes the bank desposti secrecy law---we will see that now. Even though there is this secrecy of bank
deposits that bank cannot reaveal the depsits of a person who has a bank deposit. Now, the AMLA can
allow the audit of the bank account in very chosen instances. This is an exception to the secrecy of bank
deposits.
6. It rquires covered institutions--I am told, I have nto seen it that the senate bill enlarges the list of tehse
institutions that are supposed to submit to AMLC the report o covered and suspicious transactions. Right
now, it is just financial institutions basically. Banks, quasi banks, pawnshops..but I think that the new senate
law has expanded it. For instance, they are now covering institutions that extend credit. So if you are like
EMCOR and you are selling aircon, appliances. You are covered and you must report to BSP, the secretary
of AMLC covered and suspicious transactions. But what triggered it? Because this old practice of cleaning
up the back of the car with cash, going down to Chicago and buy money orders has been exposed as one of
the modus operandi of ML. so that has been discontinued. But what is being done now? They get people to
buy appliances, refrigerators, aircon units. They load it up in bonds, bring it down to mexico and they the
drag money there..they will pay for these applaicnes that are sold at very generous discounts. This is
aggregated again and money is sent back to Chicago. So instead of buying money orders, it is appliances
and the dealer of appliances is the one who will remit it back to the head office as if ti were a clean business
of disposing of these appliances.
7. It carries provisions to protect innocent parties by providing..you will keep hearing this, CVOERED AND
SUSPICIOUS TRANSACTIONS. COVERED is any transaction P500,00 or above. The moment the bank
has that transaction, it puts it down in its AMLA list and then its supplied to AMLC and they have a list of it
and they monitor it. How can they monitor? I do not know. There are so many bank branches in the
Philippines. I am sure transactions of P500, 000 are above is quite a lot! It is not sucha big, big amount. You
must have a long list! But how do you monitor? But they have a form of that. thats COVERED
TRANSACTIONS.

SUSPICOUS transactions can be tansactions even LESS than P500,000 if they are suspicious. Example:
here is this fellow who every day visits the branch and he is wearing the universal gentlemans wear in the
Philippines known as basketball shorts and he is with a sando and tehn he has this pouch or waist bag. In
this bag of his, he carries with him always cash in various denominations which he deposits. He is never
without a small notebook and a ball pen. He is always seen checking this. The following day he comes with
it in deposits again bringing P40,000, P50,000..but he has no visible means off income! He sells fish? No
visible means of income! He is always depositing! He does nto fail everyday. That is a suspicious trnasction.
The suspicion is that the guy is an usher..sa Last 2! Which is an illegal conduit. He deposits it to the bank to
launder it. Thats a suspicious transaction.
The trigger for the suspicious trans is normally the depositor is not identified or if he is identified, he has no visible
means of justifying his deposits. Wa xay negosyo! But ngano naa man xay kwarta. That is suspicious. If it is also not
determined as to the amount, you also report that to the AMLC.

8. It establishes PROCEdures for international.---


MARCH 23, 2004RA 9194 was passed to amend the original 9160. The amendments are as follows:

a. lowers the threshold amount for single covered transactions (cash or other equivalent monetary instrument)
from P4M to P500,000.00 within one (1) banking day.any financial transaction beyond this amount within 1
banking day must be reported to the AMLA.

IF YOU are coming from abroad and you are taking the plane. Your arrival form always aks you, are you
coming more than $10,000 Or equivalent rate of P500,000. IF YOU say yes, then that is reported as part of
covered accounts. In the US also, it is also asked. Thats also a protocol. Do you have with you more than
$10,000. You must answer that. you cannot answer that coz it is just managers check. That is counted! Whether
in managers check or in cash, that is covered amounts because the original law establishes that.

b. Expands the reporting requirements to include the reporting of suspicious transactions regardless of the amount
involvedthat is an addition to the covered transactions.
c. Authorizes AMLC to inquire into or examine any particular deposit or investment, with any banking institution or
non-bank financial institution and their subsidiaries and affiliates upon order of any competent court in cases of
violation of this Act, when it has been established that there is probable cause that the deposits or investments
are related to an unlawful activity..--- no problem about that because there is a competent court. In other words,
there is a hearing. Even if hearing is Ex parte, theres a 3
rd
party who determines that there is a probable cause.
So the AMLA must prove that there is probable cause. However, amendment says that-- However, no court
order is required in cases involving unlawful activities of kidnapping for ransom, narcotics offenses and
hijacking, destructive arson and murder, including those perpetrated by terrorists killing of armed or non-
combatants against non-combatant persons and similar targetsif there are tehse instances, AMLC can
examine accounts even WITHOUT COURT ORDER.
d. Authorizes the Bangko Sentral ng Pilipinas to inquire into or examine any deposit or investment with any
banking institution or non-bank financial institution and their subsidiaries and affiliates when the examination is
made in the course of a periodic or special examination, in accordance with the rules of examination of the BSP
to ensure compliance with R.A. No. 9160, as amended.that is the form of amendments that were introduced
in 2003.
e. Transfers the authority to freeze any money/property from the AMLC to the Court of Appeals.


