WHAT ARE THE
Money laundering and terrorism financing laws in Philippines?
In Philippines, money laundering is a serious offence and is regulated primarily under the Republic Act No. (9160) and The Anti-Terrorism Act of 2020 (Republic Act No. 11479). The AML/CTF law aims to deter and detect money laundering and terrorism financing. They impose legal requirements on certain entities to establish comprehensive Anti-Money Laundering policies, demonstrating their commitment to countering these financial crimes.
WHAT ARE THE
Key obligations reporting entities have under Filipinos laws?
In the Philippines, under the Anti-Money Laundering Act (AMLA):
- Customer Due Diligence (CDD): Reporting entities are required to identify and verify the identities of their clients, typically by obtaining a range of information and supporting documentation.
- Record-keeping: Reporting entities must maintain all necessary records on transactions for at least five years. The data includes the identity and address of the client, 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 transactions.
- Reporting: Reporting entities must report covered and suspicious transactions to the Anti-Money Laundering Council (AMLC). Covered transactions are transactions involving a total amount in excess of PHP 500,000 (or its equivalent in foreign currency) within one banking day. Suspicious transactions, regardless of the amount involved, are transactions with circumstances that make them unusual.
- Internal Policies, Procedures, and Controls: Reporting entities are required to establish and implement internal anti-money laundering (AML) and counter-terrorism financing (CTF) procedures, policies, and controls. This includes the implementation of a risk-based approach to assess the money laundering and terrorism financing risks faced by their business.
- Training: Entities must provide appropriate training for their officers and employees to make them aware of the laws relating to money laundering and terrorism financing, the risks the business faces, and the business’s AML/CTF policies and procedures.
- Compliance Officer: Reporting entities are also required to designate a Compliance Officer at managerial level to be responsible for AML/CTF compliance.
WHO ARE THE
ML/TF regulators in Philippines and what functions do they perform?
The Anti-Money Laundering Council (AMLC) is the central agency in the Philippines responsible for implementing the Anti-Money Laundering Act (AMLA) and preventing money laundering and terrorism financing. Its functions include:
- Regulatory supervision: The AMLC, together with the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), and Insurance Commission (IC), supervises and regulates reporting entities, conducting inspections, audits, and assessments of their anti-money laundering and counter-terrorism financing programs.
- Registration and reporting: Reporting entities must register with their respective regulators (BSP, SEC, IC) and fulfil reporting obligations, such as submitting covered and suspicious transaction reports to the AMLC.
- Intelligence and analysis: The AMLC is responsible for collecting, analysing, and disseminating financial intelligence related to money laundering, terrorism financing, and other serious crimes.
- Compliance and enforcement: AMLC, together with the BSP, SEC, IC, enforces compliance with the AMLA through various means such as issuing penalties and seeking prosecution for serious breaches.
- Education, training and guidance: These bodies provide education, training, and guidance to reporting entities to assist them in understanding and fulfilling their obligations under the AMLA. They also publish guidance materials and offer assistance through their respective channels.
- Information sharing: The AMLC participates in global initiatives to combat money laundering and terrorism financing and exchanges information with other financial intelligence units worldwide to enhance the effectiveness of the global anti-money laundering regime.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
The regulated sectors in the Philippines include:
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
The penalties for non-compliance with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws in the Philippines can be severe and include:
- Fines: For covered persons, fines can range from Php 100,000 to Php 500,000. Directors, officers, and employees can face fines from Php 100,000 to Php 1,000,000. Financial institutions may face fines up to Php 500,000 per day of violation.
- Imprisonment: Individuals can be imprisoned from 4 years and 1 day to 7 years for non-compliance, and up to life imprisonment for serious offenses under Section 7 of Republic Act No. 11479.
- Other Penalties: Other penalties include potential revocation of banking licenses for financial institutions and other penalties provided by law.
- Additional Penalties: Additional penalties are imposed for predicate crimes, such as money laundering, terrorism financing, and other unlawful activities.
Penalties are applied at the discretion of the court.
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
The largest fines for non-compliance with AML/CTF laws in the Philippines are as follows:
Carlos F. Garcia Case (Philippines, 2022) - The Sandiganbayan Centennial Building delivered a hefty sentence to Major General Carlos F. Garcia, former Armed Forces deputy chief, for bribery and money laundering. Garcia was found guilty beyond reasonable doubt, resulting in a 168-month imprisonment and fines totaling PHP 407.8 million. The charges, originally filed in 2005 and 2009, uncovered Garcia's illicit activities in collaboration with his family, amassing PHP 303.2 million in ill-gotten wealth through funds, landholdings, and other properties, illustrating the severe repercussions of such misconduct.
Banko Sentral ng Pilipinas (BSP)
- In January 2019, the Makati Regional Trial Court in the Philippines imposed a fine of PHP 1,000,000,000 on Rizal Commercial Banking Corp (RCBC) for money laundering. An individual, a former bank manager of RCBC, pleaded guilty on the same date to money laundering.
- The BSP imposed their first significant fine against a business (RCBC) in August 2016 which resulted in penalties of PHP 1,000,000,000 for money laundering offenses. The bank was found to have laundered USD 81,000,000, which had been stolen by hackers from a U.S. Federal Reserve account belonging to Bangladesh's central bank.
- In February 2016, hackers transferred USD 81,000,000 from Bangladesh Bank's foreign reserve account at the Federal Reserve Bank of New York to four fictitious accounts at the RCBC branch. The transaction aimed to steal nearly USD 1,000,000,000. After the funds were withdrawn, they were converted into pesos and laundered in a local casino.