Amla reviewer

Anti-Money Laundering Act of 2001 Republic Act no. 9160

Submitted by: Kristoffer Joseph D. Villanueva Mark Mangliwan

Anti-Money Laundering Act of 2001 (RA 9160) Policy: It is hereby declared the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed.

Covered institution refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

(2) insurance companies and all other institutions supervised or regulated by the Insurance Commission; and

(3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close-end investment companies, common trust funds, pre-need companies and other similar entities, (iii) foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities, and (iv) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by Securities and Exchange Commission and Exchange Commission.

Obligations of Covered Transactions Covered institutions shall: 

Establish and record the true identity of their clients based on official documents.

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In case of individual clients, maintain a system of verifying the true identity of their clients.

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In case of corporate clients, require a system verifying their legal existence and organizational structure, as well as the authority and identification of all persons purporting to act in their behalf.

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Establish appropriate systems and methods based on internationally compliant standards and adequate internal controls for verifying and recording the true and full identify of their customers.

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Maintain and safely store all records of all their transactions for five years from the transaction dates;

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Ensure that said records/files contain the full and true identity of the owners or holders of the accounts involved in the covered transactions and all other identification documents; Undertake the necessary adequate measures to ensure the confidentiality of such files;

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Prepare and maintain documentation, in accordance with client identification requirements, on their customer accounts, relationships and transactions 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;

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Maintain and safely store all records of existing and new accounts and of new transactions for 5 years from October 17, 2001 or from the dates of the accounts or transactions, whichever is later;

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Anent closed accounts, preserve and safely store the records on customer identification, account files and business correspondence for at least 5 years from the dates they were closed;

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If a money laundering case based on any record kept by the covered institution has been filed in court, retain said files until it is confirmed that the case has been finally resolved or terminated by the court; and

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Retain records as originals in such forms as are admissible in court

Covered transaction

A single, series, or combination of transactions involving a total amount in excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days except those between a covered institution and a person who, at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin or economic justification. It likewise refers to a single, series or combination or pattern of unusually large and complex transactions in excess of Four million Philippine pesos (Php4,000,000.00) especially cash deposits and investments having no credible purpose or origin, underlying trade obligation or contract.

Suspicious Transactions Transactions, regardless of the amount involved, where the following circumstances exist:

a. There is no underlying legal or trade obligation, purpose or economic justification; b. The client is not properly identified; c. The amount involved is not commensurate with the business or financial capacity of the client; d. Taking into account all known circumstances, it may be perceived that the client’s transaction is structured in order to avoid being the subject of reporting requirements under the Act; e. Any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the client’s past transactions with the covered institution; f. The transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being or has been committed; or g. Any transaction that is similar or analogous to the foregoing.

When is Money Laundering committed? Money laundering is committed when a person starts to perform a process comprising of three (3) stages, namely, placement or the physical disposal of the criminal proceeds, layering or the separation of the criminal proceeds from their source by creating layers of financial transactions to disguise the audit trail, and integration or the provision of apparent legitimacy to the criminal proceeds. Any transaction involving such criminal proceeds or attempt to transact the same during the placement, layering or integration stage shall constitute the crime of money laundering.

Unlawful Activities or predicate crimes There are 14 unlawful activities or predicate crimes covered by the AMLA. These are, in the order enumerated in the law:  Kidnapping for ransom  Drug offenses  Graft and corrupt practices  Plunder  Robbery and extortion  Jueteng and masiao  Piracy on the high seas  Qualified theft  Swindling  Smuggling  Electronic Commerce crimes  Hijacking, destructive arson and murder, including those perpetrated against non-combatant persons (terrorist acts)  Securities fraud  Felonies or offenses of a similar nature punishable under penal laws of other countries

The Anti-Money Laundering Council

The AMLC is the Philippines’ financial intelligence unit, which is tasked to implement the AMLA. It is composed of the Governor of the Bangko Sentral ng Pilipinas (BSP) as Chairman & the Commissioner of the Insurance Commission (IC) and the Chairman of the Securities and Exchange Commission (SEC) as members. The AMLC is authorized to: 

Require and receive covered or suspicious transaction reports from covered institutions.