Who are the members of the AMLC? SEE PRIMER

See qualifications of the SECRETARIAT.

What are the covered institutions?

(a) "Covered Institution" refers to:
(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries
and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);
(2) Insurance companies and all other institutions supervised or regulated by the Insurance
Commission; and
(3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing
securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close
and investment companies, common trust funds, pre-need companies and other similar entities, (iii)
foreign exchange corporations, money changers, money payment, remittance, and transfer
companies and other similar entities, and (iv) other entities administering or otherwise dealing in
currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes
and other similar monetary instruments or property supervised or regulated by Securities and
Exchange Commission.

What are covered transactions?
- "(b) 'Covered transaction' is a transaction in cash or other equivalent monetary instrument involving a total
amount in excess of Five hundred thousand pesos (PhP 500,000.00) within one (1) banking day.
- If you deposit P300, 000 when the bank opens in 10AM and at 1PM, you deposit another 300,000. Those 2
are covered transactions when put together, same account, it is in excess of P500, 000. It is also the same
when you deposit 501,000 right away. I would have to believe that they have a computerized program here.
How do you keep track of all these kung kinsa ni tanan tawhana? Mubagting na dapat dayon na kung naay
P500k and above na transaction.
- Story on the recent Malaysian scam involving Amanah,etc.the banks were not just used to launder
themoney but were used to perpetuate the fraud. There are a lot of banks who were indicted by AMLC. Even
officers invested their money also.

What are suspicious transactions?
- (b-1) 'Suspicious transaction' are transactions with covered institutions, regardless of the amounts involved, where
any of the following circumstances exist:
1. there is no underlying legal or trade obligation, purpose or economic justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or financial capacity of the client;
4. taking into account all known circumstances, it may be perceived that the client's transaction is structured in
order to avoid being the subject of reporting requirements under the Act; 300,000 na deposit karon, pagka
ugma, another 300k napud. That is engineered to avoid the reporting transactions.
5. any circumstances relating to the transaction which is observed to deviate from the profile of the client
and/or the client's past transactions with the covered institution; gi withdraw na tanan payroll, then gibutang
didto sa amanah. Unsa ba.
6. the transactions is in a way related to an unlawful activity or offense under this Act that is about to be, is
being or has been committed; or
7. any transactions that is similar or analogous to any of the foregoing.


FEBRUARY 13, 2013

Fr. Gives copy on secrecy of bank deposits. Legal primer.

With recent events putting in issue the confidentiality of bank deposits and the identification process by
the banks for their depositors, the Bangko Sentral ng Pilipinas, in coordination with the Bankers
Association of the Philippines, deemed it advisable to come out with the following primer on frequently
asked questions.


This primer seeks to clarify any misunderstanding or misapprehension that may have arisen on the
subject and, more importantly, emphasizes that the secrecy of bank deposits remains sacrosanct and that
their disclosure remains subject to strict safeguards and compliance with legal requirements. Trust
accounts and other investments are partly included in the discussion.


A. Secrecy of bank deposits


Q. What guarantees on confidentiality do depositors enjoy under the law?


A. For peso deposits, Republic Act No. 1405 (Bank Deposits Secrecy Law) declares all deposits
of whatever nature with banks in the Philippines, including investments in government bonds, as of an
absolutely confidential nature and prohibits the examination or inquiry into such deposits or investments
by any person, government official, bureau or office, as well as the disclosure by any official or employee
of a bank of any information concerning said deposits.


There are only four (4) instances under the law where bank deposits or investment in government bonds
may be disclosed or looked into, namely: (1) upon written permission of the depositor; or (2) in cases of
impeachment; or (3) upon order of a competent court in cases of bribery or dereliction of duty; or (4) in
cases where the money deposited or invested is the subject matter of the litigation.


It may be noted that RA 1405 covers not only bank deposits but also investments in government bonds.


For foreign currency deposits, Republic Act No. 6426 (The Foreign Currency Deposit Act) similarly
declares that these deposits are of an absolutely confidential nature and cannot be examined, inquired or
looked into by any person, government official, bureau or office whether judicial or administrative or
legislative or any other entity whether public or private. There is only one instance for disclosure under
said law and, that is, upon the written permission of the depositor. RA 6426 also exempts foreign
currency deposits from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever.


For investments in trust accounts or in deposit substitutes, if these are in the form of investments in
government bonds or deposits, the protection under RA 1405 and RA 6426 extends thereto accordingly.
If these are in other forms of investments, the disclosure of information related thereto is covered by
Section 55 of the General Banking Law of 2000 (Republic Act No. 8791) which prohibits, unless there is
an order of a court of competent jurisdiction, the disclosure by any director, official, employee or agent of
any bank any information relative to the funds or properties in the custody of the bank belonging to private
individuals, corporations or any other entity.


