May 2017 Recent Developments In Anti-money Laundering Law [autosaved].pptx

Classic case of money laundering

• Jose is the head of an international narcotics trafficking and money laundering syndicate.

Classic case of money laundering Criminal activities  Distribution of over 7,500 kilograms of shabu in China and the Philippines.  Laundering of over $5,000,000 (narcotics proceeds) in Macau and Makati by buying high-end real estate, luxury and exotic automobiles and other highend items.  Bribery of govt officials

Classic case of money laundering Proceeds trafficking by

from drugs are laundered

 Smuggling them into Macau and Makati by couriers  wire transferring them to Hong Kong or Singapore  Depositing them to the account of corporations that own exotic car dealerships, stores selling luxury items and high-end restaurants, all of which are owned by him or his organizations.

1. Used cars from Japan are shipped to the Philippines and China.

2. Cars are sold in RP and drugs are sent to China and RP for sale. Proceeds are mixed with leg profits.

3. Profits are sent China banks via exchange houses. Makati Banks

4. Some money is diverted back to the syndicate, while others sent back to China to purchase more cars.

Makati Singap Drug Syndicate

Phils Macau Hong Kong

China

Legal and Regulatory Framework for dealing with Jose’s case

Pre R.A. No. 9160 (pre 2001) • Before the enactment of R.A. No. 9160 • Jose can be charged with violation of Dangerous Drugs Act but not for money laundering. • Bank officials who helped him transfer the proceeds of illegal drugs transaction may be held administratively but not criminally liable. • The only way to recover the proceeds of his illegal act is through criminal forfeiture; no civil forfeiture proceedings. • Investigation on Jose’s financial transactions is left with ordinary law enforcement agencies which has no special investigative powers • constrained by our strict bank secrecy laws. • No clear mechanism for enlisting the assistance of law enforcement agencies of Hong Kong, Macau or Singapore.

Pre R.A. No. 9160 (2001)

Problems caused by money laundering

• Undermines financial institutions, social, economic and political structure of a society • Stifles business competition • Proceeds of illegal acts are used for criminal operations • Finances terrorist activities • Contaminates legitimate transactions

Pre R.A. No. 9160 (2001)

Money laundering becomes increasingly harder to detect • Sophistication • Creativity • Hidden in legitimate funds • Number of people/institutions involved

Anti-Money Laundering: International Law and Standards Key instruments 1. UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) (Vienna Convention) 2. International Convention for the Suppression of Financing of Terrorism (1999) (SFT Convention) 3. Convention against Transnational Organised Crime (2000) (Palermo Convention) 4. Convention on Corruption (2003) (Merida Convention) 5. FATF Forty Recommendations on Money Laundering (FATF 40 Recommendations) and the FATF Nine Special Recommendations on Terrorist Financing

Historical context of AMLA: FATF Report In 2000, FATF reported that the Philippines 1. Lacked basic set of AML regulations such as requirements on customer identification & record-keeping 2. Had no legislation criminalizing money laundering 3. Had no system of reporting suspicious transactions 4. Had very strict bank deposit secrecy laws; •and placed the country in the Non-Cooperative Countries and Territories (NCCT) List

Historical context of AMLA: Consequence of FATF Report • Imposition of countermeasures against the Philippines in 2000 and 2001. “x x x, banks and other financial institutions operating in the United States should carefully consider, when dealing with transactions originating in or routed to or through the Philippines, or involving entities organized or domiciled, or persons maintaining accounts in the Philippines x x x.” (US Advisory, July 2000)

Historical context of AMLA: Consequence of FATF Report • Imposition of countermeasures against the Philippines in 2000 and 2001. “advised all HK authorized institutions that additional countermeasures should be applied to the Phils. effective 30 Sept. 2001 unless the Phils. “enacts significant legislation which addresses the identified money laundering concerns.” (Hong Kong Monetary Authority, August 3, 2001)

Historical context of AMLA: Enactment of the law • Congress enacted R.A. 9160, or the “Anti-Money Laundering Act of 2001” 1. 2. 3. 4. 5. 6.

criminalized money laundering; created a financial intelligence unit (AMLC); required banks and other covered institutions to comply with customer identification, record-keeping and reporting of covered and suspicious transactions; relaxed strict bank deposit secrecy laws; provided for freezing and forfeiture of dirty money or property; and, provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

• Took effect on October 17, 2001.

Historical context of AMLA: Effect of AMLA enactment • The Philippines was removed from the NCCT List on February 11, 2005 following review that confirmed the country was effectively implementing anti-money laundering measures.

