ANTI MONEY LAUNDERING ACT
1. An act defining the crime money laundering, providing penalties
therefore and for other purposes
Purpose:
To protect and preserve the integrity and confidentiality of bank
accounts
To ensure that the Pool Philippines shall not be hsed as a money
laundering site for proceeds of any unlawful activity
Money Laundering
2. Any act or attempted act to conceal or disguise the identity of illegally
obtained proceeds so that they appear to have originated from
legitimate sources
Covered Persons
1. Banks and financial institutions
2. Insurance Companies
3. Pre need Companies
4. Investment houses
5. Securities dealers, brokers or salesmen
6. Jewelry dealers in precious stones and metals
7. Company service providers
8. Casinos
9. Real estate developers and brokers
10. Offshore gaming operation
Covered Transaction
1. A transaction in cash or other equivalent exceeding P500,000
2. A transaction of jewelry dealers in precious stones and metals
exceeding P1,000,000
3. A casino transaction exceeding P5,000,000
4. A single transaction of real estate developers exceeding
P7,500,000
Suspicious Transaction
1. No underlying legal or trade obligation
2. Client is not properly identified
3. Amount involved does not commensurate to the financial
capacity of the client
4. Perceived that the client’s transaction is structured
5. Any circumstance relating to the transaction which is observed to
deviate from the profile of the client
6. Transaction is any way related to an unlawful activity
Unlawful Activity
1. Kidnap for Ransom
2. Comprehensive Dangerous Drugs Act
3. Anti Graft and Corrupt Practices
4. Robbery and Extortion
5. Plunder
6. Qualified Theft
7. Swindling
8. Smuggling
9. Hijacking
10. Destructive Arson
11. Murder
12. Terrorism
Unlawful activity that does not need court order:
1. Kidnap for Ransom
2. Comprehensive Dangerous Drugs Act
3. Hijacking
4. Destructive Arson
5. Murder
Money Laundering Offenses
Transacts said monetary instrument
Converts or uses said monetary instrument
Conceals or disguises said monetary instrument
Attempts or conspires to commit money laundering offenses
Aids or assists commission of money laundering offenses
Fails to perform any act as a result of which he facilitates the
offense
ANTI MONEY LAUNDERING COUNCIL (AMLC)
1. Governor of the BSP - chairperson
2. Chairperson of the SEC – member
3. Commissioner of the IC – member
Duties:
1. Receive covered or suspicious transactions
2. Issue orders addresses to appropriate supervising auhtory
3. Institute civil forfeiture proceedings
4. Investigate covered and suspicious transactions
5. Apply freezing of any monetary instrument or property
6. Develop educational programs related to anti money
laundering
7. Take action for any requests of foreign states
8. Impose administrative sanctions
9. To implement such measures as may deem necessary
10. To preserve or dispose assets
Safe Harbor Provision
Provides that no administrative, criminal, or civil proceedings
shall lie against any person for having made a covered
transaction report in the regular performance of his duties and
in good faith
Freeze Order
1. Petition by AMLC that there is probable cause of an unlawful activity
2. The court should act on the petition within 24 hours from petition
3. The court issue a freeze order for a period 20 days
4. The total period shall not exceed 6 months
5. The republic should file a case against the property owner
Probable cause
Bank accounts, assets or other monetary instrument to be frozen
are any way related to an unlawful activity
Freeze Order vs. Bank Inquiry
Freeze order – aimed at preserving monetary instrument or property in any
way related unlawful activities. The owner is prohibited from using the for
the duration the order
Bank Inquiry order – examination of deposits or investments in banking
and non banking institutions
*Both should probable cause to exists
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Scenario 1: Suspicious Large Transactions
Situation: A small convenience store, which typically handles low-value cash
transactions, suddenly deposits ₱5 million in a single day into its bank
account. The bank manager notices this and is unsure whether to report it.
Problem: Should the bank report this transaction to the Anti-Money
Laundering Council (AMLC)?
Analysis: Under AMLA, financial institutions must report transactions that
exceed the threshold amount (₱500,000 within a single banking day) if they
seem suspicious. The bank should file a Suspicious Transaction Report (STR),
especially if the transaction has no clear legal purpose.
Scenario 2: Structuring of Deposits
Situation: A businessman deposits ₱450,000 into his bank account in the
morning and another ₱450,000 in the afternoon at a different branch to
avoid the ₱500,000 reporting threshold.
Problem: Is this a violation of AMLA?
Analysis: Yes, this is called structuring or smurfing, a common money
laundering technique. Even though each deposit is below the reporting
threshold, financial institutions are trained to detect patterns that suggest an
attempt to evade reporting. The bank should still file an STR with AMLC.
Scenario 3: Money Transfer for Terrorism Financing
Situation: A charity organization receives a large foreign donation and
immediately transfers the full amount to an unknown individual in a high-risk
country known for terrorist activities.
