AMLA

ANTI-MONEY LAUNDERING ACT OF 2001

(REPUBLIC ACT NO. 9160, AS AMENDED BY RA 9194, RA 10167, RA 10365, RA 10927, AND RA 11521)

Section 1
Short Title

This Act shall be known as the “Anti-Money Laundering Act of 2001."

RA 9160 Has been amended (5 Amendments);

9194 (2003), 10167 (2012), 10365 (2013), 10927 (2016), 11521 (2021)

Money laundering is the process of making illegally-gained proceeds (i.e. "dirty money")
appear legal (i.e. "clean"). Typically, it involves three steps: placement, layering and
integration. First, the illegitimate funds are furtively introduced into the legitimate financial
system. Then, the money is moved around to create confusion, sometimes by wiring or
transferring through numerous accounts. Finally, it is integrated into the financial system
through additional transactions until the "dirty money" appears "clean." Money laundering
can facilitate crimes such as drug trafficking and terrorism, and can adversely impact the
global economy.

How did the term money laundering originate?

It is rumored that the term “money laundering” originated from Al Capone as he set up
laundromats across the city in order to disguise the origin of the money earned from
alcohol sales. Any illicit profits would simply be added to the revenue generated by the
laundromats and thus re-introduced into the financial system.

Reasons why money laundering act is made illegal:

The money enters the financial system without being taxed
The money is the fruit of illegal activity
Forces legitimate businesses to deal with inflated, undercut transactions
Financial system is manipulated

Section 2
Declaration of Policy

Purpose and Policies

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, as
well as in the implementation of targeted financial sanctions related to the financing of
the proliferation of weapons of mass destruction, terrorism, and financing of terrorism,
pursuant to the resolution of the United Nations Security Council.
Governing Principles
The anti-money laundering/counter-terrorism financing (AML/CTF) regime of the
Philippines shall be governed by the following principles:

(a) The AMLC, as the country's financial intelligence unit, is vested by law with
independence to perform its mandate. It upholds the continuous development of
a team of highly ethical and professional personnel and implements efficient
processes in the delivery of its mandate.

(b) The AML/CTF laws, rules and regulations and other relevant issuances are
implemented using a risk-based approach in a way that responds to the need to
bring the financially excluded into the regulated financial sector, while at the
same time maintaining effective safeguards and effective controls against
money laundering/terrorism financing risks.

(c) A strong compliance culture, good governance and observance of high ethical
standards in the conduct of business are good foundations for an effective
AML/CTF regime. It will be developed and sustained through capacity building and
deterrence of violations through imposition of appropriate, proportionate and
dissuasive sanctions.

(d) A sound risk management system to identify, assess, mitigate, monitor, and
control risks associated with money laundering/terrorism financing is essential.

(e) Timely and effective domestic and international cooperation and established
coordination mechanisms are critical in the investigation and prosecution of
money laundering/terrorism financing and associated unlawful activities.

(f) The implementation of AML laws, rules and regulations shall conform to
international AML/CTF standards and best practices.

(g) The observance of the constitutional requirements on due process, and injunction
against ex post facto laws and bills of attainder.

Section 3
Definitions.

For the purpose of this Act, the following terms are hereby defined as follows:

(a) Covered Persons refers to:

1. Persons and their subsidiaries and affiliates supervised or regulated by the

Bangko Sentral ng Pilipinas (BSP). e.g. banks, non-banks, quasi-banks, trust
entities, foreign exchange dealers, pawnshops, money changers, remittance and
transfer companies.

2. Persons supervised or regulated by the Insurance Commission (IC). e.g. insurance

companies, pre-need companies.
 3. Persons administering or otherwise dealing in monetary instruments or property
supervised or regulated by the Securities and Exchange Commission (SEC); e.g.
securities dealers, brokers, salesmen, investment houses, mutual funds, close-end
investment companies, common trust funds, and other similar persons.

4. Jewelry dealers in precious metals, who trade in precious metals, for transactions
in excess of One million pesos (P1,000,000.00).

5. Jewelry dealers in precious stones, who trade in precious stones, for transactions
in excess of One million pesos (P1,000,000.00)

6. Company service providers. e.g. acting as a formation agent of juridical persons,

acting as a director or corporate secretary of a company, a partner of a
partnership, or a similar position in relation to other juridical persons, providing a
registered office, business address or accommodation, acting as a nominee
shareholder

7. Persons who provide any of the following services: (i) managing of client money,
securities or other assets; (ii) management of bank, savings or securities
accounts; (iii) organization of contributions for the creation, operation or
management of companies; and (iv) creation, operation or management of
juridical persons or arrangements, and buying and selling business entities.