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Issue orders to determine the true identity of the owner of any monetary instrument or property that is the subject of a covered or suspicious transaction report, and to request the assistance of a foreign country if the Council believes it is necessary.

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Institute civil forfeiture and all other remedial proceedings through the Office of the Solicitor General.

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Cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money laundering offenses.

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Investigate suspicious transactions, covered transactions deemed suspicious, money laundering activities and other violations of the AMLA.

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Secure the order of the Court of Appeals to freeze any monetary instrument or property alleged to be the proceeds of unlawful activity.

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Implement such measures as may be necessary and justified to counteract money laundering.

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Receive and take action on any request from foreign countries for assistance in their own anti-money laundering operations.

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Develop educational programs to make the public aware of the pernicious effects of money laundering and how they can participate in bringing the offenders to the fold of the law.

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Enlist the assistance of any branch of government for the prevention, detection and investigation of money laundering offenses and the prosecution of offenders. In this connection, the AMLC can require intelligence agencies of the government to divulge any information that will facilitate the work of the Council in going after money launderers.

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Impose administrative sanctions on those who violate the law, and the rules, regulations, orders and resolutions issued in connection with the enforcement of the law.

Authority to Freeze. Upon determination that probable cause exists that any deposit or similar account is in any way related to an unlawful activity, the AMLC may issue a freeze order, which shall be effective immediately, on the account for a period not exceeding fifteen (15) days. Notice to the depositor that his account has been frozen shall be issued simultaneously with the issuance of the freeze order. The depositor shall have seventy-two (72) hours upon receipt of the notice to explain why the freeze order should be lifted.

The AMLC has seventy-two (72) hours to dispose of the depositor’s explanation. If it fails to act within seventy-two (72) hours from receipt of the depositor’s explanation, the freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court, provided that the fifteen (15)-day period shall be tolled pending the court’s decision to extend the period. No court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court.

Authority to Inquire into Bank Deposits. Notwithstanding the provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any competent court in cases of violation of this Act when it has been established that there is probable cause that the deposits or investments involved are in any way related to a money laundering offense: Provided, That this provision shall not apply to deposits and investments made prior to the effectivity of this Act.

Republic of the Philippines v. Hon. Antonio Eugenio, Jr. G.R. No 174629 Facts: Under the authority granted by the Resolution, the AMLC filed an application to inquire into or examine the deposits or investments of Alvarez, Trinidad, Liongson and Cheng Yong with the Makati RTC. The RTC granted the authority to inquire and examine the subject bank accounts of Alvarez, Trinidad, Liongson and Cheng Yong, the trial court being satisfied that there existed p]robable cause [to] believe that the deposits in various bank accounts, details of which appear are related to the offense of violation of Anti-Graft and Corrupt Practices Act now the subject of criminal prosecution before the Sandiganbayan. Pursuant to the Makati RTC bank inquiry order, the CIS proceeded to inquire and examine the deposits, investments and related web accounts of the four.

