Philippines

1. Does the Philippines have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. The Anti Money Laundering Act (Republic Act No. 9160, as amended) (the “AMLA”) and the Terrorism Financing Prevention and Suppression Act of 2012 (Republic Act No. 10168) (the “TFPSA”) criminalize money laundering and terrorist financing, respectively.

2. To whom does the legislation apply?

The AMLA applies to “covered persons”, which term includes financial institutions and Designated Non-Financial Businesses and Professions (“DNFBPs”) as set out in Section 3. The TFPSA applies to any person who commits, or attempts or conspires to commit, the crime of terrorism financing, as defined in Section 4 of the law, whether as a principal, accomplice or accessory.

3. What does the legislation prohibit?

The AMLA prohibits money laundering, which 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 the monetary instrument or property;
• converts, transfers, disposes of, moves, acquires, possesses or uses the monetary instrument or property;
• conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to the monetary instrument or property;
• attempts or conspires to commit money laundering offences 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 offence of money laundering referred to in paragraphs (a), (b) or (c) above.

Money laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under the AMLA to be reported to the Anti-Money Laundering Council (“AMLC”), fails to do so. Covered persons must file all Covered Transaction Reports (“CTR”) and Suspicious Transaction Reports (“STR”), in accordance with the registration and reporting guidelines of the AMLC.

The TFPSA prohibits the crime of terrorism financing, which is defined in Section 4 of the law as the act of “directly or indirectly, wilfully and without lawful excuse, possess[ing], provid[ing], collect[ing] or us[ing] property or funds or mak[ing]e available property, funds or financial service or other related services, by any means, with the unlawful and wilful intention that they should be used or with the knowledge that they are to be used, in full or in part: (a) to carry out or facilitate the commission of any terrorist act; (b) by a terrorist organisation, association or group; or (c) by an individual terrorist.” Financing of terrorism and other offenses punishable under the TFPSA are predicate offences to money laundering as defined in AMLA and are subject to its suspicious transaction reporting requirement.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Please see response to question no. 3.

It is not necessary that the underlying unlawful activity be proven. The prosecution of any offence or violation under AMLA may proceed independently of any proceeding relating to the unlawful activity. Under the implementing rules and regulations (“IRR”) of R.A. 9160, as amended, the elements of money laundering are separate and distinct from the elements of the associated unlawful activity. The elements of the unlawful activity, including the identity of the perpetrators and the details of the commission of the unlawful activity, need not be established by proof beyond reasonable doubt in the case of money laundering.

Furthermore, a criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding.

5. What level of intent or knowledge is required to establish a violation?

To be held liable for money laundering, the offender must know that monetary instrument or property, with which he was dealing or transacting, represents, includes, or relates to the proceeds of any unlawful activity. Under the IRR of R.A. No. 9160, the element of knowledge may be established by direct or circumstantial evidence. Deliberate non-performance of preventive measures under the AMLA, its IRR and related issuances by a covered person’s responsible directors, officers and employees shall be considered in determining knowledge of the commission of money laundering offences.

6. What are the potential penalties for infringing the legislation?

Money laundering may be penalized by imprisonment and fines. The length of imprisonment and the amount of fine may vary depending on the mode of commission of the offense. Generally, however, imprisonment may range from six months to 14 years, and the fines may range from one hundred thousand pesos to not more than twice the value of the monetary instrument or property involved in the offense.

Any monetary instrument or property that is in any way related to an unlawful activity or a money laundering offense may be subject to civil forfeiture.

Under the TFPSA, those guilty of terrorism financing may be subject to the penalty of reclusion temporal in its maximum period to reclusion perpetua and a fine of not less than five hundred thousand pesos (Php500,000.00) nor more than one million pesos (Php1,000,000.00).

7. Does the legislation have extra-territorial reach?

The AMLA does not have extra-territorial application. However, it provides for mutual legal assistance with foreign states. In contrast, the TFPSA has extra-territorial application.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

Very broadly, covered persons must:

• conduct an institutional risk assessment;
• adopt a comprehensive and risk-based Money Laundering and Terrorist Financing Prevention Program (MLPP);
• develop written client identification and acceptance policies and procedures;
• have procedures for making and maintaining a record of all customer relationships and transactions;
• institute a system for the mandatory reporting of covered transactions and suspicious transactions;
• appoint a senior officer as Compliance Officer and provide for board oversight on anti-money laundering and terrorist financing prevention concerns;
• establish and implement internal control and procedures aimed at preventing and impeding money laundering, including an internal audit function;
• provide anti-money laundering education and training for all its staff and personnel.

9. What are the potential penalties for failing to comply with these obligations?

Failure to comply with the aforementioned obligations may subject a covered person to administrative sanctions, including monetary penalties, warning or reprimand. The scale of penalties takes into account attendant circumstances, such as asset size of the covered person, and the nature and gravity of the violation.

10. Who are the relevant enforcement authorities in Philippines and what are their contact details?

The enforcement authority in the Philippines is the AMLC. The Bangko Sentral ng Pilipinas (“BSP”), the Securities and Exchange Commission (“SEC”) and the Insurance Commission (“IC”) have also been designated as supervisory authorities in relation to particular financial institutions or DNFBPs.

Questions may be emailed to the AMLC at imag@amlc.gov.ph.

The contact details of the supervisory authorities are as follows: