AMLA Manual

MA N U A L ON ANTI-MONEY LAUNDERING (Revised December 2009)

CONTENTS

INTRODUCTION ………………………………………………………….… 3 OBJECTIVES ………………………………………………………………... 3 PART A.

R.A. 9194 THE ANTI-MONEY LAUNDERING LAW OF 2003

I. MONEY LAUNDERING PROCESS ………………………………………4 II. THE CRIME OF MONEY LAUNDERING ………………………………..5 III. BASIC PRINCIPLES TO COMBAT MONEY LAUNDERING ………….6 IV. COVERED INSTITUTIONS ………………………………………………8 V. DUTIES AND OBLIGATIONS OF COVERED INSTITUTIONS ..….. ...8 VI. PENALTIES …………………………………………………………………9 VII. AUTHORITY TO INQUIRE INTO BANK DEPOSITS …………………..9 VIII. FREEZE ORDERS……………………………………………….………11 IX. RECORD KEEPING…… ………………………………………….……..11 X.

CROSS-BORDER ISSUES……………………………………………..12

XI. PART B.

BANK POLICIES AND PROCEDURES

A. Customer Identification…………………………..………………12 B. Account Opening of Individual Accounts………………………17 C. Account Opening of Corporate Accounts………………………19 D. Correspondent Banking…………………………………….……21 E. Remittance Tie-Ups………………………………………………23 F. Loan Application Processing………………….…..…….………25 G. AMLA Day-to-Day Policies and Controls 1. Acceptance of Foreign Currency Checks…………...…26 2. Sale and issuance of Dollar Demand Draft……………27 3. Issuance of Cashier’s Checks/Managers Checks ……27 Property of PSBank Data Classification: Confidential Revised December 2009

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4. Acceptance of Second-endorsed Checks……………..28 5. Spurious Checks…………………………………….……28 6. Guidelines for Fund Transfers…………………….…….29 7. Dormant Accounts…………………………………….….32 8. Closed Accounts………………………………………….33 9. Uploading to ICDB - Caution List…………..…………...33 10. Updating of Customer Information and CISSCs………33 H. Red Flags on Remittances……………………………………….33 I.

Flagging and Monitoring of Transactions…………………...….34

J. Reporting Requirements and Process………………………….35 K. The Anti-Money Laundering Committee of the Bank……….. 41 L. Freeze Orders…… ……………………………………………….43 M. Record Keeping….………………………………………………..44 N. Confidentiality……………………………………………………. 45 O. Administrative Sanctions…………………………………………45 XII. COMPLIANCE ………………………….……………………………....45 XIII. AUDIT REVIEW ……………………………..………...……………….46 XIV. RECRUITMENT, EDUCATION AND TRAINING ……………..….…46 Annex 1. Bank Transactions Covered for Reporting under AMLA.…..…48 Annex 2. Format of Internal Report on Suspicious Transactions ……….49 Annex 3. Money Laundering Evaluation Record ………………………...50 Annex 4. Indications of Suspicious Transactions…………………..…..…51 Annex 5. Suspicious Transaction Report Form …………………………..59 Annex 6. Anti-Money Laundering Checklist and Questionnaire ………..61 Annex 7. KYC Form for any Correspondent Banking/Counter party relation……………………………………………………….……..62 Annex 8. Standard Interview or Account Opening Spiel APPENDIX:

……….……..63

List of Terrorist Individuals and Groups……………………64 Electronic Reporting Format and Specifications…………..65 Property of PSBank Data Classification: Confidential Revised December 2009

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INTRODUCTION While striving to sustain economic development and poverty alleviation through, among others, corporate governance and public office transparency, the Philippines realized the need to contribute its share and play a vital role in the global fight against money laundering. The government thus recognized the compelling need to enact a responsive anti-money laundering legislation in order to establish and strengthen an antimoney laundering regime in the country. The anti-money laundering law is expected to strengthen the country’s financial institutions, increase investors’ confidence and eventually ensure that the Philippines is not used as a site to launder dirty money to finance terrorists or legitimize organized crime fronts. Republic Act No. 9160, otherwise known as the Anti-Money Laundering Act (AMLA) of 2001, was signed into law on September 29, 2001 and took effect on October 17, 2001. The Implementing Rules and Regulations took effect on April 2, 2002. On March 7, 2003, R.A. No. 9194 (An Act Amending R.A. 9160) was signed into law and took effect on March 23, 2003. Consequently, a revised Implementing Rules and Regulations was issued which took effect on September 7, 2003. The AMLA, as amended, criminalizes money laundering. Through the Anti-Money Laundering Council (AMLC), it imposes requirements on customer identification, records and reports covered transactions, relaxes strict Bank deposit secrecy laws, provides freezing, seizure, forfeiture and recovery of dirty money or property and provides international cooperation. OBJECTIVES This Manual serves as a comprehensive operating guideline for use of the Bank’s officers and employees in implementing the Anti-Money Laundering Law (Republic Act No. 9160, as amended) and other relevant rules and regulations issued by the Bangko Sentral Ng Pilipinas and the Securities and Exchange Commission to combat money laundering. In particular, this manual aims to achieve the following: 1. To promote adequate awareness regarding the rationale of the enactment of the anti-money laundering law and its importance to the general economy. It is also paramount that employees understand the concept of money laundering as a crime and the various activities and stages by which it is perpetrated in the economic system and through the different financial institutions. 2. To establish specific policies and procedural guidelines to ensure proper identification of customers and facilitate tagging and reporting of transactions as required under the law. 3. To ensure that officers and staff of the Bank clearly understand the responsibilities of the institution and each individual employee in carrying out the requirements of the anti-money laundering law and the accountabilities and penalties attached to noncompliance with such requirements. Property of PSBank Data Classification: Confidential Revised December 2009

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PART A.

R.A. 9194 The Anti-Money Laundering Law of 2003

I. MONEY LAUNDERING PROCESS Money laundering is briefly defined as transactions that involve the conversion or transfer of money or proceeds to disguise its illicit or illegal origins and make it appear as coming from legitimate source. The activity is commonly attached to crime syndicates that accumulate enormous amount of money from illegal activities. These illegal or unlawful activities, commonly called predicate crimes, include the following: 1. Kidnapping for ransom 2. Drug trafficking and related offenses 3. Graft and corrupt practices 4. Plunder 5. Robbery and extortion 6. Jueteng and masiao 7. Piracy on the high seas 8. Qualified theft 9. Swindling 10. Smuggling 11. Violations under the Electronic Commerce Act of 2000 12. Hijacking, destructive arson and murder, including those perpetrated by terrorists against non-combatant persons and similar targets 13. Fraudulent practices and other violations under the Securities Regulation Code of 2000 14. Felonies or offenses of similar nature that are punishable under the penal laws of other countries. Cash being the most common medium of exchange is frequently used by criminal elements to conceal the origin of funds and ownership of the same. Financial institutions shall then be used to exchange the cash into other forms of monetary instruments to perpetually conceal the criminal activity. Although money laundering often involved a complex series of transactions, it generally includes three basic components: a. Placement – The first step is the physical disposal of cash, which can be accomplished by depositing them in domestic Banks or other financial institutions. Cash might be physically shipped or smuggled abroad for deposit in foreign financial institutions, or used to buy high value goods, such as artwork, airplanes, precious metals and expensive jewelry that can be resold by payment of check or funds transfer. b. Layering – The second step, known as layering, is undertaking complex layers of financial transactions to separate the illicit Property of PSBank Data Classification: Confidential Revised December 2009

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funds from their source and disguise the audit trail. This phase may involve such transactions as: 1. Wire transfer of deposited cash, 2. Conversion of deposited cash into monetary instruments such as stocks, bonds, traveler’s checks and similar instruments, 3. Resale of high value goods and monetary instruments, and 4. Investment in real estate and legitimate businesses, particularly in leisure and tourism industries. Money laundering perpetrators usually set up shell companies. Shell companies are legal entities that have no business substance of their own right but through which financial transactions may be conducted. These are typically registered in offshore havens as a common tool in the layering phase. The directors of these companies are often local attorneys acting as nominees to obscure the identity of beneficial owners through restrictive Bank secrecy laws and attorney-client privileges. c. Integration – The last step where wealth derived from the illicit activities are made to appear legitimate. This might involve a number of techniques such as using front companies to lend the proceeds back to the owner or using funds of deposits in foreign financial institutions as security for domestic loans. In this way illicit money make its way back to the financial system as legitimate funds. Indicators of Suspicious Transactions/Seven Elements a. No underlying legal or trade obligation, purpose or economic

justification; b. Client is not properly identified; c. Amount involved is not commensurate with the business or

financial capacity of the client; d. Client’s transaction is structured in order to avoid being the subject of reporting under the requirements of AMLA; e. Any circumstances relating to the transaction which is observed to deviate from the profile of the client and/or the client’s past transaction with the Bank; f. Transaction is in any way related to an unlawful activity or offense that is about to be, is being or has been committed; g. Any transaction that is similar or analogous or identical to any of the foregoing. II. THE CRIME OF MONEY LAUNDERING Money Laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following: Property of PSBank Data Classification: Confidential Revised December 2009

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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 transact 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 facilitates the offense of money laundering referred to in paragraph a) above. c) Any person knowing that any monetary instrument or property is required under the AMLA to be disclosed and filed with the AntiMoney Laundering Council, fails to do so. III. BASIC PRINCIPLES TO COMBAT MONEY LAUNDERING The Bank adopts the following principles and policies in its institution-wide drive to combat money laundering: 1. Know your customer** In all its financial transactions, the Bank shall obtain competent evidence of the customer’s identity, and have effective procedures for verifying the bona fide identity of new customers. The rule on Know Your Customer is always coupled with the responsibility to know and understand the customers’ business. 1.

Determining the true identity of all customers seeking to conduct significant business transactions with the Bank;

2.

Identifying the ownership of the account(s) as well as those using safe-custody facilities;

3.

Predicting with relative certainty the types of transactions in which a customer is likely to be engaged;

4.

Determining any unusual transaction activity or activity that is disproportionate to the customer’s known business;

5.

Preventing the creation of fictitious accounts.

OFAC Listed Clients The AMLA System would have a negative list verification system that shall be able to verify if a customer is in a negative list such as OFAC list (Office of the Foreign Assets Control) and the Bank’s own negative list and database. The Bank is forewarned in *

All requirements are to be strictly complied by and applicable to all Bank units (SBUs, Branches, Asset Recovery & Mgt Group, Remote Banking, Treasury, Trust, Remittance, Loan Operating Units) Property of PSBank Data Classification: Confidential Revised December 2009

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entering into any financial transactions on any person listed in the said OFAC list. 2. Know Your Customers’ Business** Legal existence of customers that are corporations or other business entities must be properly established. Before establishing a business relationship with a corporation or juridical entity, a company search or inquiry shall be made to ensure that such entity has not been or is not in the process of being dissolved, wound up or voided, or that its business or operations has not been or is not in the process of being closed, shut down, phased out or terminated. In case of doubt as to the veracity of the corporation or identity of its directors and/or officers, or of the business of its partners, a search or inquiry with SEC or other relevant Regulatory Agency shall be made. Shell companies are legal entities which have no business substance in their own right but through which financial transactions may be conducted. Dealings with shell companies and corporations should be undertaken with extreme caution as these maybe abused by money launderers. In addition to the documentary and other identification procedures required, a Board of Director’s Certification as to the purposes of the owners/stockholders in acquiring the shell company should also be obtained. 3. Compliance with laws The Bank shall ensure that business is conducted in conformity with high ethical standards, that laws and regulations are adhered to, and that service is not provided where there is good reason to believe that transactions are associated with money laundering activities. 4. Cooperation with law enforcement agencies Within the legal constraints relating to customer confidentiality, the Bank shall cooperate fully with law enforcement agencies. This includes taking appropriate measures allowed by law if there are reasonable grounds for suspecting money laundering. Disclosure of information regarding covered and suspicious transactions shall be made in accordance with legal requirements 5. Policies, procedures and training

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All requirements are to be strictly complied by and applicable to all Bank units (SBUs, Branches, Asset Recovery & Mgt Group, Remote Banking, Treasury, Trust, Remittance, Loan Operating Units) Property of PSBank Data Classification: Confidential Revised December 2009

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The Bank shall adopt policies consistent with the principles set out in this Manual, and ensure that all officers and staff, wherever located, are informed of these policies and adequately trained in matters covered herein. To promote adherence to these principles, the Bank shall implement specific procedures for customer identification, record keeping and retention of transaction documents and reporting of covered and suspicious transactions. IV. COVERED INSTITUTIONS The following institutions are covered by the Anti-Money Laundering Law: a) Banks, non-Banks, quasi-Banks, trust entities and all other institutions and their subsidiaries and affiliates supervised or regulated by the BSP; b) Insurance companies and all other institutions supervised or regulated by the Insurance Commission; c) Securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant, mutual funds, close-end investment companies, common trust funds, pre-need companies and other similar entities, foreign exchange corporations, money changers, money payment remittance, and transfer companies and other similar entities and other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by the Securities and Exchange Commission. V. DUTIES AND OBLIGATIONS OF COVERED INSTITUTIONS (Revised: September 2008) As a covered institution under the Anti-Money Laundering Law, the Bank is required to implement and observe the following: 1. To ensure that true and full identity of all Bank customers is established and to understand the nature of customer’s business. 2. To preserve and store all records of all business transactions for a period of at least 5 years. 3. To report covered and suspicious transactions to the Anti-Money laundering Council within ten (10) working days from occurrence thereof as per Circular 612 dated June 13, 2008, unless Supervising Authority prescribes longer period or upon verified/ confirm knowledge of the Bank on basis for such suspicious transaction. Property of PSBank Data Classification: Confidential Revised December 2009

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VI. PENALTIES Following are the penalties imposed by law for the commission of the crime of money laundering as well as other acts that violate the requirements of the AMLA:

Nature of crime/violation

Penalties

Transacting or attempting to transact any monetary instrument or property the represents, involves or relates to the proceeds of any unlawful activity. (Money laundering crime)

Imprisonment of 7 to 14 years and fine of not less than P3,000,000.00 but not more than twice the value of the monetary instrument or property involved in the offense.