Q. How do banks respond to an order of a competent court?


A. For peso deposits, banks comply with orders for disclosure in court cases subject to these
requirements: (a) there must be a court order; (b) the order must be issued by a competent court
specifically directing the bank concerned to disclose the required information; and (c) the bank should
check and satisfy itself that the deposits or investment in government bonds being inquired into are either
the subject of a case of bribery or dereliction of duty of public officials, or of a case where the deposit or
investment itself is the subject matter of the litigation. If these requirements are not met, there would be
basis for the bank to request the court to excuse compliance with the court order.


In impeachment cases, it is necessary that there be an order issued by the impeachment court or by its
authorized officer. For foreign currency deposits, the law does not provide an instance for disclosure upon
a court order. As mentioned above, there is only a single instance for disclosure under RA 6426 and, that
is, upon written permission of the depositor. Thus, for foreign currency deposit accounts subject of a court
order, the bank can invoke RA 6426 to excuse compliance.


Q. What is the liability of the banks and/or its officers and employees for violating the laws against
disclosure?


A. Violations of the prohibitions against disclosures under RA 1405, RA 6426 and under the General
Banking Law of 2000 are subject to stiff criminal penalties.


Under RA 1405, the offender is subject to imprisonment of not more than five years or a fine of not more
than P20,000, or both, in the discretion of the court. Under RA 6426, the penalty is imprisonment of not
less than one year not more than five years or a fine of not less than P5,000 nor more than P25,000, or
both, in the discretion of the court. The violation of Sec. 55 of the General Banking Law of 2000, the
penalty is imprisonment of not less than two years nor more than 10 years or a fine of not less than
P50,000 nor more than P200,000, or both, in the discretion of the court; and in addition, if the offender is
a director or officer of a bank, he is subject to suspension or removal by the Monetary Board.


B. Use of alias or number in opening deposit accounts


Q. Are banks allowed to open accounts using an alias or a number?


A. There is no specific banking law up to the present prohibiting banks from opening deposit accounts
using an alias or a number. Prior to July 7, 2000, there is also no banking regulation providing for such
prohibition. On July 7, 2000 and in seeking the adoption of anti-money laundering measures, the Bangko
Sentral ng Pilipinas (BSP) issued a regulation, Circular No. 251, providing that, unless otherwise
prescribed under existing laws, anonymous accounts or accounts under fictitious names are prohibited.


The exception referred to under Circular No. 251 was RA 6426 (The Foreign Currency Deposit Act) which
explicitly allows the keeping of numbered accounts for the recording and servicing of deposits.


For peso accounts, when banks allow the opening of deposit accounts under pseudonyms, it is assumed
that: (1) they have exercised due diligence to ascertain the identity of their clients; and (2) they are aware
of the legal provisions and requirements on the use of pseudonyms.


The above notwithstanding, it may be pointed out that in the Manual of Regulations issued by BSP, or
even before the issuance of Circular 251, there were already regulations requiring the banks to: (a) adopt
systems to establish the identity of their depositors; and (b) require to set a minimum of three (3)
specimen signatures from each of their depositors subject to regular updating. Even for numbered
accounts as authorized under RA 6426, BSP has required banks, under Circular 258, to take necessary
measures to establish and record the true identity of their clients, which identification may be based on
official or other reliable documents and records.


Q. Are there other laws governing the use of pseudonyms or aliases?


A. Art. 178 of the Revised Penal Code penalizes the: (a) publicly using of a fictitious name for the
purpose of concealing a crime, evading the execution of a judgment, or causing damage; and (b)
concealment by any person of his true name and other personal circumstances.


On the other hand, there is also Commonwealth Act No. 142, as amended by Republic Act No. 6085
(Regulating the Use of Aliases) which provides that, except only as a pseudonym for literary purposes
and athletic events, it is unlawful for any person to use an alias, unless the same is duly recorded in the
proper local civil registry. Related thereto, Articles 379 and 380 of the Civil Code provide that no person
shall use different names and surnames except the employment of pen and stage names provided it is
done in good faith and there is no injury to third persons.


What can be noted is that the above provisions allow the use of aliases under certain circumstances.
Conversely stated, the use of aliases is not absolutely disallowed. Moreover, the sanctions for any
violation of the above provisions on aliases are mainly directed to the one using the unauthorized alias.


Q. How does Circular No. 251 apply to existing numbered accounts?


A. For peso accounts, the banks should have their respective programs of compliance with the Circular.
For foreign currency deposit accounts, they are allowed to continue maintaining numbered accounts
opened in accordance with RA 6426 subject to the requirement that the banks shall take necessary
measures to establish and record the true identity of their clients.