Stages in FATFs NCCT delisting process

Enactment of the law

Submission of AML implementation plan FATFs evaluation of the implementation of the law and amendments

Historical context of AMLA: 2nd Evaluation of AML enforcement “However, the FATF has determined that certain strategic AML/CFT deficiencies remain. The Philippines should continue to work on implementing its action plan to address these deficiencies, including by:

1.adequately criminalising money laundering and terrorist financing; 2.implementing adequate procedures to identify and freeze terrorist assets and confiscate funds related to money laundering 3.enhancing financial transparency 4.extending coverage of reporting entities. - 24 June 2011 (FATF Report)

Historical context of AMLA • Since its enactment in 2001, AMLA has been amended 3 times • Law was first amended in 2005 and the latest amendment was in 2013

Historical context of AMLA R.A. 9160 28 September 2001

R.A. 9194 5 March 2003 R.A. 10167 8 June 2012

R.A. 10365 15 February 2013

Historical context of AMLA: Enactment of R.A. No. 10167 • R.A. No. 10167 was signed into law • FATF upgraded Philippines to “grey list”; it, however, urged the Philippines to fully address the remaining deficiencies. x x x, the Philippines has taken significant steps to improve its AML/CFT system, including by enacting one of the amendments to the AMLA and enacting CFT law. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. x x x. The FATF encourages the Phils. to address its remaining deficiencies and continue the process of implementing its action plan. - FATF Report, June 2012

Historical context of AMLA: Enactment of R.A. No. 10167

Historical context of AMLA: Enactment of R.A. No. 10365 • R.A. 10365 was signed into law on February 15, 2013 • FATF noted the significant progress made by the Phils; • raised great concerns on non-inclusion of casino sector in AML regulation. • decided to conduct on-site visit to the Phils.;

• 2-3 May 2013 – the FATF conducted on-site visit to the Philippines; positive results • 17-21 June 2013 – FATF plenary meeting in Oslo, Norway;

• Officially, the Philippines is out of the FATF list of monitored-jurisdictions

Historical context of AMLA: Enactment of R.A. No. 10365 “The FATF welcomes the Philippines’ significant progress in improving its AML/CFT regime and notes that the Philippines has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in October 2010. The Philippines is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process.” FATF Statement Oslo, Norway, 21 June 2013

Anti-Money Laundering Act

R.A. No. 10365

The case of Manny Labandero • Manny Labandero is a Filipino businessman who pretended to be a legitimate recruiter and foreign employer. • He posted employment advertisements in the internet seeking to hire caregivers and nurses for nonexistent works abroad.

The case of Manny Labandero • He used several aliases and fictitious names and misrepresented that he had connections with various entities abroad to entice prospective victims-applicants.

The case of Manny Labandero • Applicants were notified of their purported selection and were required to undergo “English Training Course”, which they all passed. • Made to pay for medical and training fees ranging from Php 3T to Php 45T.

The case of Manny Labandero • Mr. Labandero was very creative. • devised a system wherein payments by applicants were made through J Xchange remittance facilities • a mobile phone payment system that turns a mobile phone into an electronic or virtual wallet for secure, fast and convenient money transfers at the speed and cost of a text message.

J XCHANGE

REMITTANCE FACILITIES

The case of Manny Labandero • tried to conceal the illegal proceeds of his crime by creating layers of J Xchange transactions. • required his victims to remit money to one J Xchange account. • from this account, he transferred the proceeds to another J Xchange account (both accounts he opened under fictitious names and under his control) • and further transferred the proceeds to a J Xchange account under his name or one of his aliases and ultimately cashed out (withdrew) the proceeds.

• By conservative estimates, he earned tens of millions of pesos from this scheme.

Remit Payment Account A J Xchange

Account B (Jose)

Account C (Maria)

Silky White Laundry Shop

Account D (Pedro)

The case of Manny Labandero • Despite payment of medical and training fees, none of the applicants was deployed for the promised overseas job.

Remit Payment Account A J Xchange

• Eventually, at least 7 criminal cases were filed against Manny Labandero for Estafa and Large-Scale Illegal Recruitment. • Because of the various complainants and evidence gathered against him, it is almost certain that he would be convicted of various crimes.

Account B (Jose)

Account C (Maria)

Silky White Laundry Shop

Account D (Pedro)

The case of Manny Labandero • Suppose the brother of Manny withdrew from his bank account and invested the same in a restaurant, is he guilty of any crime? • Suppose it was Manny who withdrew it and gave it to his brother who just put in his safety deposit box, is he guilty of any crime? • Suppose Manny, instead of giving the money to his brother, bought jewelries amounting millions of pesos, which was not reported by the jewelry store, is there any criminal liability?

Remit Payment Account A J Xchange

Account B (Jose)

Account C (Maria)

Silky White Laundry Shop

Account D (Pedro)

Pre R.A. No. 9160 Before the enactment of R.A. No. 9160

After the enactment of R.A. No. 9160

Manny can be charged with Estafa and Large-Scale Illegal Recruitment but not for money laundering.

Aside from Estafa and LargeScale Illegal Recruitment, Manny can be held criminally for money laundering.

Bank officials who helped him transfer his money can only be held administratively but not criminally liable.

Failure of bank officials to report transactions of similar nature can make them liable for money laundering.

Manny’s brother cannot be held liable for any crime.

Prior conviction, or even the filing of a criminal case, is not required for civil forfeiture proceedings against Manny.