Performing or failure to perform any act which, as a result, facilitates the offense of money laundering.

Imprisonment of 4 to 7 years and fine of not less than P1,500,000.00 but not more than P3,000,000.00.

Failure to report covered/suspicious transaction

Imprisonment of 6 months to 4 years or fine of P100,000 to P500,000, or both

Failure to keep records for five (5) years from the date of transaction or date when the account was closed.

Imprisonment of 6 months to 1 year or fine of P100,000 to P500,000, or both

Malicious Reporting (with malice or in bad faith)

Imprisonment of 6 months to 4 years and fine of P100,000 to P500,000

Breach of confidentiality

Imprisonment of 3 to 8 years and fine of P500,000 to P1,000,000.

Apart from the criminal penalties, the Anti-Money Laundering Council may also impose administrative fines on officers/ employees of covered institutions of P100,000 to P500,000 for any violations of the AMLA, IRRs & other resolutions.

VII.

AUTHORITY TO INQUIRE INTO BANK DEPOSITS

A. Anti-Money Laundering Council (AMLC)

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The AMLC may inquire into or examine any particular deposit or investment with the Bank: a. Upon order of any competent court when it has been established that there is probable cause that the deposits or investments involved are related to an unlawful activity as defined in Sec. 3(i) of the Implementing Rules of the AMLA or a money laundering offense as defined in the AMLA. b. Without court order in cases where the unlawful activity is any of the following: • Kidnapping for ransom; • Violations of Dangerous Drugs Act of 2002 • Hijacking • Destructive Arson • Murder • Including acts perpetrated by terrorists against noncombatant persons and similar targets Procedure for examination without a court order: AMLC shall issue a resolution authorizing the inquiry into or examination of any deposit or investment with the Bank. B. Bangko Sentral Ng Pilipinas (BSP) The BSP may inquire into or examine any particular deposit or investment with the Bank when the examination is made in the course of a periodic or special examination, in accordance with the Rules of Examination of the BSP. C. Confidentiality Requirements When reporting covered or suspicious transactions to the AMLC, the Bank and its officers and employees, 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 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, the concerned officer and employee of the Bank shall be held criminally liable. D. Safe Harbor Provision No administrative, criminal or civil proceedings shall lie against any person for having made a covered transaction report or a suspicious transaction report in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution under the Anti-Money Laundering Law or any other Philippine law. When reporting covered or suspicious transactions to the Property of PSBank Data Classification: Confidential Revised December 2009

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AMLC, the Bank and its officers and employees, shall not be deemed to have violated R.A. No. 1405, as amended, R.A. No. 6426, as amended, R.A. No. 7891 and other similar laws. VIII. FREEZE ORDERS Pursuant to Rule 10 of the Implementing Rules and Regulations of the R.A. 9194 which specifically states that: “When the AMLC may apply for the freezing of any monetary instrument or property: a. After an investigation conducted by the AMLC and upon determination that probable cause exists that a monetary instrument or property is in any way related to any unlawful activity as defined under Section 3 (i), the AMLC may file an ex-parte application before the Court of Appeals for the issuance of a freeze order on any monetary instrument or property subject thereof prior to the institution or in the course of the criminal proceedings involving the unlawful activity to which said monetary instrument or property is any way related. b. Considering the intricate and diverse web of related and interlocking accounts pertaining to the monetary instrument(s) or property(ies) that any person may create in the different covered institutions, their branches and/or other units, the AMLC may apply to the Court of Appeals for the freezing, not only of the monetary instruments or properties in the names of the reported-owner(s)/holder(s); and monetary instruments or properties named in the application of the AMLC but also all other related web of accounts pertaining to other monetary instruments and properties, the funds and sources of which originated from or are related to the monetary instruments or properties subject of the freeze order. c. The freeze order shall be effective for twenty days unless extended by the Court of Appeals upon application by the AMLC. IX. RECORD KEEPING** Pursuant to Rule 9.2 of the Revised Implementing Rules and Regulations of the R.A. 9194, All records of all transactions of covered institutions shall be maintained and safely stored for five years from the dates of transactions or dates when the accounts were closed. Said records and files shall contain the full and true identity of the owners or holders of the accounts involved in the covered transactions and all other customer identification documents. Covered institutions shall undertake the necessary adequate security measures to ensure the confidentiality of such file. Covered institutions shall prepare and maintain documentation, in accordance with the aforementioned client identification requirements, on their customer accounts, relationships and transactions *

All requirements are to be strictly complied by and applicable to all Bank units (SBUs, Branches, Asset Recovery & Mgt Group, Remote Banking, Treasury, Trust, Remittance, Loan Operating Units) Property of PSBank 11 Data Classification: Confidential Revised December 2009

such that any account, relationship or transaction can be so reconstructed as to enable the AMLC, and/or the courts to establish an audit trail for money laundering. NOTE: Where case has been filed in courts, the bank must keep all records until the case has been closed. X. CROSS-BORDER ISSUES The Bank requires full disclosure of required information of beneficiaries of wire transfer: name, address, purpose of remittance, remitter, telephone numbers, place and date of birth. Outward remittance transactions are limited only to non-trade remittances and to clients who have existing accounts with the Bank. The Bank adopts the revised MT103 message format (June 2006) to incorporate the following details regarding the remitter: A. Account no or Unique ID Number B. Remitter's Name C. Address The above details should be required as well for all outgoing remittances regardless of amount. The same information is provided for in the messages sent to the correspondent Banks abroad. The Bank requires complete originator information prior to processing of incoming transfers. In case required information is insufficient, the Bank shall request for an amendment from the originating Bank, should the sending Bank fail, transaction is terminated and the remittance returned to the originating Bank. Messages sent to correspondent Banks are formatted to contain all originator information and a duly filled up prior to releasing said messages. XI. PART B.

BANK POLICIES AND PROCEDURES**

A. Customer Identification/ Customer Acceptance Policy 1. The Branch/Unit Head (BH)/Branch Services & Control Officer (BSCO) and

Account Officer (AO) at Head Office/Center are expected at all times to establish the identity of their clients and comply with the Bank’s policies in keeping official file of such identification documents. They must observe the following procedures when an account is opened: a. personal presence of the account holder b. scrutiny of original identification documents c. completion of a standard account opening form d. verification of photograph on IDs presented and on person presenting such documents e. comparison of signatures with live signatures *

All requirements are to be strictly complied by and applicable to all Bank units (SBUs, Branches, Asset Recovery & Mgt Group, Remote Banking, Treasury, Trust, Remittance, Loan Operating Units) Property of PSBank 12 Data Classification: Confidential Revised December 2009

2. All accounts are generally classified Low Risk upon account opening provided they

were able to supply the 11 required information as provided for by the AML Law. (Revised December 2009) The following scenarios will cause the account be classified Medium or High Risk. Medium Risk a. Client indicated that account will be used for OFW remittances. b. Accounts that were allowed to be opened with BBG authorized approval despite failure to provide the complete 11 required information. c. Pre-existing accounts in process to complete the 11 required information. d. Accounts which failed to update the required information every 2 years. High Risk a. Client was identified as a Politically Exposed Persons (PEPs) PS Bank define PEPs/Potentate Accounts as 1) Appointed officials from Judiciary and Executive Departments - Judicial from SC Justices down to RTC Judges - Executive Department Secretary - Under Secretary - Commissioner - Deputy Commissioners 2) Elected Officials from President to Municipal Mayors Source Comelec Website – Branches may refer to local list of government elected post to supplement the list in the Banks ICDB. b. Non-Resident accounts from countries identified as one of the Non-Cooperative Countries and Territories (NCCT) by FATF. c. Nature of Business/Source of income involves Foreign Exchange, Pawnshop, Remittance Business. d. Previously reported STR account but business owner decided to keep the account open and for close monitoring. e. Accounts whose financial profile changed. f. Accounts of Financial Institutions/Rural Banks. g. Remittances tie up accounts. 3. All prospective clients shall be subject to initial interview by the Customer Service Associate-New Accounts Clerk (CSA-NAC) and the BSCO to further establish the client's moral character and business reputation and the purpose of the account opening, using the standard interview or account opening spiel/script. Clients shall be required to accomplish the Application and Agreement for Deposit Account (AADA) which shall contain vital information on client, business or profession, among others. Final approval by the Branch Head/BSCO is necessary before an account is opened.

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4. The following minimum information should be obtained:(Revised: September 2008) Individual Customer Complete name including middle/maiden name Complete permanent address (P.O. Box number is not sufficient) Contact Numbers (business/residential tel. no., fax no., e-mail address) Date and place of birth Nationality Occupation, public position held and/or name of employer Official ID (e.g., passport, residence permit, social security records, driving license) bearing photograph of the customer h. TIN/SSS/GSIS No. i. Name and address of beneficiaries (if applicable) j. Information on Remitter (if applicable) k. Type of account and nature of banking relationship l. Signature (signature cards must be updated at least every two (2) years) a. b. c. d. e. f. g.

For Foreign Nationals a. Alien Certificate of Registration b. Immigrant Card / Certificate of Registration c. Passport issued by the country of origin d. Philippine government-issued IDs e. Major Credit Card f. Immigrant visa issued by the foreign government in the country of residence g. Certificate of residency issued by the foreign government in the country of residence. h. Certificate of residency issued by the Philippine Embassy or Consulate in the foreign country of residence. Corporate/Juridical Customer a. Complete name of institution b. Complete institution’s address (P.O. Box number is not sufficient) c. Contact Numbers (business tel. no., fax no., e-mail address) d. Date and place of establishment e. Type of Ownership f. Legal status, such as an incorporation document, partnership agreement, association documents or business license g. For large corporate accounts, financial statement of the business or a description of the customer’s principal line of business h. Board Resolution depicting the authorized signatory for the transaction/Secretary’s Certificate i. Type of account and nature of banking relationship j. Duly-accomplished AMLA KYC form 5. Pursuant to MORB X695 Valid Identification Cards (IDs) for Financial Transactions and BSP Circular No. 608 dated May 20, 2008, the Bank shall consider the following government issued ID documents, as acceptable photo-bearing valid Ids. The same should be subject to the Bank’s internal policies on acceptable Ids. All documents shall be checked against original copies. (Revised: December 2009) Property of PSBank Data Classification: Confidential Revised December 2009

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a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. s. t.

Passport Driver’s license Professional Regulations Commission (PRC) ID National Bureau of Investigation (NBI) clearance Police clearance Postal ID Voter’s ID Barangay Certification Government Service Insurance System (GSIS) e-Card Social Security System (SSS) Card Senior Citizen Card Overseas Workers Welfare Administration (OWWA) ID OFW ID Seaman’s Book ACR/Immigrant Certificate of Registration Government office ID (e.g. AFP, HDMF IDs) Certification from the National Council for the Welfare of Disabled Persons Department of DSWD Certification Integrated Bar of the Philippines ID Company IDs issued by Private Entities or Institutions Registered with or Supervised or Regulated either by the BSP, SEC or IC.

BSP Circular No. 657 dated June 16, 2009 “ Valid Identification Cards (IDs) for Financial Transactions” amended BSP Circular No. 608 by adding “Passports issued by Foreign Governments shall also be considered Valid Identification Documents.”(Revised December 2009) Note: For Remote Banking Processes: Valid IDs, proofs of residence and relationship, and other verifiable personal information are required up front. Verification of customer names vs negative file information is done thru ICDB (Integrated Customer Databank System) at the account opening and loan application phases. 6. The CSA-NAC/BSCO shall perform the following verification procedures: a. Confirm the date of birth from an official document (e.g., birth certificate,

passport, identity card, social security records). b. Confirm the permanent address (vs. utility bill, tax assessment, bank

statement, a letter from a public authority). c. Call the residential/office number to validate the authenticity of the given

information. d. Verify client’s name against ICDB/PEP/other AMLA terrorist/watch list

database. 7. The authorized signatories whether for individual or corporate accounts shall be required to personally open the account and to have their signatures affixed in the CISSC in the presence of an Operating Officer for signature authentication. If the authorized signatories cannot come personally to the Bank to open the account, the AO or BH shall purposely visit the office/residence of the said client and require them to sign the signature card in her presence. In case of a payroll Property of PSBank Data Classification: Confidential Revised December 2009

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account opening, the employee himself must visit the accommodating branch to open his account personally. If he cannot visit the branch, the authorized branch personnel must be the one to visit the company to ask the customer to sign the necessary documents in his presence. No opening of accounts shall be allowed without face-to-face contact. Hence, opening of payroll account should also be in accordance with face-to-face contact with the concerned branch personnel and the client, even duly-endorsed by their Human Resource Officer, unless authorized by the Bank to use risk mitigating measures to by-pass face to face requirement thru independent contact with customer by the bank, verification or submission of additional documents or use of third party introduction. 8. Prospective clients referred by bank employees or valued clients shall not be exempted from the interview and submission of the documentary requirements. A referral letter duly signed by the referring bank employee/valued clients shall also be required. 9. "Walk-ins" who are not expected to maintain a continuing relationship with the Bank, or those proposing "one-shot deals” shall not be entertained. 10. Business principals must provide the Bank with documents on the business legal status (e.g. sole proprietorship, partnership, or incorporation or association, etc.) when opening a business account. 11. The Branch Head/BSCO/AO must verify, based on documents submitted, the status of the corporate client to ensure that the customer that is a corporate or juridical entity has not been or is not in the process of being dissolved, wound up or voided, or that its business or operations has not been or is not in the process of being closed, shut down, phased out, or terminated. Income Tax Return/Audited Financial Statements must be reviewed. 12. Dealings with suspected shell companies and corporations, which have no business substance in their own right should be undertaken with extreme caution. 13. The nature of the company's business should be recorded. Where the person who opens the account is not the person who will be operating the account, the latter should be identified and checks conducted as for an individual account holder. Where there is any doubt, the certificate of registration should be verified. 14. Where the company is registered abroad, documents comparable to what is normally required from a corporate client should be examined. Where the overseas company is not a known customer, all company documents should be verified. All signatories to the account must be properly identified. The Branch/Unit Head/BSCO/AO may request assistance from MBTC Foreign Branches and subsidiaries abroad in undertaking this task. The Bank may also consider to have KYC outsourcing. 15. Signatories to the account must be properly identified. The Branch/Unit Head/BSCO/AO may request assistance from MBTC Foreign Branches and subsidiaries abroad in undertaking this task. Property of PSBank Data Classification: Confidential Revised December 2009

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16. Thank you letters must be sent to client’s present address. 17. Post-Validation Procedures shall be the responsibility of the BH and/or BSCO of the branch concerned. a. The following procedures shall be undertaken after account opening: a. Contact the client/entity by telephone to confirm the information supplied (e.g., disconnected phone/returned mail should warrant further investigation) b. Confirm the validity of the official documents provided through certification by an authorized person (e.g., embassy official, notary public) c. Conduct inquiry on the company’s status d. Inquire from bank references given e. Ocular inspection of place of business b. A “Thank you” letter shall be sent via mail. The following statement shall be indicated (typewritten or rubber stamped) on the upper left hand portion of the envelope: “If undelivered please return to P.O. Box __________.” c. All undelivered and returned “Thank you” letters received by Head Office – General Services Division (HO-GSD) shall be endorsed by Customer Service Division to the concerned units for investigation. B. Opening of Individual Accounts 1. During account opening, the Bank requires disclosure of information as to the purpose of account, source of funds and intended nature of the business relationship, among other information. Pending revision of CISSC, the requirement for the information on source of funds, purpose of opening the account and other special tag on account e.g. PEP, etc. shall be stamped at the mid-right section of the existing CISSC.