Q. What penalties/sanctions are applicable for violating the laws/regulations?


A. Article 178 of the Revised Penal Code is directed to the person concealing his identity publicly or using
a fictitious name and the penalty would range from one day up to six months imprisonment and/or a fine
up to P500,000. For violation of Commonwealth Act 142, which is likewise directed to the person using an
unauthorized alias, the penalty is imprisonment from one year to five years and a fine of P5,000 to
P10,000. For the violation of Circular 251, it is subject to the administrative sanction on the bank and/or
responsible directors/officers of fine up to P30,000 per transaction.


C. Continued confidentiality/secrecy of deposit transactions


Q. Is confidentiality/secrecy of deposit accounts compromised with the issuance of Circular 251?


A. No. Circular 251 merely disallowed the opening of fictitious and anonymous accounts and has not in
any way modified nor lessened the safeguards and protection to depositors under RA 1405. This means
that, notwithstanding Circular 251, deposit accounts cannot be examined or looked into except under the
limited circumstances provided for in RA 1405.


Q. Why are the BSP and the BAP advocating the amendment to bank secrecy laws?


A. The proposal of BSP and BAP is for access to deposit accounts only under exceptional circumstances,
such as deposits only above the P50-million level and in relation to the commission of serious offenses
like racketeering and illicit drug trade. Except for these instances, depositors and those with legitimate
transactions remain protected under RA 1405. The objective of the proposal is to institute this measure as
an anti-money laundering campaign so as to delete the Philippines as a non-cooperative country in the
list of the Financial Action Task Force against money laundering.




REPUBLIC ACT NO. 9160 September 29, 2001

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING PENALTIES THEREFOR AND FOR
OTHER PURPOSES

RA 9194

Section 1. Short Title. This Act shall be known as the "Anti-Money Laundering Act of 2001."
Section 2. Declaration of Policy. It is hereby declared the policy of the State to protect and preserve the integrity
and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site
for the proceeds of any unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in
transnational investigations and prosecutions of persons involved in money laundering activities whenever
committed.
Section 3. Definitions. For purposes of this Act, the following terms are hereby defined as follows:
(a) "Covered Institution" refers to:
(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries
and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);
(2) Insurance companies and all other institutions supervised or regulated by the Insurance
Commission; and
(3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing
securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close
and investment companies, common trust funds, pre-need companies and other similar entities, (iii)
foreign exchange corporations, money changers, money payment, remittance, and transfer
companies and other similar entities, and (iv) other entities administering or otherwise dealing in
currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes
and other similar monetary instruments or property supervised or regulated by Securities and
Exchange Commission.
"(b) 'Covered transaction' is a transaction in cash or other equivalent monetary instrument involving a total
amount in excess of Five hundred thousand pesos (PhP 500,000.00) within one (1) banking day.
"(b-1) 'Suspicious transaction' are transactions with covered institutions, regardless of the amounts involved, where
any of the following circumstances exist:
1. there is no underlying legal or trade obligation, purpose or economic justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or financial capacity of the client;
4. taking into account all known circumstances, it may be perceived that the client's transaction is structured in order
to avoid being the subject of reporting requirements under the Act;
5. any circumstances relating to the transaction which is observed to deviate from the profile of the client and/or the
client's past transactions with the covered institution;
6. the transactions is in a way related to an unlawful activity or offense under this Act that is about to be, is being or
has been committed; or
7. any transactions that is similar or analogous to any of the foregoing."