The letter adverted to probable cause to believe that the bank accounts were used in the commission of unlawful activities that were committed a in relation to the criminal cases then pending before the Sandiganbayan. Attached to the letter was a memorandum on why the investigation of the [accounts] is necessary in the prosecution of the above criminal cases before the Sandiganbayan. The AMLC promulgated on 9 December 2005 Resolution No. 121 Series of 2005 which authorized the executive director of the AMLC to inquire into and examine the accounts named in the letter, including one maintained by Alvarez with DBS Bank and two other accounts in the name of Cheng Yong with Metrobank. Cheng Yong refused to have the account examined on ground of the Bank Secrecy Act. Issue: Whether or not the bank accounts of respondents can be examined. Held: Any exception to the rule of absolute confidentiality must be specifically legislated. Section 2 of the Bank Secrecy Act itself prescribes exceptions whereby these bank accounts may be examined by any person, government official, bureau or offial; namely when: (1) upon written permission of the depositor; (2) in cases of impeachment; (3) the examination of bank accounts is upon order of a competent court in cases of bribery or dereliction of duty of public officials; and (4) the money deposited or invested is the subject matter of the litigation. Section 8 of R.A. Act No. 3019, the Anti-Graft and Corrupt Practices Act, has been recognized by this Court as constituting an additional exception to the rule of absolute confidentiality, and there have been other similar recognitions as well. The AMLA also provides exceptions to the Bank Secrecy Act. Under Section 11, the AMLC may inquire into a bank account upon order of any competent court in cases of violation of the AMLA, it having been established that there is probable cause that the deposits or investments are related to unlawful activities as defined in Section 3(i) of the law, or a money laundering offense under Section 4 thereof. It cannot be successfully argued the proceedings relating to the bank inquiry order under Section 11 of the AMLA is a litigation encompassed in one of the exceptions to the Bank Secrecy Act which is when money deposited or invested is the subject matter of the litigation. Nevertheless, just because the AMLA establishes additional exceptions to the Bank Secrecy Act it does not mean that the later law has dispensed with the general principle established in the older law that all deposits of whatever nature with banks or banking institutions in the Philippines x x x are hereby considered as of an absolutely confidential nature. Indeed, by force of statute, all bank deposits are absolutely confidential, and that nature is unaltered even by the legislated exceptions referred to above.

G.R. No. 170281 REPUBLIC OF THE PHILIPPINES, represented by the ANTIMONEYLAUNDERING COUNCIL VS. GLASGOW CREDIT ANDCOLLECTION SERVICES, INC. and CITYSTATE SAVINGS BANK, INC. FACTS: On July 18, 2003, petitioner filed a complaint for civil forfeiture of assets with the RTC of Manila against the bank deposits in account number CS – 005-10000121-5 maintained by GLASGOW in CSBI. The case was filed pursuant to RA 9160 or the Anti-Money Laundering Act of 2001.On July 21, 2003, the RTC of Manila issued

a 72-hour TRO. And on August8, 2003 a writ of preliminary injunction was issued. Meanwhile, summons to GLASGOW was returned “unserved” as it could no longer be found at its last known address. On May 31, 2004, the trial court ordered the reinstatement of the case directing the Republic to serve the alias summons to Glasgow and CSBI within 15days.On July 12, 2004, petitioner received a copy of the sheriff’s return stating that the alias summons was returned “unserved” as GLASGOW was no longer holding office at the given address since July 2002.On August 11, 2005, petitioner filed a manifestation and ex parte motion tor esolve its motion for leave of court to serve summons by publication. On August 12, 2005, the OSG received a copy of GLASGOW’s motion to dismiss by way of special appearance alleging that 1) the court had no jurisdiction over its person as summons had not yet been served on it 2) the complaint was premature and stated no cause of action and 3) there was failure to prosecute on the part of the Republic. On October 17, 2005, the trial court dismissed the case on the grounds of 1)improper venue 2) insufficiency of the complaint in form and substance and 3) failureto prosecute and lifted the writ of preliminary injunction. Petitioner filed a petition for review. ISSUE: Whether or not the complaint for civil forfeiture was properly instituted. RULING: Sec. 12 (a) of RA 9160 provides two conditions when applying for civilforfeiture:1.when there is suspicious transaction report or a covered transaction report deemed suspicious after investigation by the AMLC;2.the court has, in a petition filed for the purpose; ordered the seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report. It is the preliminary seizure of the property in question which brings it within the reach of the judicial process. It is actually within the courts possession when it is submitted to the process of the court. The injunctive writ issued on August 8, 2003 removed account no. CA-005-10-000121-5 from the effective control of either Glasgow or CSBI or their representatives or agents and subjected it to the process of the court. Whether or not there is truth in the allegation that account no. CA-005-10000121-5 contains the proceeds of unlawful activities is an evidentiary matter that may be proven during trial. The complaint, however, did not even have to show or allege that Glasgow had been implicated in a conviction for, or the commission of, the unlawful activities of estafa and violation of the Securities Regulation Code. A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of civil forfeiture.