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“Source of Funds : ______________ Purpose of Opening: __________________” NOTE: When accomplishing the Customer Information Specimen Signature Cards (CISSC)/Signing Rules Card (SRC): a. The BSCO/CSA-NAC shall ensure that the CISSCs/SRCs are completely accomplished with the minimum information. b. The BH/BSCO shall check the accuracy and completeness of all information on the CISSC, particularly the account number indicated on the front and back portions thereof and the client’s source of funds before affixing his/her signature on the ‘Approved by’ portion. 2. Initial enrollments of accounts, whether face-to-face in our Branches or online, are vetted vs. customer information and account ownership in our deposit and loan systems, i.e. RM, 3270, ILAPS (Intra-net Loan Application Processing System) and ILS (Integrated Loan System). Enrollments go through a two-step approval process involving Branch Officers and centrally, CBRCD/EBSD. • The true and full identity of the representative/s and the nature of his/their capacity and duties; • The true and full identity of the person/business entity on whose behalf the transaction is being conducted Note: Validation fields for online enrollment and forgotten Username or Passphrase should be derived from integrated customer data based on records in our deposit and loan systems. Proper identification, account ownership, and transactional integrity shall be ensured by the use of ATM or ePINs as the case may be, and security tokens, for multiple factor authentication. 3. From the initial interview, documents and information gathered, the Bank should be able to assess the customer’s risk profile taking into consideration the client’s territory, profession, business, employment or occupation. Minimum requirements shall be sufficient for a client considered as “low” risk. The Bank should however, give particular attention to clients identified as “high” risk. Due diligence must be performed to obtain more information about the source of funds to justify transaction with the Bank. The servicing branch/unit shall perform enhanced due diligence before opening accounts or accommodating clients whose country of origin is among those classified as “high risk” --- countries identified as tax havens, rampant in drug dealing activities, corruption and organized crimes. Some examples are Colombia, Panama, Nauru, Vanuatu, Seychelles, Palau and Niue which were publicly cited in various US government agency reports. Business relationships with individuals holding important public positions and with persons or companies clearly related to them may expose a bank to

Property of PSBank Data Classification: Confidential Revised December 2009

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significant reputation and/or legal risks. Such persons are commonly referred to as “potentates”. Under certain circumstances, the Bank, its officers and employees themselves can be exposed to charges of money laundering, if they know or should have known that funds stemmed from corruption or other serious crimes. 4.

If account will be used for remittance, the information on the remitter like address and source of fund should be recorded. Remote Banking clients need to designate the particular functionalities of all enrolled accounts, namely as source of fund transfer, target of fund transfer, source of bills payment, and target of bills payment. TPAs are restricted to being target or recipient accounts only.

5. Politically Exposed Persons (PEPs) would be filtered, internally, through our ICDB, CRM and AMLA systems, and externally, thru the BSP Credit Bureau and other positive and negative databases, as to names and pseudonyms, related accounts, business affiliations, and positions or designations. For Remote Banking Processes: PEP accounts should be bird-dogged in our automated AML system, and any unusual movements or deviations should be the subject of automatic STRs. One must also consider that even after leaving public office, accounts of ex-PEPs may exhibit suspicious transactional behavior, which would still subject them to STRs. 6. Based on its assessment of the risk indicators, BSCO/BH shall enhance due diligence to assure greater level of understanding of the correspondent institution. Following are elements that should be further considered: a. Ownership and management i. Politically Exposed Person (PEP) involvement ii. Quality of anti-money laundering controls correspondent Bank Downstream correspondent clearing

of

7. The authorized BBG Officer shall approve client’s opening of accounts for PEPs in the New Accounts policy. Actual names and designations of PEPs should be uploaded and updated in our ICDB for pre-screening in account openings and loan applications. Top management clearance must be sought before these are to be processed any further. Such clients must be tagged as PEP special accounts and closely monitored, for early reporting to Compliance Office, Risk Management Office and IAG. 8. As Remote Banking interfaces with our deposit and loan systems, any deviation from the client’s business or risk profile, average balances and other indicators would be captured by the Group’s automated AMLA system for proper intervention by the concerned parties. And prior to rollout of cyber- or purely online products and services, enrollments and transactions thereof must be incorporated in said pattern recognition and monitoring system.

C. Opening of Account by a Corporate/Juridical Person Property of PSBank Data Classification: Confidential Revised December 2009

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1. For corporate accounts and financial institutions, the Bank also implemented the use of the AMLA Checklist & Questionnaire (See Annex 6) which aims to establish the identity of the persons who control the operations of the business entity, the nature of its operations, type of transactions, etc. Opening of accounts without face-to-face contact with customer and anonymous accounts and accounts under fictitious names are prohibited. 2.

Corporate client(s) shall be required to submit the original copies of the corporate business papers which shall be compared with the photocopies to confirm the authenticity of the documents. The opening of an account shall be immediately verified with the corporation's main office, thru the fastest means of communication available, to determine authenticity of Board Resolution and the identities of the officers authorized to sign in behalf of the firm if actually connected with the said corporation.

Note: The servicing branch/office shall observe the following: a. The authorized signatories whether for individual or corporate

accounts shall be required to personally open the account and to have their signatures affixed on the CISSC and SRC (if necessary) in the presence of an operating officer for signature authentication. In case of associations/corporations, if the authorized signatories cannot personally appear, a Bank officer shall visit the place of business and ensure that the authorized signatories sign the signature cards in his presence. Thereafter the Bank officer shall affix his signature. b. Consider the customer’s residence or place of business. If it is not

in the area served by the branch, ask why the customer is opening an account at that location. c.

Determine customer’s legal beneficiaries as well as the client’s personal or business background.

d. For corporation or large individual accounts, the customer shall be

asked for a prior bank reference. In this way, the customers’ handling of accounts as well as his credit standing can be inquired/validated. e. If the client is a Foreign Exchange Dealer/Remittance Agent,

require client to present the original BSP Certificate of Registration and to submit a photocopy of the certificate. Note: In case the certificate is still being processed by the BSP, require the client to submit the proof of filing in lieu of the photocopy. Prior to opening the account, the BH/BSCO shall verify the authenticity of the certificate presented to the BSP Supervision and Examination Department III. Property of PSBank Data Classification: Confidential Revised December 2009

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D. Correspondent Banking 1. Correspondent Banking refers to activities of the Bank having direct connection or friendly relations with another Bank, financial institution/counter-parties’ remittance information if applicable. . The Bank should consider the type of risk indicators in initiating the correspondent Banking relationship, and on a continuing basis, to ascertain what reasonable due diligence or enhanced due diligence it will undertake. The Bank may give appropriate weight to each risk factor as it deems necessary. 2. The risk indicators to be considered are as follows: a. The correspondent Bank’s/counter parties’ domicile • Jurisdiction where the correspondent Bank is based and/or where its ultimate parent is headquartered. Certain jurisdictions are internationally recognized as having inadequate anti-money laundering standards, insufficient regulatory supervision or presenting greater risk for crime, corruption or terrorist financing. On the other hand, other jurisdictions such as members of the Financial Action Task Force (FATF) have more robust regulatory environments representing lower risks. • The Bank should review pronouncements from regulatory agencies and international bodies, such as the FATF, to evaluate the degree of risk presented by the jurisdiction in which the correspondent Bank is based and/or in which its ultimate parent is headquartered. b. The correspondent Bank’s/counter parties’ ownership and management structures • Location of owners • Corporate legal form • Transparency or ownership structure • Location and experience of management • Involvement of politically exposed persons (PEPs) in the management of ownership c. The correspondent Bank’s/counter parties’ business and customer base • • •

•

Type of businesses the correspondent Bank/counter parties’ engages in Type of markets the correspondent Bank serves Involvement in certain business segments internationally recognized as creating particular vulnerability to money laundering, corruption or terrorist financing Substantial part of business income derived from higher risk clients

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3. The Anti Money Laundering Checklist and Questionnaire / KYC Form for any Correspondent Banking/counter party relation (See Annex 6 and 7) shall be prepared at all times. Based on its assessment of the risk indicators, the Bank may need to perform an enhanced due diligence to assure greater level of understanding of the correspondent institution. Following are elements that should be further considered: a. Ownership and management b. Politically Exposed Person (PEP) involvement c. Quality of anti-money laundering controls of correspondent Bank d. Downstream correspondent clearing 4. The Bank should not enter into a correspondent Banking/financial institution counter party relationship with shell Banks. It should also guard against establishing relations with respondent foreign financial institutions that permit their accounts to be used by shell Banks. 5. A shell Bank is a Bank that: • Does not conduct business at a fixed address in a jurisdiction in which the shell Bank is authorized to engage in Banking activities; • Does not employ one or more individuals on a full time business at this fixed address; • Does not maintain operating records at this address; and • Is not subject to inspection by the Banking authority that licensed it to conduct Banking activities. 6. Treasury Division and other operating units of PSBank shall ensure that requesting correspondent banks/counter parties have properly established testing arrangement with the Bank prior to accommodating requests for AMLA purposes. In situations involving branches, subsidiaries or affiliates, the Bank should consider the parent of the correspondent Bank in determining the extent of required due diligence. If the correspondent entity is an affiliate not substantially and effectively controlled by the parent, the Bank should review both the parent and the correspondent entity. Note: In implementing the requirements of the Anti-Money Laundering Law, Treasury Group/Branch Banking Group and other operating units of the Bank shall be responsible for prescribing acceptable customer identification documents and the detailed guidelines/procedures in obtaining information and accomplishing customer identification forms and records. 7. Upon receipt of proposal from correspondent bank/financial institution to establish relationship, Treasury Group shall: Property of PSBank Data Classification: Confidential Revised December 2009

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a. Request for the submission of the following updated/latest documents: • Annual Report • Statement of Condition • Terms and Conditions • List of Major Correspondents b. Request for background, credit information and /or account relationship from at least four (4) of the applicant bank’s major correspondents, preferably from or through banks which are also Metrobank’s correspondents maintaining branches, offshore units or representative offices in the Philippines. c. If applicant bank can service and meet our international requirements, recommend for approval of Finance and Operations Group Heads the proposal to establish correspondent banking relationship. d. Once approved, forward a copy of the approval letter to Finance, Remittance and Treasury Operations. e. Send acceptance letter to the new correspondent bank and provide them with our latest annual report, terms and conditions and AML questionnaire. E. Remittance Tie-Ups (Revised December 2009) Remittance Tie-Ups refers to activities of the Bank having direct connection or friendly relations with another financial institution/counter-parties. The Bank should consider the type of risk indicators in initiating the remittance tie-up relationship, and on a continuing basis, to ascertain what reasonable due diligence or enhanced due diligence it will undertake. The Bank may give appropriate weight to each risk factor as it deems necessary. 2. The risk indicators to be considered are as follows: a. The financial institution/counter parties’ domicile • Jurisdiction where the counterparty is based and/or where its ultimate parent is headquartered. Certain jurisdictions are internationally recognized as having inadequate antimoney laundering standards, insufficient regulatory supervision or presenting greater risk for crime, corruption or terrorist financing. On the other hand, other jurisdictions such as members of the Financial Action Task Force (FATF) have more robust regulatory environments representing lower risks. • The Bank should review pronouncements from regulatory agencies and international bodies, such as the FATF, to evaluate the degree of risk presented by the jurisdiction in which the counterparty is based and/or in which its ultimate parent is headquartered. b. The counter parties’ ownership and management structures Property of PSBank Data Classification: Confidential Revised December 2009

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• • • • •

Location of owners Corporate legal form Transparency or ownership structure Location and experience of management Involvement of politically exposed persons (PEPs) in the management of ownership

c. The counter parties’ business and customer base • • •

•

Type of businesses the counter parties’ engages in Type of markets the counterparties’ serves Involvement in certain business segments internationally recognized as creating particular vulnerability to money laundering, corruption or terrorist financing Substantial part of business income derived from higher risk clients

3. The Anti Money Laundering Checklist and Questionnaire / KYC Form for any counter party relation (See Annex 6 and 7) shall be prepared at all times. Based on its assessment of the risk indicators, the Bank may need to perform an enhanced due diligence to assure greater level of understanding of the correspondent institution. Following are elements that should be further considered: a. Ownership and management e. Politically Exposed Person (PEP) involvement f. Quality of anti-money laundering controls of correspondent Bank 4. The Bank should not enter into a financial institution counter party relationship with shell Banks. It should also guard against establishing relations with respondent foreign financial institutions that permit their accounts to be used by shell Banks. 5. Business Development Unit (BDU) and other operating units of PSBank shall ensure that requesting counter parties have properly established testing arrangement with the Bank prior to accommodating requests for AMLA purposes. In situations involving branches, subsidiaries or affiliates, the Bank should consider the parent of the counterparty in determining the extent of required due diligence. If the counetrparty entity is an affiliate not substantially and effectively controlled by the parent, the Bank should review both the parent and the couterparty entity. Note: In implementing the requirements of the Anti-Money Laundering Law, BDU and other operating units of the Bank shall be responsible for prescribing acceptable customer identification Property of PSBank Data Classification: Confidential Revised December 2009

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documents and the detailed guidelines/procedures in obtaining information and accomplishing customer identification forms and records. 7. Upon receipt of proposal from financial institution/counterparty to establish relationship, BDU shall: f.

Request for the submission of the following updated/latest documents: • Annual Report • Statement of Condition • Terms and Conditions • List of Major Correspondents

g. Request for background, credit information and /or account relationship from at least four (4) of the applicant counterparties’ major correspondents, preferably from or through banks which are also Metrobank’s correspondents maintaining branches, offshore units or representative offices in the Philippines. h. If applicant couterparty can service and meet our international requirements, recommend for approval of Finance and Operations Group Heads the proposal to establish remittance-tie ups relationship. i.

Once approved, forward a copy of the approval letter to Finance, Remittance and BDU.

j.

Send acceptance letter to the new counterparty and provide them with our latest annual report, terms and conditions and AML questionnaire.

F. Loan Application Processing 1. It is the responsibility of the concerned Account Officer to complete the KYC, documentary information of all the requirements e.g. updated financial statements/Income Tax Return, acceptable photo-bearing Ids. The Account Officer must at all times conduct the proper KYC and the KYCB during the loan application to establish the true identity of the applicant as well as that of his/her business. 2. Likewise new products being developed must likewise have defined Money Laundering Risks and needed controls to protect the interest of the bank and the general public will be protected. 3. All solicited application forms and documents are transmitted to Loans Process Support Department (LPSD) for proper validation and document verification. For those with outsourced services on account acquisition such as PLD: the process of completing the KYC requirements are bundled and incorporated in the outsource contract. Thus, the proper KYC is still being followed. As to the Auto Loans-Dealer Sales, the dealer coordinator assigned in the respective dealer center is the one properly doing the KYC Property of PSBank Data Classification: Confidential Revised December 2009

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for the prospective loan borrower. Hence, the loan applicant should be accordingly identified. 4. Loans Review Servicing Department (LRSD) - Loans Processor shall perform additional validation/authentication/KYC procedures prior to booking as follows: • Check if the duplicate clear copies of the 2 IDs presented are acceptable and valid based on the following features: • Check the consistency of the customer data on the ID vs. the following minimum customer information provided to the Bank by the client in the Validation Sheet, Application Form and ITR. • Compare the photo of the borrower/co-borrower/JSS if these match with all IDs presented. Compare signatures on IDs presented vs signatures on loan documents, application form, marriage contract and loan guaranty when applicable. • If existing Bank depositor, validate signature versus the signature on Signature Verification System. • If repeat Bank loan client, validate signature versus all loan documents and IDs available in the credit folder. • Check if the photocopies have stamp “original seen” or “signatureverified” and with initial of the Marketing Assistant or Account/Branch Officer. • For corporate or partnership or single proprietorship accounts, Loans Review Servicing Department (LRSD) - Loans Processor shall also properly establish legal existence of customers • When in doubt, ask the client to submit additional IDs and perform additional verification procedures as needed in establishing the identity of the client. Other documents such as marriage certificate or birth certificate provided by the client can help in establishing the identity of the borrower/co-borrower/JSS. • If the IDs are found to be valid and acceptable, use these ID’s as basis for performing signature verification on loan documents. If ok, affix initial on PN/CAML a “Signature Verified” stamp on the said documents then initial or sign in full over printed name. Note: For Remote Banking Processes: Whenever CDD, either by the Bank or third party service providers, is inadequate due to meager information or validation sources, or reticence on the part of clients, the Bank will bar the creation of the client relationships and file the necessary STRs. The Bank will observe the dictum of “when in doubt, stay out.” •

G. Anti-Money Laundering Day-to-Day Policies and Controls 1. Acceptance of Foreign Currency Checks a. Foreign currency checks/drafts accepted either for deposit or as collection items shall be subject to the following conditions: o First endorsed checks/drafts (not second-endorsed) Property of PSBank Data Classification: Confidential Revised December 2009

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o o

Not postdated/stale-dated (issued 6 months earlier) Free from any technical defects

b. Only checks payable to the depositor, to “CASH,” or to “bearer” shall be accepted for deposit. Each check for deposit must be properly endorsed (i.e., signed at the back) by the payee. Second-endorsed checks should be rejected. Client’s Account Number must be legibly written by the client on the reverse side of the check. c. All FX checks shall be microfilmed, scanned or photocopied (both face and reverse side), if microfilmer or scanner is not available, prior to dispatch. d. Authorized personnel of Remittance Department (Processing Center) shall perform the following: o o

o

Verify completeness and accuracy of information in the manifold. Review proper classification of checks received. If there are erroneous check classifications, the branch officer should be immediately advised via e-mail to correct. For collection items that are erroneously credited outright should be reversed / corrected the same day. Erroneous classifications shall be subject to MIS charges from Remittance Department. Acknowledge receipt of checks in the supporting Manifolds. Date and time of receipt shall also be indicated in the Manifold to monitor the clearing period. Corrections shall be noted in the received manifold.

2. Sale and issuance of Dollar Demand Draft a. Sale of $DD must be covered by a duly accomplished application form. Purpose of sale must be specified and name of the payee. Sale of $DD will only be allowed to existing depositors of the Bank to ensure that the applicant has been duly identified. Dollar Demand Draft shall always bear the full signature of any two-branch officers of the issuing unit at the time of issuance. b. Dollar Demand Draft is a dollar denominated draft drawn on Metrobank, New York for the account of PSBank, H.O. Philippines issued by PSBank Head Office and branches. c. Dollar Demand Draft shall be issued and made payable only to a specific payee and shall not in any instance be made payable to “CASH” or “BEARER”. The words “PAYEE’S ACCOUNT ONLY” shall be stamped diagonally at the upper left corner of the FXDD and shall always bear the check written amount. 3. Sale and Issuance of Manager’s Checks / Gift Checks (Revised: September 2008) a. The Bank shall allow sale of MC/GCs only to existing depositors of the Bank. Property of PSBank Data Classification: Confidential Revised December 2009

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b. In filling-out the application form for Manager’s Checks / Gift Checks, the branch shall use the Application for Fund Transfer (AFT) to document the sale and issuance of MC/GC. c. The following information needed to obtain : o Reference No, (MC/GC Serial No.) o Mode of Payment o Amount in Words and in Figures o In favor of (Payee of MC/GC) o Name and signature of the applicant/purchaser o Purpose o Authorized Representative portion (if applicable) Note: If the application is via a representative, acceptable IDs should be required from the representative. d. The payee of a MC/GC must be a specific person or entity. e. Manager’s Checks / Gift Checks payable to Cash, Bearer and Numbered Accounts shall not be allowed. f.

That the deposit or said instruments shall be subject to the same requirements/scrutiny applicable to cash deposits.

g. That transactions involving said instruments should be accordingly reported to the AMLC, through the Compliance Officer if there is reasonable ground to suspect that said transactions are being used to launder funds of illegitimate origin. 4.

Acceptance of Second-Endorsed Checks

As a general rule, all second endorsed checks shall not be accepted for deposit because of the risk involved in receiving the same. Whenever possible, the payee of the check shall be encouraged to open an account with proper identification papers, to avoid second endorsed check deposits. 5. Spurious Checks Spurious/fake checks are checks that were illegally/unlawfully printed or altered to defraud banks or the payee. Spurious checks are defined as those that are materially altered. These were clearly done with a criminal intent and therefore reportable. Preparing the BSP Report of Crimes & Losses does not absolve us from the requirement of submitting the corresponding STR. At a glance, spurious/fake checks may appear to use the same logo and other security features of an authentic/valid checks. PSBank personnel shall consider a check as spurious or fake if it does not contain the security features set by the drawee bank or security features of the check have been maliciously altered. Property of PSBank Data Classification: Confidential Revised December 2009

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a. Not all dishonored checks are reportable only those related to swindling b. Bouncing check is a criminal law violation of Batas Pambansa (BP) 22 but it is not an unlawful activity under AMLA except when it falls Article 315 of the Revised Penal Code. c. Returned checks due to closed account or insufficient funds issued for a consideration are not automatically reportable under AMLA. d. Only if there is swindling, deceit or fraud prior issuance/negotiation of the check.

or

during the

Example issuance of check after 6 months of account closure When in doubt report, AML COMMITTEE will make the determination of the offense. While it is discretionary upon the banks to report a STR, non-reporting bears the risk of the penalty. 6. Guidelines for Fund Transfers a. Fund Transfer is remittances of funds from one bank to another, either locally or internationally in local or foreign currencies. This may include movement of money between customers or between accounts of the same customer of the Bank. Transfers can be effected by teletransmission, draft, manager’s check or certified check depending on the request of the applicant. The term also includes Automated Clearing House Transfers, transfers made at Automated Teller Machine (ATM) and point of sale terminals. b. The financial institutions should be governed by a Manually Initiated Funds Transfers (MIFT) Policies and Procedures for funds transfer requests that are manually initiated (via fax, telephone, messenger, electronic mail, file transfers, and other similar manual origination means) externally from clients or internally from within the banking group/entities. c. The policies and procedures should specify personnel that will be responsible for ensuring compliance with the guidelines on funds transfers transactions. d. The policies and procedures shall also provide for independent review by appropriate personnel to monitor and ensure continued compliance with the institution’s polices, procedures and guidelines on funds transfers. e. The financial institution shall allow wire transfer electronically (internet transfer) only upon its prior approval. f. The Bank should maintain a policies and procedures manual for funds transfers that are reasonably designed to prevent the Property of PSBank Data Classification: Confidential Revised December 2009

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financial Institution from being used to facilitate money laundering and the financing of terrorist activities. At a minimum, the manual must incorporate policies, procedures and internal controls to: • Verify customer information (KYC). • Verify transactions that show indicators of suspicious transactions, particularly those instance stated under Rule 3.b1 of the Revised Implementing Rules and Regulations (R.A. No.9160, as amended by R.A. No. 9194); • File reports (including covered transaction/suspicious transactions reports); • Respond to regulators/law enforcement requests; • Provide education and/or training of personnel; • Provide security procedures.

g. The Bank should not accept funds transfer instruction from and/or pay-out funds transfers to non-customers, unless in cases where the initiating party is an authenticated primary customer of a sending group or unit of the Bank. h. If the fund sender/remitter is not a bank or coming from non-FATF member or non-compliant countries on AML, the receiving bank must do the due diligence on the beneficiary of the fund. i. Whenever possible, manually initiated funds transfer instructions should not be the primary delivery method. Every effort should be made to provide the client with an electronic banking solution. j. Validation must be performed by all banks. The term “validation” applies to various methods used by both sending and receiving parties to verify the identity of the sender of a message. Some validation methods also verify elements in the message including but not limited to amount, value date and currency. Some specific validation methods are: Test Key: An algorithmic computation method using a fixed set of factors known only to the sender and receiver, used to verify the sender and, in some cases, other elements of the message. Authentication: A cryptographic process used to verify the sender and, in some cases, the full text of a message. Signature Verification: A matching of signature or other representation from a source document request to a document pre-signed by a Bank customer and held on file by the Bank, or other documents held by the customer (e.g. Bank approved acceptable identification), used to verify the sender.

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Telephone Callback: A procedure used to verify the authenticity of a message received by telephone. The Bank places a return phone call to the customer using a pre-determined telephone number on file within the Bank. k. The originating/remitting branch/office shall require the remitter to indicate the purpose of the remittance and his/the remitting company’s complete address and contact numbers (residential/office or tel. Number/e-mail/fax) in the remittance application form and shall see to it that the following information regarding the beneficiary/claimant are completely provided: 1. 2. 3. 4.

full name of the beneficiary complete address of the beneficiary telephone number (if any) name and complete address of the branch/bank where funds are to be remitted 5. account number (for remittances by way of credit to account) l.

No relationship shall be established and no wire transfer shall be processed without satisfactory identification. The Remittance Teller or Agent shall require each prospective customer to provide any valid government issued identification document pursuant to BSP Circular 608 dated May 20, 2008.

m. For additional verification, identification document maybe combined with any supplementary ID’s, provided that such ID contains a photo ID as required under the Bank’s policy on the matter. n. Business Accounts 1. Business principals should provide evidence of legal status (e.g. sole proprietorship, partnership, or incorporation or association) when opening a business account. The following identification documents shall be required: a. b. c. d.

Individual ID’s for each signatory Certificate of Filing of Business Name Employer Identification Number Certificate or Articles of Incorporation/Partnership/Association, etc. e. By-Laws f. Corporate Resolution g. License to Operate Business, if applicable 2. When circumstances allow, perform a visual check of the business to verify the actual existence of the business and that the business has the capability of providing the services described. 3. Consider the purpose and source of funds used to process the transaction. Cash transactions over $2,000.00 should be questioned. Property of PSBank Data Classification: Confidential Revised December 2009

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4. For large commercial accounts, the following information may be obtained while in the process of establishing the relationship: a. description of the customer’s principal line of business; b. list of major suppliers and customers and their geographic

locations; description of the business’s primary trade area, and whether international transactions are expected to be routine; and d. description of the business operations, i.e., retail versus wholesale, and the anticipated volume of cash sales. c.

o. The above information may not necessarily be a major requirement but these can be obtained during the process of interviewing the applicant. The employee who is processing the transaction should make a note in the forms/documents for reference purposes. 7. Dormant Accounts a. As a matter of policy, Banks shall exert all efforts to prevent checking and savings accounts from becoming dormant. When it becomes apparent that an account is inactive, a short letter should be sent to the depositor encouraging him to use his account. a. Segregated dormant accounts shall be placed under joint custody of two

(2) responsible officers/employees. b. A separate ledger control for dormant accounts shall be maintained. c.

Signature cards for dormant accounts shall also be segregated from active files and held under joint custody.

d. Entries to dormant account ledgers shall be verified and approved by a

designated officer. His initials shall be placed next to the entry on the ledger sheet. e.

All inquiries on dormant accounts shall be coursed to one officer who should obtain sufficient identification from the inquirer to assure that he is entitled to the information.

f.

A trial balance of dormant account ledgers shall be taken periodically and balances with the general control account by an employee other than the bookkeeper.

g. Dormant or inactive accounts shall be verified directly with depositors. h. All transactions affecting dormant accounts shall be subject to audit by

the internal auditor.

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i.

A semestral report on deposit accounts transferred to dormant shall be rendered to bank management.

8. Closed Accounts The depositor whose account is being closed (client or bank-initiated due to improper handling) shall be required to surrender all unused checks to the BH/BSCO or CSA-NAC. It shall be the responsibility of the branches/units concerned to retrieve all unused checks from the depositor of closed accounts to prevent further negotiation and/or use. 9. Uploading to ICDB- Caution List (Revised December 2009) For uploading of PEP and OFAC List in the Bank’s ICDB, the following procedures are being implemented by the Bank: a. Compliance Office to provide the website of PEP and OFAC List. b. CAG- CCED to secure approval for access to PEP and OFAC website and update source group on a monthly basis. c. IT-SSD to upload PEP and OFAC List by overwriting previous records. d. CAG- CCED to update AML blacklisted names as needed or upon advice from Compliance Office. 10. Updating of Customer Information and CISSCs (Revised December 2009) Per Bank’s Policies and Procedures PP-2007-021 “Updating of Customer Information and Specimen Signature Cards (CISSCs)” dated 09.05.2007, updating of CISSCs is required every two (2) years. Branches shall manually prepare the Notification Letters for Updating of CISSCs to remind depositors that their signatures cards are due for updating. Letters shall be sent to depositors within two (2) months before the 2-year expiry period, based on the date of last approval of the CISSC in the SVS. In lieu of the General Information Sheet, Bank shall use the updated CISSCs to obtain the required information that need to be disclosed by the depositors. Moreover, the Bank shall require its Corporate and Juridical customers to accomplish and update every 2 years an Anti-Money Laundering Checklist and Questionnaire where other significant data such as ownership interest and management information, among others, are also shown. For loan transactions, the General Information Sheet shall be accessed from the SEC website, as matter of practice and procedure. H.

Red Flags on Remittance

For remittance transactions, the Bank accepts outward and inward fund transfers only from existing depositors who have already undergone the KYC process. Further, clients are required to indicate the purpose and/or nature of the Property of PSBank Data Classification: Confidential Revised December 2009

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remittance. On top of the verification process above to establish the purpose of the business relationship and/or nature of the transaction, the Bank continuously reviews the propriety of transactions conducted by clients to possibly detect structured or covered transactions. The Bank requires disclosure of the beneficial owner, and takes reasonable measures to verify the identity of the beneficial owner such that the financial institution is satisfied that it knows who the beneficial owner is. For legal persons and arrangements, the Bank takes reasonable measures to understand their ownership and control structure. I.

Flagging and Monitoring of Transactions (Revised: September 2008) 1. The Bank shall devise a system of flagging and monitoring transactions that qualify as suspicious transactions regardless of amount or covered transactions involving amounts below the threshold to facilitate the process of aggregating them for purposes of future reporting of such transactions to the AMLC when their aggregate amounts breach the threshold. 2. The “Suspicious Transaction Indicator Report” (STIR) was designed to capture transactions or series of transactions that were structured to avoid suspicion and possible reporting to the proper authorities. STIR is generated from the DEPOSIT system which validates all the Bank’s transactions regardless of the mode of payment use or type of transaction: deposit or loan transactions or any other miscellaneous transaction that a customer will undertake.

To support the day-to-day evaluation of transactions for possible suspicious items, the branch personnel and other operating units of the Bank shall regularly review the Suspicious Transaction Indicator Report (STIR). 3. The following are the Red Flag Indicators which should be investigated and elevated by concerned employees as soon as these are detected in their respective operations: a. Wire transfers between accounts, without visible economic or business purpose, especially if the wire transfers are effected through countries which are identified or connected with terrorist activities. b. Sources and/or beneficiaries of wire transfers are citizens of countries which are identified or connected with terrorist activities. c. Repetitive deposits or withdrawals that cannot be explained or do not make sense. Property of PSBank Data Classification: Confidential Revised December 2009

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d. Value of the transaction is over and above what client is capable of earning. e. Client is conducting a transaction that is out of the ordinary for his known business interest. f.

Deposits being made by individuals who have no known connection or relation with the account holder.

g. An individual receiving remittances, but has no family members working in the country from which the remittance is made. h. Client was reported and/or mentioned in the news to be involved in terrorist activities. i.

Client is under investigation by law enforcement agencies for possible involvement in terrorist activities.

j.

Transactions of individuals, companies or non-governmental organizations (NGOs) that are affiliated or related to people suspected of being connected to a terrorist group or a group that advocates violent overthrow of a government.

k. Transactions of individuals, companies or NGOs that are suspected as being used to pay or receive funds from revolutionary taxes. l.

The NGO does not appear to have expenses normally related to relief or humanitarian efforts.

m. The absence of contributions from donors located within the country of origin of the NGO. n. A mismatch between the pattern and size of financial transactions on the one hand and the stated purpose and activity of the NGO on the other. o. Incongruities between apparent sources and amount of funds raised or moved by the NGO. p. Any other transaction that is similar, identical or analogous to any of the foregoing. q. Any transactions or clients that have the characteristics of any of the above should be immediately reported to Compliance Office J.

Reporting Requirements and Procedures* Property of PSBank Data Classification: Confidential Revised December 2009

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1.

AMLA Process details of reporting elevation to cover STR required reports generation that will be covered by the X-Man System. (See Annex 4) •

Scenario 1: Elevation of scenarios/cases which are not surfaced by any system a. Staff/Officer who originally discovered a possible crime/losses/suspicious transactions accesses X-Man to encode the details of the transaction/situation b. Officer/supervisor reviews the merits of the issue reported and makes a decision to approve the incident as reportable under existing rule or not. Enters his/her decision in the prescribed XMan approval screen. c. If decision is to report, X-Man reviews the scenario and classifies if incident is reportable to AMLCS as STR d. Additionally, X-Man will review the transaction details if the case is for automatic report submission or for further AMLA Committee deliberation. e. If the matter is for automatic reporting to AMLCS, the corresponding AMLCS STR following the prescribed formats will be generated. f. If the matter will require detailed review by the bank’s internal AMLA Committee, the case facts will be elevated to the X-Man queue of all the AMLA Committee using the AMLA Decision Template for disposition. NOTEs: 1) AMLA Committee Members will receive SMS advising them of their needed actions. 2) Majority decision must be made before the process can flow to the next step (i.e., at least 4 AMLA Committee members must vote in favor of reporting the case as STR.) g. Once a unanimous decision is arrived, the Suspicious Transaction Report to AMLCS will be generated. NOTEs : 1. The bank may use Electronic Signatures. 2. For STR, electronic and hard copy reports will be submitted to AMLCS

As agreed upon during the AML Committee Meeting held on October 16, 2009 on reporting of fake/falsified document/s submitted by client , where LOD, CAG, CBRCD discover a suspected fake/falsified documents from clients, Bank also adopts the following procedures in reporting possible suspicious transaction: (Revised December 2009) Issues and Discussions FOR LOAN

Committee Agreements/ Discussions

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TRANSACTIONS:

NOT REPORTABLE

A. General Rule: If PRIOR to encoding, LPSD discovered the possibly spurious docs the application will not proceed.

Agreement: Since the case is not even contained in our database and the fraud was prevented from the start. Thus, there is no need to report such cases because there is no transaction yet. Elevation to Compliance Office is not needed.

B. If loan application was ENCODED & it was found out that certain documents used were fabricated & falsified; • Submitted fake ID/Business Papers • Submitted fake ITR • Submitted fake TCT/other related docs such as RETR, Tax Declaration, etc. • Submitted fake AFS/SAL • Submitted fake proof of employment documents (Cert. of Employment, Payslip) • Provided erroneous address/contact information

For Evaluation This will be subject to evaluation, depending on who discovered the spurious documents used: Dispositions as agreed upon by the AML Committee: 1. If documentary deficiency was discovered by CAG, thus, the loan application was disapproved: DISPOSITION: -FOR AUTOMATIC REPORTING as RCL & STR due to submission of falsified documents as contained under BSP Cir. 587 (on Reporting of Crimes & Losses) and STR because the client is not properly identified if ID docs are faked or it was an attempt to defraud the bank. Thus the transaction is similar or analogous to the grounds or reasons why a transaction is deemed spurious (swindling etc). - CAG must report the case to Compliance Office within 24 hrs. - CAG must enroll the borrower in the ICDB negative info - CAG must coordinate with CO on submission of RCL & STR to BSP & AMLC - There is no need to elevate this case to AML Committee. The case will form part of the monthly summary report of the AML Committee to Board. 2. If documentary deficiency was discovered by LOD during booking

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or loan release: DISPOSITION: - LOD to elevate to AML Committee thru the Compliance Office for disposition - Compliance Office to elevate to AML Committee for decision to report or not and if there is need to include subject in the ICDB negative list. - CO coordinates with LOD on submission of RCL & STR to BSP & AMLC

NOT REPORTABLE Agreement: Since the account was not opened, there is no need to report such use of fake documents. FOR DEPOSIT TRANSACTIONS: A. General Rule: If PRIOR to account opening, Branch discovered use of spurious docs and does not open the account.

B. If documentary deficiency such as fake IDs & other deficiency were discovered by CBRCD in the course of dayto-day verification of documents/media submitted.

•

Elevation to Compliance Office is not needed Dispositions as agreed upon by the AML Committee: - CBRCD requires the Branch to explain or provide justifications why a possible fake document was accepted - If Branch justifications & result of evaluation indicates that indeed a possible fraud or falsification of documents existed and decided to close the account, Branch will endorse to BOD for AUTOMATIC REPORTING as RCL & STR. - BOD to coordinate with Compliance Office for reporting to regulatory bodies. -Branch to coordinate with CAG to include in the ICDB negative list

Scenario 2: AMLA System elevation of possible suspicious transactions a. AMLA System generates a list of possible AMLA suspicious transactions, which will be on queue to the line officers for negative confirmation. Property of PSBank Data Classification: Confidential Revised December 2009

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b. Within 24 hours, Line Supervisors (Dept head/Division Heads for HO units or BSCO/AOO for BBG must indicate NOT for reporting and corresponding justification why a transaction should not be considered Suspicious. c. Possible STRs, which are not acted within 24 hours, will immediately queue to the X-man reporting pile. d. The X-Man Reporting pile will classify the items for automatic reporting and those items that will require careful review and evaluation by the internal AMLA Committee. e. Items that were given negative confirmation by the line officers/supervisors and other items that are not for automatic reporting will queue to the bank’s Internal AMLA Committee for disposition. NOTEs: 1. AMLA Committee Members will receive SMS advising them of their needed actions. 2. Majority decision must be made before the process can flow to the next step (i.e., at least 4 AMLA Committee members must vote in favor of reporting the case as STR.) f. Once a unanimous decision is arrived, the Suspicious Transaction Report to AMLCS will be generated. NOTEs : 1. The Bank may use Electronic Signatures. 2. For STR, electronic and hard copy reports will be submitted to AMLCS g. Compliance Officer converts electronic file to the required CSV formats and electronically transmits the same. Also submits the required hard copy to the respective regulatory offices within the required 5 days turn around time. •

Scenario 3 CDRS 2 system elevation of possible suspicious transactions a. CBRCD Staff/Officer tags a transaction in CDRS 2 as suspicious and provides basis of his/her observations. Also provides other details as necessary. b. Officer/supervisor reviews the merits of the issue reported and makes a decision to approve the incident as reportable under existing rule or not. Enters his/her decision in the prescribed CDRS approval disposition screen/ X-Man screen c. From CDRS 2 the transaction will flow in to X-man System. d. X-Man System generates a list of possible AMLA suspicious transactions, which will be on queue to the line officers for negative confirmation. e. Within 24 hours, Line Supervisors (Dept head/Division Heads for HO units or BSCO/AOO for BBG) makes negative confirmation on items on their queue. Officer indicates, “NOT for reporting” and corresponding justification why a transaction should not be considered Suspicious. f. Possible STRs which are not acted within 24 hours, will immediately queue to the X-man reporting pile. Property of PSBank Data Classification: Confidential Revised December 2009

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g. The X-Man Reporting pile will classify the items for automatic reporting and those items that will require careful review and evaluation by the internal AMLA Committee. h. Additionally, X-Man will review the transaction details if the case is for automatic report submission or for further AMLA Committee deliberation. i. If the matter is for automatic reporting to AMLCS, the corresponding AMLCS STR following the prescribed formats will be generated, following scenario 2.f- 2.g above. Scenario 4 - CDRS 1 system elevation of possible suspicious transactions NOTEs: 1. This will cover the receipt of spurious checks through the central clearing dept. 2. While this process does not flow in to the X-man unlike CDRS 2, the procedure that will be followed will be similar to scenario 1. 3. However, as a matter of rule all spurious checks are automatically reported as STR and Crimes and Losses.