(c) "Monetary Instrument" refers to:
(1) coins or currency of legal tender of the Philippines, or of any other country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds, commercial papers, deposit certificates, trust
certificates, custodial receipts or deposit substitute instruments, trading orders, transaction tickets
and confirmations of sale or investments and money marked instruments; and
(4) other similar instruments where title thereto passes to another by endorsement, assignment or
delivery.
(d) "Offender" refers to any person who commits a money laundering offense.
(e) "Person" refers to any natural or juridical person.
(f) "Proceeds" refers to an amount derived or realized from an unlawful activity.
(g) "Supervising Authority" refers to the appropriate supervisory or regulatory agency, department or office
supervising or regulating the covered institutions enumerated in Section 3(a).
(h) "Transaction" refers to any act establishing any right or obligation or giving rise to any contractual or
legal relationship between the parties thereto. It also includes any movement of funds by any means with a
covered institution.
"(i) 'Unlawful activity' refers to any act or omission or series or combination thereof involving or having direct relation
to following:
"(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as
amended;
"(2) Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16 of Republic Act No. 9165, otherwise known as the
Comprehensive Dangerous Act of 2002;
"(3) Section 3 paragraphs B, C, E, G, H and I of republic Act No. 3019, as amended, otherwise known as the Anti-
Graft and Corrupt Practices Act;
"(4) Plunder under Republic Act No. 7080, as amended;
"(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code, as
amended;
"(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;
"(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential under the Revised Penal
Code, as amended and Presidential Decree No. 532;
"(8) Qualified theft under Article 310 of the Revised penal Code, as amended;
"(9) Swindling under Article 315 of the Revised Penal Code, as amended;
"(10) Smuggling under Republic Act Nos. 455 and 1937;
"(11) Violations under Republic Act No. 8792, otherwise known as the Electrinic Commerce Act of 2000;
"(12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined under the
Revised Penal Code, as amended, including those perpetrated by terrorists against non-combatant persons and
similar targets;
"(13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities
Regulation Code of 2000;
"(14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries."
"SEC. 4. Money Laundering Offense. -- Money laundering is a crime whereby the proceeds of an unlawful activity as
herein defined are transacted, theeby making them appear to have originated from legitimate sources. It is committed
by the following:
(a) Any person knowing that any monetary instrument or property represents, involves, or relates to, the proceeds of
any unlawful activity, transacts or attempts to transacts said monetary instrument or property.
(b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity,
performs or fails to perform any act as a result of which he falicitates the offense of money laundering referred to in
paragraph (a) above.
(c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed
with the Anti-Money Laundering Council (AMLC), fails to do so."
Section 5. Jurisdiction of Money Laundering Cases. The regional trial courts shall have jurisdiction to try all cases
on money laundering. Those committed by public officers and private persons who are in conspiracy with such public
officers shall be under the jurisdiction of the Sandiganbayan.
Section 6. Prosecution of Money Laundering.
(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful
activity as herein defined.
(b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any
offense or violation under this Act without prejudice to the freezing and other remedies provided.
"SEC.7. Creation of Anti-Money Laundering Council (AMLC). -- The Anti-Money Laundering Council is hereby
created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas as chairman, the Commissioner of
the Insurance Commission and the Chairman of the Securities and Exchange Commission as member. The AMLC
shall shall act unanimously in the discharge of its functions as defined hereunder:
"(1) to require and receive covered or suspicious transaction reports from covered institutions;
"(2) to issue orders addressed to the appropriate Supervising Authority or the covered institutions to determine the
true identity of the owner of any monetary instrument or preperty subject of a covered transaction or suspicious
transaction report or request for assistance from a foreign State, or believed by the Council, on the basis fo
substantial evidence, to be, in whole or in part, wherever located, representing, involving, or related to directly or
indirectly, in any manner or by any means, the proceeds of an unlawful activitity.
"(3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of th Solicitor
General;
"(4) to cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money
laundering offenses;
"(5) to investigate suspicious transactions and covered transactions deemed suspicious after an investigation by
AMLC, money laundering activities and other violations of this Act;
"(6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property alleged to
be the proceeds of any unlawful activity as defined in Section 3(i) hereof;
"(7) to implement such measures as may be necessary and justified under this Act to counteract money laundering;
"(8) to receive and take action in respect of, any request from foreign states for assistance in their own anti -money
laundering operations provided in this Act;
"(9) to develop educational programs on the pernicious effects of money laundering, the methods and techniques
used in the money laundering, the viable means of preventing money laundering and the effective ways of
prosecuting and punishing offenders;
"(10) to enlist the assistance of any branch, department, bureau, office, agency, or instrumentality of the government,
including government-owned and -controlled corporations, in undertaking any and all anti-money laundering
operations, which may include the use of its personnel, facilities and resources for the more resolute prevention,
detection, and investigation of money laundering offenses and prosecution of offenders; and
"(11) to impose administrative sanctions for the violation of laws, rules, regulations, and orders and resolutions issued
pursuant thereto."
Section 8. Creation of a Secretariat. The AMLC is hereby authorized to establish a secretariat to be headed by an
Executive Director who shall be appointed by the Council for a term of five (5) years. He must be a member of the
Philippine Bar, at least thirty-five (35) years of age and of good moral character, unquestionable integrity and known
probity. All members of the Secretariat must have served for at least five (5) years either in the Insurance
Commission, the Securities and Exchange Commission or the Bangko Sentral ng Pilipinas (BSP) and shall hold full-
time permanent positions within the BSP.
Section 9. Prevention of Money Laundering; Customer Identification Requirements and Record Keeping.
(a) Customer Identification, - Covered institutions shall establish and record the true identity of its clients
based on official documents. They shall maintain a system of verifying the true identity of their clients and, in
case of corporate clients, require a system of verifying their legal existence and organizational structure, as
well as the authority and identification of all persons purporting to act on their behalf.
The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under
fictitious names, and all other similar accounts shall be absolutely prohibited. Peso and foreign currency
non-checking numbered accounts shall be allowed. The BSP may conduct annual testing solely limited to
the determination of the existence and true identity of the owners of such accounts.
(b) Record Keeping All records of all transactions of covered institutions shall be maintained and safely
stored for five (5) years from the date of transactions. With respect to closed accounts, the records on
customer identification, account files and business correspondence, shall be preserved and safety stored for
at least five (5) years from the dates when they were closed.
"(c) Reporting of Covered and Suspicious Transactions. -- Covered institutions shall report to the AMLC all covered
transactions and suspicious transactions within five(5) working days from occurrences thereof, unless the Supervising
Authority prescribes a longer period not exceeding ten (10) working days.
"Should a transaction be determined to be both a covered transaction and a suspicious transaction, the covered
institution shall be required to report the same as a suspicious transaction.
"When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers and
employees shall not be deemed to have violated Republic Act No. 1405, as amended, Republic Act No. 6426, as
amended, Republic Act No. 8791 and other similar laws, but are prohibited from communicating, directly or indirectly,
in any manner or by an means, to any person, the fact that a covered or suspicious transaction report was made, the
contents thereof, or any other information in relation thereto. In case of violation thereof, the concerned officer and
employee of the covered institution shall be criminally liable. However, no administrative, criminal or civil proceedings,
shall lie against any person for having made a covered or suspicious transaction report in the regular performance of
his duties in good faith, whether or not such reporting results in any criminal prosecution under this Act of any other
law.
"When reporting covered or suspicious transactions to the AMLC, covered instituting and their officers and employees
are prohibited from communicating directly or indirectly, in any manner or by any means, to any person or entity, the
media, the fact that a covered or suspicious transaction report was made, the contents thereof, or any other
information in relation thereto. Neither may such reporting be published or aired in any manner or form by the mass
media, electronic mail, or other similar devices. In case of violation thereof, the concerned officer and employee of the
covered institution and media shall be held criminally liable.
When reporting covered transactions to the AMLC, covered institutions and their officers, employees,
representatives, agents, advisors, consultants or associates shall not be deemed to have violated Republic Act No.
1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791 and other similar laws, but are
prohibited from communicating, directly or indirectly, in any manner or by any means, to any person the fact that a
covered transaction report was made, the contents thereof, or any other information in relation thereto. In case of
violation thereof, the concerned officer, employee, representative, agent, advisor, consultant or associate of the
covered institution, shall be criminally liable. However, no administrative, criminal or civil proceedings, shall lie against
any person for having made a covered transaction report in the regular performance of his duties and in good faith,
whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law.
When reporting covered transactions to the AMLC, covered institutions and their officers, employees,
representatives, agents, advisors, consultants or associates are prohibited from communicating, directly or indirectly,
in any manner or by any means, to any person, entity, the media, the fact that a covered transaction report was
made, the contents thereof, or any other information in relation thereto. Neither may such reporting be published or
aired in any manner or form by the mass media, electronic mail, or other similar devices. In case of violation thereof,
the concerned officer, employee, representative, agent, advisor, consultant or associate of the covered institution, or
media shall be held criminally liable.
Sec 10. Freezing of Monetary Instrument or Property. -- The Court of Appeals, upon application ex parteby the AMLC
and after determination that probable cause exists that any monetary instrument or property is in any way related to
an unlawful activity as defined in Section 3(i) hereof, may issue a freeze order which shall be effective immediately.
The freeze order shall be for a period of twenty (20) days unless extended by the court.

Sec. 11. Authority to Inquire into Bank Deposits. -- Notwithstanding the provisions of Republic Act No. 1405, as
amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or
examine any particular deposit or investment with any banking institution or non-bank financial institution upon order
of any competent court in cases of violation of this Act, when it has been established that there is probable cause that
the deposits or investments are related to an unlawful activities as defined in Section 3(I) hereof or a money
laundering offense under Section 4 hereof, except that no court order shall be required in cases involving unlawful
activities defined in Sections 3(I)1, (2) and (12).
"To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine any deposit
of investment with any banking institution or non-bank financial institution when the examination is made in the
course of a periodic or special examination, in accordance with the rules of examination of the BSP.
Section 12. Forfeiture Provisions.
(a) Civil Forfeiture. When there is a covered transaction report made, and the court has, in a petition filed
for the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or
indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply.
(b) Claim on Forfeited Assets. Where the court has issued an order of forfeiture of the monetary
instrument or property in a criminal prosecution for any money laundering offense defined under Section 4 of
this Act, the offender or any other person claiming an interest therein may apply, by verified petition, for a
declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary
instrument or property corresponding thereto. The verified petition shall be filed with the court which
rendered the judgment of conviction and order of forfeiture, within fifteen (15) days from the date of the order
or forfeiture, in default of which the said order shall become final and executory. This provision shall apply in
both civil and criminal forfeiture.
(c) Payment in Lieu of Forfeiture. Where the court has issued an order of forfeiture of the monetary
instrument or property subject of a money laundering offense defined under Section 4, and said order
cannot be enforced because any particular monetary instrument or property cannot, with due diligence, be
located, or it has been substantially altered, destroyed, diminished in value or otherwise rendered worthless
by any act or omission, directly or indirectly, attributable to the offender, or it has been concealed, removed,
converted or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof, or it is
located outside the Philippines or has been placed or brought outside the jurisdiction of the court, or it has
been commingled with other monetary instruments or property belonging to either the offender himself or a
third person or entity, thereby rendering the same difficult to identify or be segregated for purposes of
forfeiture, the court may, instead of enforcing the order of forfeiture of the monetary instrument or property or
part thereof or interest therein, accordingly order the convicted offender to pay an amount equal to the value
of said monetary instrument or property. This provision shall apply in both civil and criminal forfeiture.
Section 13. Mutual Assistance among States.
(a) Request for Assistance from a Foreign State. Where a foreign State makes a request for assistance
in the investigation or prosecution of a money laundering offense, the AMLC may execute the request or
refuse to execute the same and inform the foreign State of any valid reason for not executing the request or
for delaying the execution thereof. The principles of mutuality and reciprocity shall, for this purpose, be at all
times recognized.
(b) Power of the AMLC to Act on a Request for Assistance from a Foreign State. The AMLC may
execute a request for assistance from a foreign State by: (1) tracking down, freezing, restraining and seizing
assets alleged to be proceeds of any unlawful activity under the procedures laid down in this Act; (2) giving
information needed by the foreign State within the procedures laid down in this Act; and (3) applying for an
order of forfeiture of any monetary instrument or property in the court: Provided, That the court shall not
issue such an order unless the application is accompanied by an authenticated copy of the order of a court
in the requesting State ordering the forfeiture of said monetary instrument or properly of a person who has
been convicted of a money laundering offense in the requesting State, and a certification of an affidavit of a
competent officer of the requesting State stating that the conviction and the order of forfeiture are final and
then no further appeal lies in respect or either.
(c) Obtaining Assistance from Foreign States. The AMLC may make a request to any foreign State for
assistance in (1) tracking down, freezing, restraining and seizing assets alleged to be proceeds of any
unlawful activity; (2) obtaining information that it needs relating to any covered transaction, money
laundering offense or any other matter directly or indirectly, related thereto; (3) to the extent allowed by the
law of the Foreign State, applying with the proper court therein for an order to enter any premises belonging
to or in the possession or control of, any or all of the persons named in said request, and/or search any or all
such persons named therein and/or remove any document, material or object named in said
request: Provided, That the documents accompanying the request in support of the application have been
duly authenticated in accordance with the applicable law or regulation of the foreign State; and (4) applying
for an order of forfeiture of any monetary instrument or property in the proper court in the foreign
State: Provided, That the request is accompanied by an authenticated copy of the order of the regional trial
court ordering the forfeiture of said monetary instrument or property of a convicted offender and an affidavit
of the clerk of court stating that the conviction and the order of forfeiture are final and that no further appeal
lies in respect of either.
(d) Limitations on Request for Mutual Assistance. The AMLC may refuse to comply with any request
for assistance where the action sought by the request contravenes any provision of the Constitution or the
execution of a request is likely to prejudice the national interest of the Philippines unless there is a treaty
between the Philippines and the requesting State relating to the provision of assistance in relation to money
laundering offenses.
(e) Requirements for Requests for Mutual Assistance from Foreign State. A request for mutual
assistance from a foreign State must (1) confirm that an investigation or prosecution is being conducted in
respect of a money launderer named therein or that he has been convicted of any money laundering
offense; (2) state the grounds on which any person is being investigated or prosecuted for money laundering
or the details of his conviction; (3) gives sufficient particulars as to the identity of said person; (4) give
particulars sufficient to identity any covered institution believed to have any information, document, material
or object which may be of assistance to the investigation or prosecution; (5) ask from the covered institution
concerned any information, document, material or object which may be of assistance to the investigation or
prosecution; (6) specify the manner in which and to whom said information, document, material or object
detained pursuant to said request, is to be produced; (7) give all the particulars necessary for the issuance
by the court in the requested State of the writs, orders or processes needed by the requesting State; and (8)
contain such other information as may assist in the execution of the request.
(f) Authentication of Documents. For purposes of this Section, a document is authenticated if the same
is signed or certified by a judge, magistrate or equivalent officer in or of, the requesting State, and
authenticated by the oath or affirmation of a witness or sealed with an official or public seal of a minister,
secretary of State, or officer in or of, the government of the requesting State, or of the person administering
the government or a department of the requesting territory, protectorate or colony. The certificate of
authentication may also be made by a secretary of the embassy or legation, consul general, consul, vice
consul, consular agent or any officer in the foreign service of the Philippines stationed in the foreign State in
which the record is kept, and authenticated by the seal of his office.
(g) Extradition. The Philippines shall negotiate for the inclusion of money laundering offenses as herein
defined among extraditable offenses in all future treaties.