Pre R.A. No. 9160 Before the enactment of R.A. No. 9160

After the enactment of R.A. No. 9160

Only way to recover the proceeds of his illegal act is through criminal forfeiture; no civil forfeiture proceedings.

Prior conviction, or even the filing of a criminal case, is not required for civil forfeiture proceedings against Manny.

Jewelry store cannot be held liable for failure to report.

Jewelry stores are now covered persons.

Investigation on Manny’s financial transactions is left with ordinary law enforcement agencies;

Investigation on Manny’s financial transactions will now be made by a Financial Investigation Unit – AMLC. No clear mechanism for enlisting the MLAT and other forms of mutual assistance assistance of law enforcement agencies of HK, are available worldwide Macau or Singapore.

Highlights of R. A. No. 9160

Highlights of R. A. No. 9160 1. 2. 3. 4. 5. 6.

Criminalized money laundering; Required banks and other covered institutions to comply with customer identification, recordkeeping and reporting of covered and suspicious transactions; Created a financial intelligence unit (AMLC); Relaxed strict bank deposit secrecy laws; Provided for freezing and forfeiture of dirty money or property; and, Provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

• Took effect on October 17, 2001.

Highlights of R. A. No. 9160 1. Criminalized money laundering; 2. 3. 4. 5. 6.

Required banks and other covered institutions to comply with customer identification, recordkeeping and reporting of covered and suspicious transactions; Created a financial intelligence unit (AMLC); Relaxed strict bank deposit secrecy laws; Provided for freezing and forfeiture of dirty money or property; and, Provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

Salient Features of R.A. No. 9160: Criminalized money laundering Sec. 4. Money Laundering Offense. Money laundering is a crime whereby the proceeds of an unlawful activity as herein defined are transacted thereby making them appear to have originated from legitimate sources. It is committed by the following: 1.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. 2.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. 3.Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so. -original definition under R.A. No.. 9160

Salient Features of R.A. No. 9160: Criminalized money laundering Elements of money laundering 1. 2. 3. 4. 5.

Commission of an unlawful activity The unlawful activity is a predicate offense to money laundering The unlawful activity yielded proceeds/profits The proceeds have been transacted Purpose of transaction is to obscure the source of the illegitimate money and make it appear that it comes from legitimate source.

Salient Features of R.A. No. 9160: Predicate Offense Unlawful Activity : Any act or omission or series or combination thereof involving or having relation to the following:

1. Kidnapping for ransom 2. Dangerous Drugs Act

8. Swindling 9. Plunder

3. Anti-Graft and Corrupt Practices Act

10. Hijacking and other violations of RA 6235

4. Robbery and extortion

11. Qualified theft

5. Piracy on the high seas

12. Jueteng and Masiao

6. Securities Regulation Code 13. Smuggling 7. Electronic Commerce Act of 2000 14. Felonies of a similar nature punishable in other countries

Highlights of R. A. No. 9160 1.

Criminalized money laundering;

3. 4. 5. 6.

Created a financial intelligence unit (AMLC); Relaxed strict bank deposit secrecy laws; Provided for freezing and forfeiture of dirty money or property; and, Provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

2. Required banks and other covered institutions to comply with customer identification, record-keeping and reporting of covered and suspicious transactions;

Salient Features of R.A. No. 9160: Regulated institutions

1. Bangko Sentral ng Pilipinas • banks, non-banks, quasi-banks, trust entities, and their subsidiaries and affiliates supervised or regulated by the BSP [Sec. 3(a)(1)]

Salient Features of R.A. No. 9160: Regulated institutions

2. Insurance Commission

• insurance companies and all other institutions supervised or regulated by the Insurance Commission;

Salient Features of R.A. No. 9160: Regulated institutions 3. Securities and Exchange Commission a.

b. c. d.

securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant mutual funds, close and 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 Securities and Exchange Commission.

Salient Features of R.A. No. 9160: Regulated institutions Obligations of covered institutions 1. Customer Identification 2. Record Keeping 3. Reporting of Covered Transactions

Salient Features of R.A. No. 9160: Regulated institutions Obligations of covered institutions

1. Customer Identification • To establish and record the true identity of its clients based on official documents. • anonymous accounts, accounts under fictitious names, and all other similar accounts are absolutely prohibited • Allows BSP to conduct annual testing but limited to the determination of the existence and true identity of the owners of such accounts.

Salient Features of R.A. No. 9160: Regulated institutions Obligations of covered institutions

2. Record keeping • All records of all transactions of covered institutions to be maintained and safely stored for 5 years from the date of transactions.

Salient Features of R.A. No. 9160: Regulated institutions Obligations of covered institutions 3. Reporting of covered transactions

• To report to the AMLC all covered transactions within 5 working days from occurrence thereof, unless the Supervising Authority concerned prescribes a longer period not exceeding ten (10) working days. • Not a violation of bank secrecy laws but must ensure confidentiality of the reporting

Salient Features of R.A. No. 9160: Covered transactions • a single, series, or combination of transactions involving a total amount in excess P 4M or an equivalent amount in foreign currency based on the prevailing exchange rate within 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.

Salient Features of R.A. No. 9160: Covered transactions • likewise refers to a single, series or combination or pattern of unusually large and complex transactions in excess of P 4M especially cash deposits and investments having no credible purpose or origin, underlying trade obligation or contract

Highlights of R. A. No. 9160 1. 2.

Criminalized money laundering; Required banks and other covered institutions to comply with customer identification, recordkeeping and reporting of covered and suspicious transactions;

3. Created a financial intelligence unit (AMLC); 4. 5. 6.

Relaxed strict bank deposit secrecy laws; Provided for freezing and forfeiture of dirty money or property; and, Provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

• Took effect on October 17, 2001.

Salient Features of R.A. No. 9160: AMLC • AMLC is the Philippines’ financial intelligence unit (FIU) • serves as the national center for the receipt and analysis of: a. b.

Suspicious transaction reports; and Other information relevant to money laundering and associated predicate offenses

Salient Features of R.A. No. 9160: AMLC The Council Governor of the Bangko Sentral Pilipinas, as Chairman

Insurance Commissioner, SEC, as Member Member

Chairman of as

Salient Features of R.A. No. 9160: AMLC AMLC Secretariat Executive Director

Technical Services Staff

Compliance and Investigation Group

Legal Services Group

Information Management and Analysis Group

Administrative and Financial Services Division

Salient Features of R.A. No. 9160: AMLC Functions 1. Require and receive covered and suspicious transaction reports from covered institutions; 2. Issue orders to determine the true identity of the owner of any monetary instrument subject of a CTR/STR or request for assistance from a foreign state x x x 3. Institute civil forfeiture and all other remedial proceedings through the OSG; 4. Cause the filing of complaints with the DOJ or the Ombudsman for the prosecution of money laundering offenses;

Salient Features of R.A. No. 9160: AMLC Functions 5. Investigate suspicious transactions and covered transactions deemed suspicious, money laundering activities and other violations of the law; 6. To freeze any monetary instrument or property alleged to be proceed of any unlawful activity (repealed); 7. Implement such measures as may be necessary and justified to counteract money laundering; 8. Receive and take action on any request for assistance from foreign states in their own AML operations;

Salient Features of R.A. No. 9160: AMLC Functions 9. Develop educational programs on the pernicious effects of ML, the methods and techniques used in ML, the viable means of preventing ML and the effective ways of prosecuting and punishing offenders; 10. Enlist the assistance of any branch, department, bureau, office, agency or instrumentality of the government, including GOCCs, in undertaking any and all AML operations x x x

Highlights of R. A. No. 9160 1. 2. 3.

Criminalized money laundering; Required banks and other covered institutions to comply with customer identification, recordkeeping and reporting of covered and suspicious transactions; Created a financial intelligence unit (AMLC);

4. Relaxed strict bank deposit secrecy laws; 5. 6.

Provided for freezing and forfeiture of dirty money or property; and, Provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

Salient Features of R.A. No. 9160: Relaxed Bank Secrecy Law

• Authorized AMLC to issue freeze order • Authorized AMLC to inquire into bank deposits • permits the BSP to inquire into or examine any deposit or investment with any banking institution or non-bank financial institution

Highlights of R. A. No. 9160 Major features 1. 2. 3. 4.

Criminalized money laundering; Required banks and other covered institutions to comply with customer identification, recordkeeping and reporting of covered and suspicious transactions; Created a financial intelligence unit (AMLC); Relaxed strict bank deposit secrecy laws;

5. Civil forfeiture of dirty money or property;, 6.

Provided for international cooperation in the transnational investigation and prosecution of money laundering offenses wherever committed.

Salient Features of R.A. No. 9160: Civil Forfeiture

• Provided the remedy of civil forfeiture • When there is a covered transaction report made, and the court has, in a petition filed for the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply.

Amendments to AMLA Amendatory Laws 1.R.A. No. 9194 (5 March 2003) 2.R.A. No. 10167 (8 June 2012) 3.R.A. No. 10365 (15 February 2013)

Change in the Definition of Money Laundering

Change in the Definition of Money Laundering Sec. 4. Money Laundering Offense. Money laundering is a crime whereby the proceeds of an unlawful activity as herein defined are transacted thereby making them appear to have originated from legitimate sources. It is committed by the following: 1.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. 2.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. 3.Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so. -original definition under R.A. No.. 9160

Change in the Definition of Money Laundering Sec. 4. Money Laundering Offense. Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity: 1.transacts said monetary instrument or property; 2.converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property; 3.conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property; 4.attempts or conspires to commit money laundering offenses referred to in paragraphs (a), (b) or (c); - under R.A. No. 10365

Change in the Definition of Money Laundering Sec. 4. Money Laundering Offense. Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity: 5.aids, abets, assists in or counsels the commission of the money laundering offenses referred to in paragraphs (a), (b) or (c) above; and 6.performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraphs (a), (b) or (c) above - under R.A. No. 10365

Change in the Definition of Money Laundering Elements of Money Laundering 1. 2. 3. 4.

(under R.A. No. 10365)

Commission of an unlawful activity The unlawful activity is a predicate offense to money laundering The unlawful activity yielded proceeds/profits transacts said monetary instrument or property; converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property; conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property; aids, abets, assists in or counsels the commission of the money laundering

R. A. No. 9160

Money laundering is a crime whereby the proceeds of an unlawful activity as herein defined are transacted thereby making them appear to have originated from legitimate sources. It is committed by the following:

•

•

•

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. 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. Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the AntiMoney Laundering Council (AMLC), fails to do so.

R.A. No. 10365

Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity

• • •

• • •

transacts said monetary instrument or property; converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property; conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property; attempts or conspires to commit money laundering offenses referred to in paragraphs (a), (b) or (c); aids, abets, assists in or counsels the commission of the money laundering offenses referred to in paragraphs (a), (b) or (c) above; and performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraphs (a), (b) or (c) above.

Definition of Money Laundering (R.A. No. 10365) Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity: 1.Transacts said monetary instrument or property; 2.Converts, transfers, disposes of, moves, acquires, possesses or uses said MI/P 3.Conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said MI/P;

Definition of Money Laundering (R.A. No. 10365) Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity: 4.Attempts or conspires to commit ML referred to in par. a), b) & c); 5.Aids, abets, assists in or counsels the commission of the ML offenses referred to in par. a), b) & c) above; 6.Performs or fails to perform any act as a result of which he facilitates the offense of ML referred to in par. a), b) & c) above;

Definition of Money Laundering (R.A. No. 10365) Money Laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under the AMLA, as amended, to be reported to the Anti-Money Laundering Council (AMLC), fails to do so.

Expansion of Unlawful Activity from 14 to 34 Crimes (R.A. No. 10365)

Expansion of Unlawful Activity from 14 to 34 Crimes (R.A. No. 10365) Unlawful Activity : Any act or omission or series or combination thereof involving or having relation to the following:

1. Kidnapping for ransom 2. Dangerous Drugs Act

8. 9.

Swindling

Plunder

3. Anti-Graft and Corrupt Practices Act

10. Hijacking and other violations of RA 6235

4. Robbery and extortion

11. Qualified theft

5. Piracy on the high seas

12. Jueteng and Masiao

6. Securities Regulation Code 13. Smuggling 7. Electronic Commerce Act of 14. Felonies of a similar nature 2000 punishable in other countries

Expansion of Unlawful Activity from 14 to 34 Crimes (R.A. No. 10365)

1. Kidnapping for ransom under the Revised Penal Code (RPC) 2. Drug Trafficking and other violations of the Comprehensive Dangerous Drugs Act of 2002 3. Graft and Corruption (R.A. No. 3019, as amended) 4. Plunder (R.A. No. 7080, as amended) 5. Robbery and extortion (RPC) 6. Jueteng and Masiao (PD 1602) 7. Piracy (RPC & PD 532) 8. Qualified Theft (RPC) 9. Swindling/Estafa (RPC) 10. Smuggling (R.A. Nos. 455 & 1937)

Expansion of Unlawful Activity from 14 to 34 Crimes (R.A. No. 10365) 11. 12. 13. 14. 15. 16. 17. 18. 19.

Violations of Electronic Commerce Act of 2000 (R.A. No. 8792) Hijacking (R.A. No. 6235), Destructive Arson and Murder (RPC) Terrorism and Conspiracy to Commit Terrorism (R.A. No. 9372); Financing of Terrorism (R.A. No. 10168) Bribery and Corruption of Public Officers (RPC); Frauds and Illegal Exactions and Transactions (RPC); Malversation of Public Funds (RPC); Forgeries and Counterfeiting (RPC); Trafficking in Persons (R.A. No. 9208;

Expansion of Unlawful Activity from 14 to 34 Crimes (R.A. No. 10365) 20. Violations of the Revised Forestry Code (PD 705); 21. Violations of the Philippine Fisheries Code of 1998 (R.A. No. 8550); 22. Violations of the Philippine Mining Act of 1995 (R.A. No. 7942); 23. Violations of the Wildlife Resources Conservation and Protection Act (R.A. No. 9147); 24. Violations of the National Caves and Cave Resources Management Protection Act (R.A. No. 9072); 25. Carnapping (R.A. No. 6539); 26. Illegal/Unlawful Possession, Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunitions and Explosives (PD 1866);

Expansion of Unlawful Activity from 14 to 34 Crimes (R.A. No. 10365) 27. 28. 29. 30. 31. 32.

Fencing (PD 1612); Illegal Recruitment (R.A. No. 8042); Violations of the Intellectual Property Code; Voyeurism (R.A. No. 9995); Child Pornography (R.A. No. 9775); Child Prostitution, Trafficking, and other forms of Abuse (R.A. No. 7610); 33. Fraudulent practices and other violations of the Securities Regulation Code (R.A. No. 8799); and 34. Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.