•

2.

Covered Transaction Report (Revised: December 2009) a.

1) 2) 3) 4) 5) 6) 7) 8)

Following are different transactions that must be reported by the Bank to the Anti-Money Laundering Council whenever the amount involved exceeds Php500,000 within one (1) Banking day (See Annex 1 for detailed listing):

Cash/check deposit Cash withdrawal Check encashment Credit/Debit Memo Fund transfer Bills payment Collection Miscellaneous transactions 9) Sale of MC/DD/TT 10) Check warehousing 11) Remittance

12) Auto debit arrangement 13) Payroll 14) ATM deposit/withdrawal 15) ATM bills payment 16) Other ATM/Internet Banking transactions 17) Buy/Sale of government/private securities 18) Trust transactions 19) Loan releases/payments 20) Inward/outward remittances 21) Foreign currency buying/selling 22) Sale of ROPA

BSP Circular Letter No. CL-2009-037 “Anti-Money Laundering Council (AMLC) Resolution No. 24 dated 18 March 2009”, amended AMLC Resolution No. 58 dated May 25, 2005 by excluding “Transactions between Banks and government agencies” from among the “non-cash, no/low risk” transactions, for which reporting of covered transaction was deferred and covered under Circular Letter dated June 16, 2005. b.

All “covered transactions” shall be generated centrally at Head Office in accordance with the electronic reporting format (See Appendix) prescribed by Property of PSBank Data Classification: Confidential Revised December 2009

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the Anti-Money Laundering Council. Operating units responsible for the data generation shall be as follows:

Transaction Type Transactions captured by the deposit system Transactions captured by the Loan System ATM Transactions Remittances Sale of ROPA Treasury transactions Trust Transactions

Responsible Unit IT Division IT Division IT Division Remittance Unit Remedial Management Treasury Operations Trust Department

c. The Covered Transaction Report (CTR) shall be sent to the AMLC in encrypted electronic form either via leased lines or through Internet facilities. The CTR shall be transmitted within ten (10) Banking days from transaction date. Only authorized officials of the Bank shall be allowed to send the CTR electronically to AMLC. No corresponding hard copy report is necessary. d.

In case of subsequent corrections or major change in the CTR, a different CTR shall be prepared for the corrected batch to ensure identification and appropriate disposition on the part of the AMLC.

e.

There are some covered transactions that are exempted from reporting to the AMLC, to wit: 1. 2. 3. 4.

Transactions between BSP and Banks; Transactions between Banks operating in the Philippines; Internal operating expenses of Banks; Transactions involving fund transfers between same account holder within same Bank; 5. Roll-over of placements; 6. Loan interest/principal payments debited from deposit account maintain in the lending bank.

K. The Anti-Money Laundering Committee of the Bank (Revised: December 2009) The Bank’s Committee on Anti-Money Laundering is composed of: Chairman :Noli S. Gomez Members: 1. Jaime Valentin L. Araneta 2. Emma B. Co 3. Ma. Patricia L. Castaneda 4. Francis C. Llanera 5. Neil Estrellado 6. Grace G. Dela Cruz 7. Jaydee P. Caparas

SVP/ Operations Group Head SVP/ Remote Banking Head VP/ Chief Audit Executive VP/ Chief Risk Officer VP/ Collections &Remedial Mgt. Group Head FVP/ IT Head VP/ Chief Compliance Officer AVP/Bank Operations Division

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NOTE: The Chief Compliance Officer will act as the Secretary of the Committee The duties and responsibilities of the Bank’s Anti-Money Laundering Committee are as follows: 1.

Review internal policies and guidelines pertaining to reporting of Suspicious Transaction Reports, including criteria or basis on what comprise a suspicious transaction.

2.

Submit updates for notation of the Audit Committee and Board of Directors on the Reports on Suspicious Transactions reported to the AMLCS and the Report on Crimes and Losses submitted to BSP.

3.

Recommend revisions of the Anti Money Laundering Manual for submission to the board of directors to ensure Bank’s full compliance to the Anti Money Laundering revised Implementing Rules and regulations. (e.g. IRR dated Sept. 7, 2003)

4.

Review possible suspicious transaction reports (STR) prior to submission of report to AMLC. In view of the required turn around time in submission of report (within 5 working days from date of discovery/confirmation of the suspicious transaction as per Bank’s practice) an email advice may be routed to all members and chairman for comments and consensus to report or not to report. In case of unresolved issues, the chairman may opt to call for an immediate meeting for the committee to finalize its recommendation or position on certain crucial transactions. The frequency on the conduct of AML Committee meeting will be as necessary, given the rules set on deciding STR cases and in the discharge of the committee reports.

5.

Based on the recommendations of Fraud Investigation Units (RMO and IAG) or the Compliance Officer, conduct investigation and analysis of the following but not limited to: a. Cases of employee lapses related to failure to comply with the requirements of AMLC on customer identification, record keeping, and reporting of covered and suspicious transactions, b. Internal and external fraud to determine appropriate actions to be undertaken by the Bank, which should be, submitted to the President, Audit Committee or the Board whichever is appropriate, c. Attempted or completed schemes of syndicates such as use of spurious Bank documents in order to defraud the public and can cause damage to the Bank in terms of reputation and legal risks.

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6.

Review and approve system requirements, policies and procedures to ensure Bank’s AMLA compliance. Review and define scenarios that may result to a suspicious transaction trigger or alerts.

7.

Coordinate with PSB Anti Money Laundering Committee and AMLC regarding updates and other anti money laundering issues that need to be cascaded within PSBank.

L. FREEZE ORDERS 1. Freeze Orders (FOs) from the Court of Appeals shall be received by Compliance Officer. Upon receipt of the notice of the freeze order, the Compliance Unit/Officer shall coordinate with Legal Department for proper direction on course of action to be taken in accordance with existing laws/regulations and policies and immediately freeze the monetary instrument or property and related web of accounts subject thereof. 2. All inquiries/communication/directives relating to FO/Instructions from the AMLC shall be coursed through the Compliance Unit/Officer. FO received shall be sent immediately to all branches through email and/or fax. Upon receipt of the freeze order issued by the Court of Appeals and upon verification by the Bank that the related web of accounts originated from and/or are materially linked to the monetary instrument or property subject of the freeze order, the Bank should freeze these related web of accounts wherever these funds may be found. Freeze/forfeiture orders and letter of authority to inquire/examine certain accounts/ transactions/documents shall be promptly coordinated with AMLCS through the Head of Legal Department by the head of the concerned operating unit prior to complying with such orders/letters. 3. Bank shall likewise immediately furnish a copy of the notice of the freeze order upon the owner or holder of the monetary instrument or property or related web of accounts subject thereof; 4. Within 24 hours from receipt of the freeze order, Branches concerned, in coordination with the Compliance Unit/Officer and Legal Department, shall submit to the Court of Appeals and the AMLC, by personal delivery, a detailed written return on the freeze order, specifying all the pertinent and relevant information which shall include the following: i. The account number(s) ii. The name(s) of the account owner(s) or holder(s) iii. The amount of the monetary instrument, property or related web of accounts as of the time they were frozen iv. All relevant information as to the nature of the monetary instrument or property

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v. Any information on the related web of accounts pertaining to the monetary instrument or property subject of the freeze order vi. The time when the freeze thereon took effect “Related Web of Accounts pertaining to the monetary instrument or property subject of the freeze order” is defined as those accounts, the funds and sources of which originated from and/or are materially linked to the monetary instrument(s) or property(ies) subject of the freeze order(s). 5. Upon expiry of the 20-day period of the freeze order issued by the Court of Appeals, the Bank should not lift the effects of the freeze order without securing official confirmation from the AMLC that the Court of Appeals has already lifted the Freeze Order. M. RECORD KEEPING Transaction records should be sufficient to permit reconstruction of individual transactions so as to provide, if necessary, evidence for prosecution of criminal activity. Examples of the necessary components of transaction records include: customer’s (and beneficiary’s) name, address (or other identifying information normally recorded by the intermediary), the nature and date of the transaction, the type and amount of currency involved, and the type and identifying number of any account involved in the transaction. Records shall be retained as originals in such forms as are admissible in court pursuant to existing laws and the applicable rules promulgated by the Supreme Court. In addition to the required full documentation of customer relationships, the Bank strictly requires that following policies on record keeping must be observed: 1. Records of all customer accounts and transactions must be maintained and stored for a period of five (5) years reckoned from the date of the transaction. These include, but not limited to, the following: • • • • •

Account application forms Customer identification documents Specimen signature cards Transaction records Business correspondence

In cases of closed accounts, records should be preserved and safely stored for a period of at least five (5) years from the date of closure of the accounts. 2. All heads of departments/branches/units must ensure that customer records are properly safe kept in accordance with the Bank’s records retention policy. A complete record must be maintained in the branch/department/unit for all items/documents/ records transmitted . Property of PSBank. Reproduction of any part of this Manual without the Bank’s consent and authorization is punishable. Revised December 2009

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for safekeeping in the Bank’s offsite storage area. In case of relocation or transfer of assignment of personnel, the responsible officer must properly turnover the records to the person who assumes the position. 3. In case a money laundering case based on any record kept by the Bank has been filed in court, such record file must be retained beyond the required 5-year retention period until it is confirmed that the case has been finally resolved or terminated by the court. N. Confidentiality All officers and employees of the Bank are strictly prohibited from disclosing to any person, including clients, the fact that a covered or suspicious transaction has been or is being reported to the AMLC. E-mail copies of the covered/suspicious transaction report should be limited to the persons required to be furnished under the prescribed reporting process. O.Administrative Sanctions Bank officers and staff who may be found violating any of the requirements under this manual shall be asked by the Compliance Office to submit his/her written explanation/s within 48 hours. Administrative sanction/s may be imposed by management in accordance with the Bank’s Code of Ethics and Behavior. XII.

COMPLIANCE

Compliance with the requirements of the Anti-Money Laundering Law as contained in the Bank’s AMLA Operating Manual shall be the responsibility of each officer and staff of the Bank under the guidance and supervision of the respective heads of the business or operating units. In order to promote awareness and ensure proper compliance with the requirements of the AMLA, following are the support functions and responsibilities of designated units in the Bank:

1.

2. 3. 4.

Function/Responsibility Development and issuance of Operating Manual on Anti-Money Laundering and dissemination of all memorandum circulars, resolutions, instructions and policies issued by the AMLC/BSP/SEC relating to the prevention of money laundering. Issuance and enforcement of supplementary internal operating guidelines for branches Reporting of Covered and Suspicious transactions Periodic compliance checking to ensure proper implementation by business/operating units

5. Monitoring of Branch’s/Business Unit’s compliance

Designated Officer/Unit Compliance Office

Compliance Office Refer to IX (b) and (c) Auxiliary Compliance Officer, Audit Group, Compliance Office Branch Head/BSCO

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with AMLA requirements and monthly submission of Compliance Checklist to Compliance Office. 6. Personnel Training

7. Serve as liaison between the Bank and the AMLC in matters relating to compliance with the provisions of the Anti-Money Laundering Law and its Implementing Rules and Regulations. 8. Over all responsible for ensuring compliance by the Bank with provisions of the Anti-Money Laundering Law and its Implementing Rules and Regulations.

Head of Business Unit Training Division (in coordination with Compliance Office) Compliance Office

Compliance Office

Note: Notwithstanding the foregoing duties and responsibilities, the ultimate responsibility for the proper supervision, reporting and compliance pursuant to the AMLA, as amended, its Revised Implementing Rules and Regulations shall rest with the Bank and its Board of Directors. XIII.

AUDIT REVIEW

The Internal Audit Group shall include in their audit program, techniques and procedures to test compliance with the requirements under this manual, detect any money laundering activities, & extend investigative services to properly document money laundering report. In compliance with RA 9160, as amended by RA 9194, and the AML policy of the Bank, the Audit Group includes as part of its regular audit programs, specific audit programs/procedures on AML, focused mainly on the following: a.

Compliance with minimum identification requirements as part of the Bank’s KYC policy; b. Reporting of covered and/or suspicious transactions; c. Record retention; and, d. Adequacy of AMLA training programs for employees. All Audit reports must have an AMLA sub-section that will cover how compliant is the HO Unit and branches in terms of its faithfulness to its duties as employees of covered institution. XIV. RECRUITMENT, EDUCATION AND TRAINING The Bank should institute adequate screening and recruitment procedures for Bank personnel including designated compliance officer/s. Likewise, all Bank employees, officers and staff, shall undergo training on a regular/periodic basis, including refresher trainings, to make them fully aware of their responsibilities and accountabilities in implementing the Anti-Money Laundering guidelines contained in this Manual. Employee training and other educational support programs shall be as follows: . Property of PSBank. Reproduction of any part of this Manual without the Bank’s consent and authorization is punishable. Revised December 2009

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a) Training shall be provided to all new employees of the Bank for them to acquire a general understanding and appreciation of the background to money laundering, the need to be able to identify suspicious transactions and report such transactions to appropriate Bank authorities. (Basic AMLA Training) b) Front-line personnel such as New Accounts Clerks and Tellers deal directly with customers and are usually the first point of contact with potential money launderers. Because of their vital role, they shall be trained to properly handle unusual transactions and/or non-regular customers particularly where large cash transactions are involved. Training goal is for them to be able to identify suspicious transactions and to properly implement procedures when confronted with a transaction deemed to be suspicious. c) Rank and file, line supervisors and managers shall be provided with a higher level of education that will cover all aspects of the anti-money laundering procedures. This shall include the nature of offenses and penalties under the AMLA, the requirements for verification of customer identity and retention of records and the responsibilities and internal reporting procedures and done on an annual basis. This training module will likewise focus on actual cases and examples that were encountered by the bank to provide a higher level of learning among the participants. (AMLA Reinforcement Training) d) Periodically, the Bank’s Compliance Officer shall issue Compliance Bulletins to remind key personnel of their responsibilities, to update them of any changes in the laws and/or regulations and to keep them abreast with changes and/or additions to the Bank’s internal processes to combat money laundering. e) The Anti-Money Laundering Operating Manual, internal memoranda, bulletins, as well as resolutions, instructions and policies issued by the AMLC/BSP/SEC relevant to money laundering shall be posted in the Bank’s InfoChannel to provide easy access to information by officers and staff in all of the Bank’s branches/offices nationwide.