Section 14. Penal Provisions.
(a) Penalties for the Crime of Money Laundering. The penalty of imprisonment ranging from seven (7) to
fourteen (14) years and a fine of not less than Three million Philippine pesos (Php 3,000,000.00) but not
more than twice the value of the monetary instrument or property involved in the offense, shall be imposed
upon a person convicted under Section 4(a) of this Act.
The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One million five
hundred thousand Philippine pesos (Php 1,500,000.00) but not more than Three million Philippine pesos
(Php 3,000,000.00), shall be imposed upon a person convicted under Section 4(b) of this Act.
The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than One hundred
thousand Philippine pesos (Php 100,000.00) but not more than Five hundred thousand Philippine pesos
(Php 500,000.00), or both, shall be imposed on a person convicted under Section 4(c) of this Act.
(b) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6) months to one (1)
year or a fine of not less than One hundred thousand Philippine pesos (Php 100,000.00) but not more than
Five hundred thousand Philippine pesos (Php 500,000.00), or both, shall be imposed on a person convicted
under Section 9(b) of this Act.
"(c) Malicious Reporting. Any person who, with malice, or in bad faith, reports or files a completely unwarranted or
false information relative to money laundering transaction against any person shall be subject to a penalty to six (6)
months to four (4) years imprisonment and a fine of not less than One hundred thousand Philippine pesos
(Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), at the discretion of the
court: Provided, That the offender is not entitled to avail the benefits of the Probation Law.
"If the offender is a corporation, association, partnership or any juridical person, the penalty shall be imposed upon
the responsible officers, as the case may be, who participated in, or allowed by their gross negligence, the
commission of the crime. If the offender is a juridical person, the court may suspend or revoke its license. If the offer
is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings after
serving the penalties herein prescribed. If the offender is a public official or employee, he shall, in addition to the
penalties prescribed herein, suffer perpetual or temporary absolute disqualification from office, as the case may be.
"Any public official or employee who is called upon to testify and refuses to do the same or purposely fails to testify
shall suffer the same penalties prescribed herein.
"(d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to eight (8) years and a fine of
not less than Five hundred thousand Philippine pesos (Php500,000.00) but not more than One million Philippine
pesos (Php1,000,000.00) shall be imposed on a person convicted for a violation under Section 9(c). In the case of a
breach of confidentiality that is published or reported by media, the responsible reporter, writer, president, publisher,
manager and editor-in-chief shall be liable under this Act.
Section 16. Prohibitions Against Political Harassment. This Act shall not be used for political prosecution or
harassment or as an instrument to hamper competition in trade and commerce.
No case for money laundering may be filed against and no assets shall be frozen, attached or forfeited to the
prejudice of a candidate for an electoral office during an election period.
Section 17. Restitution. Restitution for any aggrieved party shall be governed by the provisions of the New Civil
Code.
Section 18. Implementing Rules and Regulations. Within thirty (30) days from the effectivity of this Act, the Bangko
Sentral ng Pilipinas, the Insurance Commission and the Securities and Exchange Commission shall promulgate the
rules and regulations to implement effectivity the provisions of this Act. Said rules and regulations shall be submitted
to the Congressional Oversight Committee for approval.
Covered institutions shall formulate their respective money laundering prevention programs in accordance with this
Act including, but not limited to, information dissemination on money laundering activities and its prevention, detection
and reporting, and the training of responsible officers and personnel of covered institutions.
Section 19. Congressional Oversight Committee. There is hereby created a Congressional Oversight Committee
composed of seven (7) members from the Senate and seven (7) members from the House of Representatives. The
members from the Senate shall be appointed by the Senate President based on the proportional representation of the
parties or coalitions therein with at least two (2) Senators representing the minority. The members from the House of
Representatives shall be appointed by the Speaker also based on proportional representation of the parties or
coalitions therein with at least two (2) members representing the minority.
The Oversight Committee shall have the power to promulgate its own rules, to oversee the implementation of this Act,
and to review or revise the implementing rules issued by the Anti-Money Laundering Council within thirty (30) days
from the promulgation of the said rules.
Section 20. Appropriations Clause. The AMLC shall be provided with an initial appropriation of Twenty-five million
Philippine pesos (Php 25,000,000.00) to be drawn from the national government. Appropriations for the succeeding
years shall be included in the General Appropriations Act.
Section 21. Separability Clause. If any provision or section of this Act or the application thereof to any person or
circumstance is held to be invalid, the other provisions or sections of this Act, and the application of such provision or
section to other persons or circumstances, shall not be affected thereby.
Section 22. Repealing Clause. All laws, decrees, executive orders, rules and regulations or parts thereof, including
the relevant provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No.
8791, as amended and other similar laws, as are inconsistent with this Act, are hereby repealed, amended or
modified accordingly.
SEC. 23. Effectivity. -- This Act shall take effect fifteen (15) days after its complete publication in theOfficial
Gazette or in at least two (2) national newspapers of general circulation.
SECTION 12. Transitory Provision. -- Existing freeze orders issued by the AMLC shall remain in force for a period of
thirty (30) days after the effectivity of this Act, unless extended by the Court of Appeals.
SECTION 13. Effectivity. -- This Act shall take effect fifteen (15) days after its complete publication in theOfficial
Gazette or in at least two (2) national newspapers of general circulation.