Prosecution of Money Laundering (R.A. No. 10365) Clarified that

a. any person may be charged with and convicted of both the offense of money laundering and the unlawful activity

b. the prosecution of any offense or violation under this Act shall proceed independently of any proceeding relating to the unlawful activity

-introduced by R.A. No. 10365

Reporting by Covered Institutions (R.A. No. 9194) Change in the Amount of Covered Transaction

•Amount of covered transaction reporting was reduced to P 500,000 from P4M and period from 5 consecutive banking days to just 1 banking day.

Distinction between CTR and STR

•Made a distinction between covered transactions and suspicious transaction

From Covered Institution to Covered Person (R.A. No. 10365) A. Changed covered institution to covered persons, natural or juridical and included the following: 1. Under BSP - foreign exchange dealers, pawnshops, money

changers, remittance and transfer companies and other similar entities;

2. Under Insurance Commission - pre-need companies and all other persons (instead of institutions) 3. Under SEC – changed reference to entities to persons 4. Land Registration Authority and all of its Register of Deeds on all real estate transaction (>P500th)

From Covered Institution to Covered Person (R.A. No. 10365)

Included jewelry related businesses as covered persons B. Included the following as covered persons: 1. Jewelry dealers in precious metals, who, as a business, trade in precious metals, for transactions in excess of P 1M. 2. Jewelry dealers in precious stones, who, as a business, trade in precious stones, for transactions in excess of P 1M (Section 3a - Definition)

Included company service providers (R.A. No. 10365) Included company service providers Company service providers to 3rd parties a.

acting as a formation agent of juridical persons;

b.

acting as (or arranging for another person to act as) a director or corporate secretary of a company, a partner of a partnership, or a similar position in relation to other juridical persons;

c.

providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement; and

d.

acting as (or arranging for another person to act as) a nominee shareholder for another person;

Included company service providers (R.A. No. 10365) Person providing the following services

a. managing of client money, securities or other assets; b. management of bank, savings or securities accounts; c. organization of contributions for the creation, operation or management of companies; and d. creation, operation or management of juridical persons or arrangements, and buying and selling business entities.

Included company service providers (R.A. No. 10365) C. Excluded lawyers and accountants from covered persons • If acting as independent legal professionals in relation to information concerning their clients or • where disclosure of information would compromise client confidences or the attorney-client relationship

Introduced the Concept of STRS (R.A. No. 9194) Required covered institutions to submit STRs if any of the following exists: 1. there is no underlying legal or trade obligation, purpose or economic justification; • • • • • •

Refusal/reluctance to proceed with a transaction; Significant increases in the number or amounts; Explanation of source unclear/unsatisfactory explanation; Frequent deposits/withdrawals w/ no business source; Conduit accounts (temporary repository of funds); Wire Transfers w/ no apparent reason, etc.

Amendments to AMLA: Suspicious Transaction Reports

Introduced by R.A. No. 9194: STRs 2. the client is not properly identified;

•Refusal/reluctance to provide information/identification; •Lack of references/identification; •Non-local address, etc.

Amendments to AMLA: Suspicious Transaction Reports

Introduced by R.A. No. 9194

3. Not commensurate with the business or financial capacity of the client •Multiple accounts/transactions inconsistent w/ business; •Unusual large cash deposits by an individual or company whose business activities would normally be generated by checks; •International fund transfers/loans to companies outside the Philippines; •Transactions inconsistent w/ Financial Statements, etc.

Amendments to AMLA: Suspicious Transaction Reports

Introduced by R.A. No. 9194

4. Structuring •Recurring, non-CTR transactions; •Multiple parties conducting separate, but related, non-CTR transactions; •Multiple accounts w/ numerous deposits under P500K in a short period of time; •Numerous small incoming wire transfers, followed by a large outgoing wire transfer; •High volume of wire transfers w/ low account balances

Amendments to AMLA: Suspicious Transaction Reports

Introduced by R.A. No. 9194

5. Deviation from the profile •Sudden, unexplained increase in account activity or balance; •Sudden lavish lifestyle of customers or employees; •Sudden, unexpected payment of loans or early redemption of CTDs; •Inconsistent deposit/withdrawal activity; etc.

Amendments to AMLA: Suspicious Transaction Reports

Introduced by R.A. No. 9194

6. 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 • Media reports / KYC / other open source information

7. Similar, analogous or identical to any of the foregoing •Questions on how to avoid reporting/recordkeeping; •Customer attempt to influence an employee not to file a report; •Circumvention of internal control procedures; •Short-term/no vacations, etc.

Amendments to AMLA: Suspicious Transaction Reports

Introduced by R.A. No. 10635 Proceeds – not limited to those realized/derived from the unlawful activity. Transaction – refers to any act establishing any right or obligation. It also includes any movement of funds by any means with a covered institution

Amendments to AMLA: Issuance of Freeze Order Introduced by R.A. No. 9194 •Took away from the AMLC the authority to issue freeze order and stated clearly that the power belongs to the Court of Appeals.

Amendments to AMLA: Issuance of Freeze Order Introduced by R.A. No. 10167 •Directs the CA to act on the petition to freeze within twenty-four (24) hours from filing of the petition. •Computation of 24 hour period does not include non-working days •Allows the filing a motion to lift the freeze order by the person whose account has been frozen •Directs the court to resolve such motion before the expiration of the 20 day original freeze order.

Amendments to AMLA: Issuance of Freeze Order: Period To stress, the evils caused by the law’s silence on the freeze order’s period of effectivity compelled this Court to issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed the maximum allowable extension on the freeze order’s effectivity at six months. In doing so, the Court sought to balance the State’s interest in going after suspected money launderers with an individual’s constitutionally-protected right not to be deprived of his property without due process of law, as well as to be presumed innocent until proven guilty. - Ligot, et al. vs. RP (G.R. No. 176944, March 6, 2013)

Amendments to AMLA: Issuance of Freeze Order Introduced by R.A. No. 10365 •Put a limit to the validity of freeze order • not to exceed 6 months depending upon the circumstances of the case.

•if there is no case filed against the person whose account has been frozen within the period determined by the court, the freeze order shall be deemed ipso facto lifted. •amendment shall not apply to pending cases in the courts.

Amendments to AMLA: Issuance of Freeze Order In resolving the issue of whether probable cause exists, the CA’s statutorilyguided determination’s focus is not on the probable commission of an unlawful activity (or money laundering) that the Office of the Ombudsman has already determined to exist, but on whether the bank accounts, assets, or other monetary instruments sought to be frozen are in any way related to any of the illegal activities enumerated under R.A. 9160, as amended. Otherwise stated, probable cause refers to the sufficiency of the relation between an unlawful activity and the property or monetary instrument which is the focal point of section 10 of RA No. 9160, as amended. Ret. Lt. Gen. Jacinto C. Ligot, et al v. Republic of the Philippines represented by the AntiMoney Laundering Council, G.R. No. 176944, March 6, 2013.

Amendments to AMLA: Inquiry into Bank Deposits Introduced by R.A. No. 9194 •Provided that no court order shall be required in cases involving kidnapping for ransom, illegal drugs, hijacking, destructive arson and murder including those perpetrated by terrorists against noncombatant persons and similar targets; •Allowed BSP inquire into or examine any deposit of investment with any banking institution or non-bank financial institution when the examination is made in the course of a periodic or special examination

Amendments to AMLA: Inquiry into Bank Deposits Introduced by R.A. No. 10167 •Directs the CA to act on the application within twenty-four (24) hours from filing of the application. •Defined related accounts. •Ex parte court order is required before AMLC can inquire into related accounts

• the procedure for the ex parte application of the ex parte court order for the principal account shall be the same with that of the related accounts.

•Must comply with Article III, Sec 2 and 3, 1987 Constitution

Amendments to AMLA: Inquiry into Bank Deposits Introduced by R.A. No. 10365 •By expressed provision, allows the ex parte filing of application for bank deposits inquiry

Amendments to AMLA: Inquiry into Bank Deposits • In Subido vs. CA, the constitutionality of Section 11 of AMLA, as amended, specifically AMLC's authority to file with the CA an exparte application for inquiry into certain bank deposits and investments, including related accounts based on probable cause was challenged before the SC. 1. AMLA is unconstitutional insofar as it allows the examination of a bank account without any notice to the affected party because it: a. it violates the person's right to due process; and b. it violates the person's right to privacy.

Amendments to AMLA: Inquiry into Bank Deposits • In Subido vs. CA, the constitutionality of Section 11 of AMLA, as amended, specifically AMLC's authority to file with the CA an ex-parte application for inquiry into certain bank deposits and investments, including related accounts based on probable cause was challenged before the SC. 2. Even if AMLA is constitutional, CA committed grave abuse o discretion a. refusal of respondent presiding justice to provide petitioner with a copy of the ex-parte application for bank examination filed by AMLC b. a carte blanche authority to examine any and all transactions pertaining to petitioner's bank accounts violates the attorney-client privilege which is sacrosanct in the legal profession; c. petitioner did not commit, nor has the petitioner been impleaded in any complaint involving any predicate crime that would justify an inquiry into its bank accounts.

Amendments to AMLA: Inquiry into Bank Deposits • In Subido vs. CA, the following issues were looked into: • Whether Section 11 of R.A No. 9160 violates substantial due process. • Whether Section 11 of R.A No. 9160 violates procedural due process. • Whether Section 11 of R.A No. 9160 is violative of the constitutional right to privacy enshrined in Section 2, Article III of the Constitution.

Amendments to AMLA: Inquiry into Bank Deposits 1. No violation of substantive due process. Succinctly, Section 11 of the AMLA providing for exparte application and inquiry by the AMLC into certain bank deposits and investments does not violate substantive due process, there being no physical seizure of property involved at that stage. It is the preliminary and actual seizure of the bank deposits or investments in question which brings these within reach of the judicial process, specifically a determination that the seizure violated due process.

Amendments to AMLA: Inquiry into Bank Deposits 1. No violation of substantive due process. “On the other hand, a bank inquiry order under Section 11 does not necessitate any form of physical seizure of property of the account holder. What the bank inquiry order authorizes is the examination of the particular deposits or investments in banking institutions or non-bank financial institutions. The monetary instruments or property deposited with such banks or financial institutions are not seized in a physical sense, but are examined on particular details such as the account holder's record of deposits and transactions. Unlike the assets subject of the freeze order, the records to be inspected under a bank inquiry order cannot be physically seized or hidden by the account holder. Said records are in the possession of the bank and therefore cannot be destroyed at the instance of the account holder alone as that would require the extraordinary cooperation and devotion of the bank.”

Amendments to AMLA: Inquiry into Bank Deposits 2. No violation of procedural due process. • The AMLC functions solely as an investigative body in the instances mentioned in Rule 5.b.26 Thereafter, the next step is for the AMLC to file a Complaint with either the DOJ or the Ombudsman pursuant to Rule 6b. Even in the case of Estrada v. Office of the Ombudsman, where the conflict arose at the preliminary investigation stage by the Ombudsman, we ruled that the Ombudsman's denial of Senator Estrada's Request to be furnished copies of the counter-affidavits of his co-respondents did not violate Estrada's constitutional right to due process where the sole issue is the existence of probable cause for the purpose of determining whether an information should be filed and does not prevent Estrada from requesting a copy of the counter-affidavits of his co-respondents during the pre-trial or even during trial. • Plainly, the AMLC's investigation of money laundering offenses and its determination of possible money laundering offenses, specifically its inquiry into certain bank accounts allowed by court order, does not transform it into an investigative body exercising quasijudicial powers. Hence, Section 11 of the AMLA, authorizing a bank inquiry court order, cannot be said to violate SPCMB's constitutional right to due process.

Amendments to AMLA: Inquiry into Bank Deposits 3. No violation of right to privacy. • We x x x found nothing arbitrary in the allowance and authorization to AMLC to undertake an inquiry into certain bank accounts or deposits. Instead, we found that it provides safeguards before a bank inquiry order is issued, ensuring adherence to the general state policy of preserving the absolutely confidential nature of Philippine bank accounts: a. b.

c.

d.

AMLC is required to establish probable cause as basis for its ex-parte application for bank inquiry order; CA, independent of the AMLC's demonstration of probable cause, itself makes a finding of probable cause that the deposits or investments are related to an unlawful activity under Section 3(i) or a money laundering offense under Section 4 of the AMLA; A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court order ex-parte for the principal account which court order ex-parte for related accounts is separately based on probable cause that such related account is materially linked to the principal account inquired into; and Need ompliance with Section of Article 3 of the Constitution.

Amendments to AMLA: Inquiry into Bank Deposits 3. No violation of right to privacy. • One might assume that the constitutional dimension of the right to privacy, as applied to bank deposits, warrants our present inquiry. We decline to do so. Admittedly, that question has proved controversial in American jurisprudence. Notably, the United States Supreme Court in U.S. v. Miller held that there was no legitimate expectation of privacy as to the bank records of a depositor. Moreover, the text of our Constitution has not bothered with the triviality of allocating specific rights peculiar to bank deposits.

Amendments to AMLA: Inquiry into Bank Deposits SEC. 11. Authority to Inquire into Bank Deposits.  Notwithstanding the provisions of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non bank financial institution upon order of any competent court in cases of violation of this Act,  x x x

SEC. 11. Authority to Inquire into Bank Deposits. – Notwithstanding the provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791; and other laws, the AMLC may inquire into or examine any particular deposit or investment, including related accounts, with any banking institution or non-bank financial institution upon order of any competent court based on an ex parte application in cases of violations of this Act, x x x

Amendments to AMLA: Civil Forfeiture Introduced by R.A. No. 10365 •Filing of petition for civil forfeiture is now upon determination of AMLC (i.e. probable cause exists that any monetary instrument or property is in any way related to an unlawful activity) •Introduced the concept of equivalent value

“ forfeiture shall include those other monetary instrument or property having an equivalent value to that of the monetary instrument found to be related in any way to an unlawful activity or a money laundering offense, when with due diligence, the former cannot be located, or it has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, or it has been concealed, removed, converted, or otherwise transferred, or it is located outside the Philippines or has been placed or brought…”

Amendments to AMLA: Additional Power to AMLC Introduced by R.A. No. 10365 •AMLC is given authority to impose administrative sanctions including monetary penalties, warning or reprimand upon any covered person, its directors, officers, employees or any other person for 1. Violation of this act, its implementing rules and regulations, 2. Failure or refusal to comply with amlc orders, resolutions and other issuances

Amendments to AMLA: Nonintervention in BIR operations Introduced by R.A. No. 10365 •Clarified that law does not allow AMLC to participate in any manner in the operations of the BIR.