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ANNEX 1 BANK TRANSACTIONS COVERED FOR REPORTING UNDER AMLA A. Core Deposits/Withdrawals 1. 2. 3. 4. 5.

Cash Deposit Cash withdrawal Encashment Check deposit Certificate of Time C. Deposit 6. Credit Memo 7. Special time deposit 8. Debit Memo 9. Transfers (local) 10. Bills payment 11. Collection 12. Miscellaneous transactions 13. Purchase of MC/DD/TT 14. Check warehousing 15. Bills Purchase 16. Remittance 17. Auto debit arrangement 18. Payroll B. Remote Banking 1. 2. 3. 4. 5.

ATM Deposit ATM withdrawal ATM bills payment Fund Transfer Order Checkbooks

C. Treasury 1. IBODI – Govt 2. IBODI – private D. 3. IBODI – foreign E. F. D. Securities G.

1. 2. 3. 4. 5. 6.

Buy Sell Lodgments Upliftment EQ in EQ out

H. I.

4. Prepaid card purchase 5. Prepaid card loading

J.

G. Consumer Banking

E. Trust Transactions 1. Contributions/subscript ions K. 2. Withdrawal/redemption 3. Purchase security/asset 4. Expense payment 5. Earnings 6. Loan release 7. Loan payment 8. Regular Trust Fund 9. Common Trust Fund 10. Fiduciary-safekeeping 11. Fiduciary-guardianship 12. Fiduciary-Executorship 13. Fiduciary-Escrow 14. FiduciaryCustodianship L. 15. FiduciaryAdministratorship 16. Fiduciary-Pre-need plan 17. Fiduciary-Life insurance Trust 18. Fiduciary-Bond issues M. 19. Investment Management Fund F. Credit Card

1. New business for insurance, pension, educational plan 2. Premium/plan payment 3. Claims/maturities H. Institutional Banking 1. 2. 3. 4. 5. 6. 7. 8. 9.

Loan availment Loan payment Loan repricing Loan renewal Loan pretermination LC (Import/Export) Doc. Collection Outgoing guarantee Clean collection (export) 10. Credit bills-export I. Remittance 1. Outward remittance 2. Inward remittance 3. SWIFT transactions J. FX Retail 1. Buy Fx 2. Sell Fx

1. Credit card purchase 2. Credit card cash advance 3. Credit card payment ANNEX 2

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INTERNAL REPORT ON SUSPICIOUS TRANSACTION Branch/Office _________________________________

CUSTOMER IDENTIFICATION A. Individual Account Number : Name : Present address : Permanent address : Date of birth : Place of birth : Nationality : Name of employer (or nature of business if selfemployed):

B. Corporate/Juridical Entity Account Number : Registered Name: Date of registration: Address :

Address of employer/business:

List of document/s presented to verify legal existence:

Telephone No/s: Fax No/s : Nature of business :

Contact Nos. : TIN/SSS/GSIS No.: Other details of ID documents: Nature of Transaction or Source of Funds:

Nature of Transaction or Source of Funds:

Name of beneficiary (if applicable) :

Name of beneficiary (if applicable) :

Address of beneficiary (if applicable) :

Address of beneficiary (if applicable) :

DESCRIPTION/DETAILS OF SUSPICIOUS TRANSACTION: (Use additional/separate sheets if necessary)

Name of front-line employee:

Officer who prepared the report:

Date of Report:

Other instructions: ANNEX 3 . Property of PSBank. Reproduction of any part of this Manual without the Bank’s consent and authorization is punishable. Revised December 2009

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PSBANK MONEY LAUNDERING SUSPICION EVALUATION RECORD

AMLA COMMITTEE ELEVATION TEMPLATE (Revised November 2009) Date endorsed to AMLA Committee Case Reference Number: (to be assigned by Compliance Office) Customer Name:

IDs submitted

Bank Business Unit Relationship/s

Date of Occurrence:

Date of Suspicion was confirmed:

Amount involved:

Discovered by/How Discovered

Consummated? YES NO

Date Reported To AMLC

Address

Metro Grp Relationship? YES NO Insurance Cover

BSP

Case Brief Description:

AMLA Committee Member

AMLA COMMITTEE DECISION TEMPLATE REPOR REPORT As HOLD needs T as C&L additional info/issue STR resolution

COMMENTS

1. Noli Gomez 2. Jimi Araneta 3. Trixie Castaneda 4. Emma Co 5. Francis Llanera 6. Neil Estrellado 6. Jaydee Caparas 8. Grace dela Cruz

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NOTES: A. Reporting Criteria on Suspicious Transactions, include ANY of the following circumstances (whether consummated, frustrated or attempted): • Purpose of transaction is questionable (no legal/trade/economic justification) • No proper identification of client or remitter (in the case of RTS, it will fall into this category: Client's address given I assume was a wrong which resulted to RTS, insufficient/spurious IDs) • Amount of transaction not commensurate with business or financial capacity of client • Structuring of transaction amount to avoid 500K threshold • Transaction deviates from Customer Profile or past transactions of the account • Transaction is related to an unlawful activity or crimes mentioned under anti money laundering law (14 predicate crimes) that was committed in the past, being presently committed or to be committed in the future • Any transaction that is similar or analogous to the above. NOTE REPORT SUBMISSION DATE: within 5 banking days from date of determination/confirmation that transaction was suspicious (as per PSBank AMLA Manual) B. Reporting Criteria for Crimes and Losses to BSP (whether consummated, frustrated or attempted). 1. Amount is 20K or more involving crimes of theft, robbery, swindling, estafa , falsification, credit card related or other crimes that may cause to the bank, negligence and deceits or damage to bank properties and facilities, 2. Regardless of amount is committed by an employee of the bank, negligence included. As defined in Cir 587 Negligence is: the failure to exercise the care which an ordinarily prudent person would use under the circumstances in the discharge of the duty then resting upon him 3. Amount of 100K per incident involving material loss or destruction of properties and facilities other than those arising from crimes. NOTE REPORT SUBMISSION DATE: within 10 calendar days from date of knowledge of crime or incident as per BSP Cir 587. Must be submitted to in two (2) copies: BSP SDC and BSP SITD. Important reminder to HRG/ BBG and other offices submitting reports on Crimes and Losses: Where a thorough investigation and evaluation of facts is necessary to complete the report, an initial report submitted within deadline may be accepted: Provided, that a complete report is submitted not later than twenty (20) calendar days from termination of investigation. Moreover, final reports on crimes and losses with incomplete information as required under SES Form 6G shall be considered erroneous reports and the concerned bank shall be required to submit amended reports subject to penalties on late reporting for Category B reports under Subsection X162.2 of the MORB.

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ANNEX 4 INDICATIONS OF SUSPICIOUS TRANSACTIONS Xman General Templates Exception Code SR1

SR2

SR3 SR4 SR5

SR6

SR6.1 SR6.2 SR6.3 SR6.4 SR6.5 SR6.6 SR6.7 SR6.8 SR6.9 SR6.10 SR6.11 SR6.12 SR6.13 SR6.14 SR7

Exceptions Questionable Purpose of transaction OR No purpose/legal/trade/economic justification, intention to use account for incoming remittances or outward remittances was not disclose as purpose of opening the account, Application for FT, CC/MC/GC/$DD not fully accomplished • Lacks or incomplete identification of client (including cases of RTS, insufficient or use spurious IDs/ faked documents ITR etc) Failure to disclose source of funds/wealth, No clear source of funds, Failure to submit business documents; Failure to accomplish AMLA Questionnaire; Negative information on Client based on ICDB, PEP, AMLA List/OFAC list; Account movements not reflective of nature of true customer’s business (in/out funds same day or for short period of time). • Amount of transaction not commensurate with business or financial capacity of client, unexplained incoming remittance to a regular account, • Structuring of transaction amount • Transaction deviates from Customer Profile or past transactions of the account (unexplained improvements in ADBs, reactivated dormant accounts, significant incoming remittances, excessive purchases of FX, cyclical pattern of loan transactions being paid up then re-availed, Transactions from FATF uncooperative countries) • Customer involved in unlawful activity or crimes mentioned under anti money laundering law (14 predicate crimes below) that was committed in the past, being presently committed or to be committed in the future 1. Kidnapping for ransom 2. Drug trafficking 3. Graft and corruption 4. Plunder 5. Robbery or extortion 6. Jueteng or Masiao 7. Piracy at high seas 8. Qualified theft 9. Swindling 10. Smuggling 11. Violation of eCommerce Law 12. Hijacking, arson, murder 13. Fraudulent practices 14. Felony or practices that are punishable under the new penal law Any transaction that is similar or analogous to the above. (Groups known to be planning to overthrow the govt, NGO does not appear to have expenses normally related to relief or humanitarian efforts, of individuals, companies or NGOs that are suspected as being used to pay or receive funds from revolutionary taxes etc) •

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XMAN STR Decision Parameters Reporting units

BBG BBG/ REMITTANCE

BBG

Scenarios

Exception Category

- Client failed or refused to disclosed purpose for opening the account - Source of remittance with no clear purpose or underlying legal basis Unusual cash purchases of drafts, traveler’s checks and cashier’s checks. Retail deposits of numerous checks but rare withdrawals for daily operations. A business owner (e.g. a one-location storeowner) who makes several deposits on the same day at different Bank branches. Frequent request for Bankers drafts, money transfers or other negotiable and readily marketable money instruments. Frequent exchange of cash into other currencies. Substantial increases in cash deposits without apparent cause especially if the same is transferred to another account not usually associated with the client. Corporate account(s) where deposits or withdrawals are primarily in cash rather than checks. A loan secured by a certificate of deposit or other investment vehicle of other Banks. A customer who often visits the safety deposit box area immediately before making cash deposits just under the reportable threshold. An account or customer that has frequent deposits or large amounts of currency that appear to have been withdrawn from other Banks (i.e. wrapped in currency straps that have been stamped by the other Bank.) An account or customers that frequently deposits of extremely dirty bills. A depositor, who purchases cashier’s checks, drafts, traveler’s checks, etc., with large amounts of cash. A request for loans to a company, especially one located in a haven country, or for a loan secured by obligations of an offshore Bank. Wiring cash proceeds of a cash deposit to another country without changing the form of

SR 1

AMLA COM Automatic DISPOSITION (STR) X

SR 1

X

SR1

X

SR1

X

SR1

X

SR1 SR1 SR1

X

SR1

X

SR1

X

SR1

X

SR1

X

SR1

X

SR1

X

SR1

X

SR1

X

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BBG

BBG

BBG BBG BBG/ REMITTANCE SBUs/PLPS/ Credit Admin/LOG

SBUs PLPS/Credit Admin/LOG SBUs/PLPS/ Credit Admin/LOG Collections

currency. Client failed or refused to disclosed purpose for opening the account A customer who operates a retail business and provides check-cashing service and does not make large draws of cash against checks deposited. This may indicate the customer has another source of cash. Wire transfers between accounts, without visible economic or business purpose, especially if the wire transfers are effected through countries which are identified or connected with terrorist activities - Client failed to submit acceptable IDs - Client requested to open a numbered account - Client used aliases - Client’s information on application form is inconsistent with the information on the IDs presented (name, address, birthday) - Client has no clear source of funds/wealth - Client is PEP disapproved by mgt from opening account -Returned to Sender (RTS) thank you letter - Transactions indicative of regular in/out deposit/ withdrawal on same day or within short period of time. -Client is conducting a transaction that is out of the ordinary for his known business interest. -Deposits being made by individuals who have no known connection or relation with the account holder. -An individual receiving remittances, but has no family members working in the country from which the remittance is made. - Use of fake IDs

SR1

X

SR1/SR2

X

SR1/SR5

X

SR 2 SR 2

X X

SR 2 SR 2

X X

SR 2 SR 2

X X

SR 2 SR 2

X X

SR 2

X

SR 2 SR 2

X

SR 2

X

SR 2

X

SR 2

X X

- Submission of spurious supporting documents ITR, RETC, By-laws. Etc - Failed to declare purpose of loan - Intentional changes in customer static information like spelling of name. Birthday, spouse details in order to by pass ICDB detection - Use of fake IDs supporting documents

SR 2

- Non-starter and investigation will show that

SR 2

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X 54

RMU/Fraud control Unit Collections RMU/Fraud control Unit Collections RMU/Fraud control Unit BBG

BBG/ REMITTANCE BBG

customer used faked IDs and spurious docs with intention to defraud the bank -Fraud initiated by the applicant and was turned in by agent (e.g. top performer) in good faith or a case of “nalusutan or naisahan” during the course of solicitation Client remains uncontacted and declared residence address w/c she has vacated prior to her auto loan application Reluctance to provide information when opening an account. A customer who is reluctant to provide information needed for a mandatory report to have the report filed or to proceed with a transaction after being informed that the report must be filed. Source of remittance with no clear purpose or underlying legal basis A business that is reluctant to provide complete information regarding the purpose of the business, prior Banking relationships, officers or directors, or its location. A business that refuses to provide information to qualify customers for credit or other Banking services. A customer who is unwilling to provide personal background information when opening an account or purchasing monetary instruments above a specified threshold. A customer who opens an account without references, a local address, or identification (passport, alien registration card, driver’s license, etc.), or who refuses to provide information the Bank requires to open an account. A customer who presents unusual or suspicious identification documents that the Bank cannot readily verify. A customer whose home phone is disconnected. A customer who includes no record of past or present employment on a loan application. A customer who has no record of past or present employment but makes frequent large transactions. A business that is reluctant to reveal details about its activities or to provide financial statements. A business that presents financial statements noticeably different from those similar

X SR 2 SR 2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2

X

SR2 SR2

X

SR2

X

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SBUs/PLPS/ Credit Admin/LOG

Collections/CSD/ LOG

BBG BBG/Remittance BBG/Remittance BBG BBG

BBG/SBU/HO Units

businesses. Client failed to submit acceptable Ids. Client requested to open a numbered account Client used aliases Negative information on client obtained from ICDB Negative information on client obtained from OFAC LIST Negative information on client obtained from AMLC Terrorist list Client is PEP which disapproved by mgt from opening account Returned to Sender (RTS) thank you letter Use of fake IDs supporting documents Sources and/or beneficiaries of wire transfers are citizens of countries which are identified or connected with terrorist activities Client is conducting a transaction that is out of the ordinary for his known business interest. Example issuance of loan payment PDC (Post dated check) after 6 months of account closure -Repetitive deposits or withdrawals that cannot be explained or do not make sense. Large cash deposits made by an individual or company whose business should not normally generate substantial amounts of cash. Clients who wish to maintain several trustees’ accounts not consistent with type of business. Beneficiary of huge volume of unexplained remittances Instructing the Bank to transfer funds abroad and to expect an equal incoming wire transfer from other sources. Numerous cash deposit transactions to conceal the total amount of transaction. Transferring funds into several accounts, usually in amounts below a reportable threshold, and then consolidating into a master account and transferring them outside the country. -Client is under investigation by law enforcement agencies for possible involvement in terrorist activities Amount is 20K or more involving crimes of theft, robbery, swindling, estafa or other deceits involving loss or damage to bank

SR2 SR2 SR2 SR2

X X X X

SR2

X

SR2

X

SR2

X

SR2 SR2

X X

SR2

X

SR2

X

SR 2

X

SR2/SR5

X

SR3

X

SR3

X

SR3 SR3

X

SR4

X

SR4

SR 4

X

SR 4

X

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BBG/SBU/HO Units

HRG/BBG/HO Unit/Audit/Fraud Control Unit BBG BBG

BBG BBG CREDIT ADMIN/BBG/ LOG/ COLLECTIONS BBG BBG BBG REMITTANCE REMITTANCE BBG

BBG

properties and facilities, whether consummated, frustrated or attempted. Amount is LESS than 20K involving crimes of theft, robbery, swindling, estafa or other deceits involving loss or damage to bank properties and facilities, whether consummated, frustrated or attempted Regardless of amount is committed by an employee of the bank

SR 4

X

SR 4

X

Single, substantial cash deposit composed of many small bills and coins. Frequent exchanges of small bills for large bills or vice-versa. Receiving wire transfers and immediately purchasing monetary instruments prepared for payment to a third party. Sending or receiving frequent or large volumes of wire transfers to and from offshore institutions. Sudden inconsistent change in currency transactions or patterns. A customer who suddenly pays down a large problem loan with no reasonable explanation as to the source of funds.

SR4

- Deviation from Deposit ADB profile - Deviation from the usual account movement in terms of period of deposit and withdrawals - Deviation from the usual volume of deposit or withdrawal amount. - Huge remittances from countries with FATF negative information - Beneficiary of huge volume of unexplained remittances - Dormant account which was suddenly reactivated and with high volume of movements -Wire transfers between accounts, without visible economic or business purpose, especially if the wire transfers are effected through countries which are identified or connected with terrorist activities - Sources and/or beneficiaries of wire transfers are citizens of countries which are identified or connected with terrorist activities -Value of the transaction is over and above what client is capable of earning. -Incongruities between apparent sources and amount of funds raised or moved by the NGO.

SR4 SR5

X

SR5

X

SR5

X

SR5

X

SR 5 SR 5

X X

SR 5

X

SR 5

X

SR 5

X

SR 5

X

SR 5

X

SR 5

X

SR 5

X

SR 5

X

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BBG/Remittance

BBG

BBG

BBG

BBG BBG

Central Clearing

An account that sends and receives wire transfers (especially to/from Bank-haven countries), without an apparent business reason or when inconsistent with the customer’s business or history. An account that receives many small incoming wire transfers or makes deposits using checks and money orders, and almost immediately wire transfers all but a token amount to another city or country, when such activity is inconsistent with the customer business or history. Dormant account which was suddenly reactivated and with high volume of movements Regularly depositing or withdrawing large amounts by wire transfers to, from, or through countries that are known sources of narcotics or whose Bank secrecy laws facilitate the laundering of money. -A mismatch between the pattern and size of financial transactions on the one hand and the stated purpose and activity of the NGO on the other. -Cash or funds flow is a mismatch to the nature of business or declared purpose of transaction - Validated information that client is involved in any of the predicate crime - Validated information that client is involved in any of the predicate crime Any individual or group that is engage in Kidnapping for ransom activities. Any individual/group that has illegal drugs business/drug trafficking Any individual or group that coerces or attempts to coerce a Bank employee not to file any required record keeping or reporting forms. Any individual facing a crime of plunder Any individual engage in robbery or extortion Jueteng or Masiao Priacy at the High Seas Qualified Theft - Returned Check items due to due to closed account or insufficient funds issued for a consideration

SR5

X

SR5

X

SR5

X

SR5

X

SR 5

X

SR 5

X

SR6

X

SR6

X

SR6.1

X

SR6.2

X

SR6.3

X

SR6.4 SR6.5 SR6.6 SR6.7 SR6.8 SR6.9

X X X X X X

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Central Clearing

- Drawee bank returned check items for reason spurious, raised amount or any indications of swindling, deceit or fraud prior or during the issuance/negotiation of the check.

SR6.9

X

Central Clearing

Spurious PSB checks or MCs presented OTC or thru clearing which are proven to be fake issuances -Fraud initiated by the agent himself such as tampering of income documents e.g. ITR, COE or even payslip; Use of spurious ATM card which was transacted in our ATM machine Any individual engage in a smuggling business Violation of eCommerce Law Hijacking, arson, murder Fraudulent practices Felony of practices that are punishable under the new penal law. -Transactions of individuals, companies or non-governmental organizations (NGOs) that are affiliated or related to people suspected of being connected to a terrorist group or a group that advocates violent overthrow of a government. -Transactions of individuals, companies or NGOs that are suspected as being used to pay or receive funds from revolutionary taxes. -The NGO does not appear to have expenses normally related to relief or humanitarian efforts. -The absence of contributions from donors located within the country of origin of the NGO. -Client was reported and/or mentioned in the news to be involved in terrorist activities. -Any other transaction that is similar, identical or analogous to any of the foregoing.

SR6.9

X

SR6.9

X

SR6.9 SR6. 13 SR6.10

X X

SR6.11 SR6.12 SR6.13 SR6.14

X X X X

Collections RMU/Fraud control Unit ATM Dept/BBG branches

BBG

BBG BBG BBG

SR 7

SR 7 SR 7 SR 7 SR 7 SR 7

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ANNEX 5 SUSPICIOUS TRANSACTION REPORT (STR) FORM

SUSPICIOUS TRANSACTION REPORT ( STR )

AMLAC Form 51

( Completely fill up all parts that apply - see instructions ) Part 1. HEADER RECORD H

Header Record Indicator :

Supervising Agency :

1

1 - BSP 2 - SEC 3 - IC

Institution Code*: Bank industry

main entity

type of unit

Report Date*: Format Code*:

branch no. (yyyy/mm/dd)

Submission Type*:

1

Rep. Typ :

STR CTRS/STR/FX

1 - new 2 - correction 3 - nil 4 - erased

PART II. DETAIL RECORD

A. Transaction Data D

Detail Record Indicator : Trans Date*:

( yyyy/mm/dd )

Trans. Reference No*:

( 16-20 char )

Trans. Type*: 1 - ind 2 corp

Ind./Corp.*:

Account No. :

( max. 40 char. )

Php Amount*: FX Amount : FX Currency Code : Nature/Purpose of Trans./Covered Risk*:

B. Subject Data : Name of Acct. Holder Flag :

Y

Y - name concatenated N - name divided into three/fields

Please fill this space if flag is Y

Name of Acct. Holder*:

( max. 90 char )

Please fill this space if flag is N

Name of Acct. Holder : Last Name

( max. 30 char )

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First Name

( max. 30 char )

Middle Name

( max. 30 char )

Y

Address of Acct. Holder Flag :

Y - name concatenated N - name divided into three/fields

Please fill this space if address of account holder flag is Y

Address of Acct. Holder*

( max. 90 cha )

Please fill this space if address of account holder flag is N

Address of Acct. Holder : Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

Birthdate of Account Holder*

( yyyy/mm/dd )

Tax Acct. No. : SSS/GSIS/Registration No. : Telephone No. : ( max. 35 char )

Nature of Business :

In case of multiple account holders ( joint account etc ) please accomplish the form contained in annex " A" for the subsequent names

C. Beneficiary Data Name of Beneficiary Flag :

Y

Y - name concatenated N - name divided into three fields

Please fill this space if flag is Y

Name of Beneficiary :

( max. 90 char )

0 Please fill this space if flag is N

Name of Beneficiary : Last Name

( max. 30 char )

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First Name

( max. 30 char )

Middle Name

( max. 30 char )

Y

Address of Beneficiary Flag :

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Beneficiary :

( max. 90 char. )

Please fill this space if flag is N

Address of Beneficiary :

Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

Please accomplish the form contained in Annex "B" for additional beneficiaries

D. Counterparty : Y

Name of Counterparty Flag :

Y - name concatenated

N - name divided into three fields

Please fill this space if flag is Y

Name of Counterparty :

( max. 90 char. )

Please fill this space if flag is N

Name of Counterparty : Last Name

( max. 30 char )

First Name

( max. 30 char )

Middle Name

( max. 30 char )

Address of Counterparty Flag :

Y

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Counterparty :

( max. 90 char. )

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Please fill this space if flag is N

Address of Counterparty :

Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

E. Other Participants Data Name of Other Participant Flag :

Y

Y - name concatenated

N - name divided into three fields

Please fill this space if flag is Y

Name of Other Participant :

( max. 90 char )

Please fill this space if flag is N

Name of Other Participant : Last Name

( max. 30 char )

First Name

( max. 30 char )

Middle Name

( max. 30 char )

Address of Other Participant Flag :

Y

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Other Participant :

( max. 30 char )

Please fill this space if flag is N

Address of Other Participant : Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

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( max. 30 char )

Correspondent Bank : Address of Correspondent Bank Flag :

Y

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Correspondent Bank :

( max. 90 char )

Please fill this space if flag is N

Address of Correspondent Bank : Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

Country Code of Correspondent Bank :

F. Product/Services Data Name of Issuer Flag :

Y

Y - name concatenated

N - name divided into three fields

Please fill this space if flag is Y

Issuer of product/Policy Owner/Payor/Trustor :

( max. 30 char. )

Please fill this space if flag is N

Issuer of product/Policy Owner/Payor/Trustor : Last Name

( max. 30 char )

First Name

( max. 30 char )

Middle Name

( max. 30 char )

Address of Issuer Flag :

Y

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Issuer of Product/Policy Owner/Payor/Trustor :

( max. 90 char. )

Please fill this space if flag is N

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( max. 30 char

64

)

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

Start/Inception/Effectivity Date : yyyy

mm

Maturity/Expiry Date : dd

yyyy

mm

dd

Amount of Claim : Php Amount of Annual Premium : FX Amount of Annual Premium :

G. DETAILS OF SUSPICION Reason*: ( max. 800 char )

Narrative*: ( max. 1000 char )

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PART III. TRAILER RECORD Trailer Record Indicator :

T

Total Amount of Transaction ( Php )*:

1

Total No. of STRs*: Institution Name :

Philippine Savings Bank

Prepared by :

Position :

Signature :

Date :

Recommending Approval :

Position : Vice-President

GRACE G. DELA CRUZ

Compliance Officer ( at least Vice President )

Signature :

Date :

Approved by :

Position : With rank of at least Senior Vice President

Signature :

Date :

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ANNEX " A " Form for Multiple Account Holders Please accomplish this form for each account holder Name of Account Holder Flag :

Y - name concatenated

N - Name divided into three fields

Please fill this space if flag is Y

Name of Account Holder : ( max. 90 char )

Please fill this space if flag is Y

Name of Account Holder : Last Name

( max. 30 char )

First Name

( max. 30 char )

Middle Name

( max. 30 char )

Address of Account Holder Flag :

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Account holder : ( max. 90 char )

Please fill this space if flag is N

Address of Account holder : Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

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Birthdate of Account Holder yyy

mm

dd

ANNEX " B " Form for Additional Beneficiaries Please accomplish this form for each beneficiary Name of Beneficiary Flag :

Y - name concatenated

N - name divided into three fields

Please fill this space if flag is Y

Name of Beneficiary :

( max. 90 char. )

Please fill this space if flag is N

Name of Beneficiary : Last Name

( max. 30 char )

First Name

( max. 30 char )

Middle Name

( max. 30 char )

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Address of Beneficiary Flag :

Y - address concatenated

N - address divided into three fields

Please fill this space if flag is Y

Address of Beneficiary :

( max. 90 char. )

Please fill this space if flag is N

Address of Beneficiary : Bldg/No.St.Brgy

( max. 30 char )

District/Town/City

( max. 30 char )

Province/Country/Zip

( max. 30 char )

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ANNEX 6 ANTI MONEY LAUNDERING CHECKLIST AND QUESTIONNAIRE

ANNEX 7

KYC FORM FOR ANY CORRESPONDENT BANKING / COUNTER PARTY RELATION

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ANNEX 8

STANDARD INTERVIEW OR ACCOUNT OPENING SPIEL/ SCRIPT

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APPENDIX

LIST OF TERRORIST INDIVIDUALS AND GROUPS (For a complete list, see OFAC list in the Info channel)

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APPENDIX

ELECTRONIC FORMAT AND SPECIFICATIONS FOR REPORTING OF COVERED AND SUSPICIOUS TRANSACTIONS

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