Problem: Should this be flagged under AMLA?
Analysis: Yes, AMLA covers not just money laundering but also terrorism
financing. Even if the transaction seems legitimate, financial institutions
must conduct customer due diligence (CDD) and report transactions that
could be linked to terrorism. The transaction should be investigated and
reported as necessary.
Scenario 4: Real Estate and Money Laundering
Situation: A young individual with no stable job purchases a high-end
condominium unit in cash worth ₱20 million. When asked about the source of
funds, he provides vague answers and refuses to submit supporting
documents.
Problem: Should the real estate developer report this transaction?
Analysis: Yes. Under AMLA, real estate developers and brokers are covered
persons who must report large cash transactions (exceeding ₱7.5 million)
and suspicious transactions to AMLC. Refusing to disclose the source of funds
is a red flag.
Scenario 5: Shell Company for Laundering Money
Situation: A newly registered company with no clear business operations
receives multiple international wire transfers from unknown sources and
immediately withdraws the funds in cash.
Problem: What should the bank do?
Analysis: This activity is highly suspicious. Shell companies are often used for
money laundering. The bank must conduct enhanced due diligence and
report the transaction to AMLC. If needed, authorities can freeze the account
under AMLA.
Under the bank inquiry order, does consent of the depositor needed
to proceed with the examination?
No, under the Bank Inquiry Order (BIO) provision of the Anti-Money
Laundering Act (AMLA), the consent of the depositor is not required to
proceed with the examination of their bank accounts.
Under Section 11 of AMLA (Republic Act No. 9160, as amended by R.A. 9194
and R.A. 10365), the Anti-Money Laundering Council (AMLC) may inquire into
or examine bank accounts, but it requires a court order, except in certain
cases.
Two Situations for Bank Inquiry:
1. With Court Order
If there is probable cause that the deposit or investment is related to
unlawful activities of money laundering, the AMLC may file a petition in court
to examine the account. Once the court grants the Bank Inquiry Order (BIO),
AMLC can proceed without the depositor's consent.
2. Without Court Order (For Terrorism and Terrorism Financing Cases)
If the account is suspected of financing terrorism under RA 10168 (Terrorism
Financing Prevention and Suppression Act), AMLC can examine the account
without needing a court order or the depositor’s consent.
Covered Transaction Examples
1. Large Cash Deposit Without Clear Source
Situation:
A 22-year-old college student with no known source of income deposits
₱800,000 in cash into his bank account. When asked by the bank teller about
the source of funds, he vaguely mentions it is from a “family business” but
refuses to provide details or supporting documents.
Problem: Should the bank report this transaction as a Covered Transaction or
a Suspicious Transaction? What additional actions should the bank take?
Possible Analysis:
Since the deposit exceeds ₱500,000, it qualifies as a Covered Transaction
and must be reported to the AMLC. Because the depositor has no apparent
source of income and is reluctant to provide details, the bank may also file a
Suspicious Transaction Report (STR) due to the lack of an economic
justification.
2. Jewelry Purchase with Cash from an Unknown Buyer
Situation:
A customer walks into a jewelry store and buys a gold bracelet and diamond
ring worth ₱1.2 million in cash. The customer insists on not providing
identification and claims they are “just a collector.”
Problem:
Is the jewelry store required to report this transaction? What are the red flags
in this scenario?
Possible Analysis:
Since the transaction exceeds ₱1,000,000, the jewelry dealer must report it
as a Covered Transaction. The customer’s refusal to provide identification is a
red flag for possible money laundering. The store should conduct Customer
Due Diligence (CDD) and, if suspicions remain, file an STR.
3. Casino Wins and Immediate Withdrawal
Situation:
A businessman enters a casino and buys ₱6 million worth of casino chips. He
plays for a short time, makes minimal bets, and then cashes out ₱5.8 million,
requesting a direct transfer to an offshore bank account.
Problem:
Does the casino need to report this transaction? Could this be a case of
money laundering?
Possible Analysis:
Since the transaction exceeds ₱5 million, the casino must report it as a
Covered Transaction to the AMLC. The fact that the player did not seriously
gamble but instead withdrew most of the money suggests “chip dumping”, a
common money laundering technique where criminals use casinos to “clean”
illicit funds. The casino should consider filing an STR in addition to the CTR.
4. Real Estate Purchase with Suspicious Cash Payment
Situation:
A foreign investor pays ₱9 million in cash to buy a condo unit from a real
estate broker. The investor refuses to disclose his business background,
stating he “just wants to invest in the country.”
Problem:
Is the real estate broker required to report this transaction? What are the
potential legal implications?
Possible Analysis:
Since the payment exceeds ₱7.5 million, it qualifies as a Covered
Transaction, and the broker must report it to AMLC. The investor’s refusal to
disclose his source of funds could indicate money laundering, requiring
additional due diligence and possibly an STR.