8. Casinos, including internet and ship-based casinos, with respect to their casino
cash transactions related to their gaming operations.

9. Real estate developers and brokers

10. Offshore gaming operations, as well as their service providers, are supervised,
accredited or regulated by the Philippine Amusement and Gaming Corporation
(PAGCOR) or any government agency.

Primary Duties of Covered Persons

1. Covered persons shall comply with all the requirements under the AMLA and
Terrorism Financing Prevention and Suppression Act (TFPSA), their respective IRR,
and other AMLC issuances. They shall have the duty to cooperate with the AMLC in
the discharge of the latter's mandate and execution of its lawful orders and
issuances to protect their businesses or professions from being used in ML/TF
activities.

2. The covered persons' board of directors, partners or sole proprietors shall be

ultimately responsible for the covered persons' compliance with the AMLA and
TFPSA, their respective IRR, and other AMLC issuances.

(b) Covered Transaction is a transaction in cash or other equivalent monetary instrument

involving a total amount in excess of Five hundred thousand pesos (₱500,000.00)
within one (1) banking day; for covered persons under Section 3(a)(8), a single casino
cash transaction involving an amount in excess of Five million pesos (₱5,000,000.00)
or its equivalent in any other currency.
It refers to:

1. A transaction in cash or other equivalent monetary instrument exceeding

₱500,000.

2. A transaction with or involving jewelry dealers, dealers in precious metals and

dealers in precious stones in cash or other equivalent monetary instrument
exceeding ₱1,000,000.

3. A casino cash transaction exceeding P5,000,000 or its equivalent in other

currency.

(b-1) Suspicious Transaction are transactions with covered institutions/persons,

regardless of the amounts involved, where any of the following circumstances exist:

1. There is no underlying legal or trade obligation, purpose or economic justification

2. The client is not properly identified;

3. The amount involved is not commensurate with the business or financial capacity
of the client;

4. 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;

5. 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;

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; or

7. Any transaction that is similar or analogous to any of the foregoing.

(c) Monetary Instrument refers, but is not limited, to the following:

1. Coins or currency of legal tender of the Philippines, or of any other country;

2. Credit instruments, including bank deposits, financial interest, royalties,

commissions, and other intangible property;

3. Drafts, checks, and notes;

4. Stocks or shares, participation or interest in a corporation or in a commercial

enterprise or profit-making venture and evidenced by a certificate, contract,
instrument, whether written or electronic in character, including those
enumerated in Section 3 of the Securities Regulation Code;

5. A participation or interest in any non-stock, non-profit corporation;

 6. Securities or negotiable instruments, bonds, commercial papers, deposit
certificates, trust certificates, custodial receipts, or deposit substitute instruments,
trading orders, transaction tickets, and confirmations of sale or investments and
money market instruments;

7. Contracts or policies of insurance, life or non-life, contracts of suretyship, preneed

plans, and member certificates issued by mutual benefit association; and

8. Other similar instruments where title thereto passes to another by endorsement,

assignment, or delivery.

(d) Offender refers to any person who commits a money laundering offense.

(e) Person refers to any natural or juridical person.

(f) Proceeds refers to an amount derived or realized from an unlawful activity.

(g) Supervising Authority refers to the appropriate supervisory or regulatory agency,

department or office supervising or regulating the covered institutions enumerated in
Section 3(a).

(h) Transaction refers to any act establishing any right or obligation or giving rise to any
contractual or legal relationship between the parties thereto. It also includes any
movement of funds by any means with a covered institution.

(i) Unlawful activity refers to any act or omission or series or combination thereof
involving or having direct relation to the following:

1. Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the
Revised Penal Code, as amended;

2. Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise
known as the Comprehensive Dangerous Drugs Act of 2002;

3. Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended,

otherwise known as the Anti-Graft and Corrupt Practices Act;

4. Plunder under Republic Act No. 7080, as amended;

5. Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the
Revised Penal Code, as amended;

6. Jueteng and Masiao punished as illegal gambling under Presidential Decree No.
1602;

7. Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532;

8. Qualified theft under Article 310 of the Revised Penal Code, as amended;

9. Swindling under Article 315 and Other Forms of Swindling under Article 316 of the
Revised Penal Code, as amended;

10. Smuggling under Republic Act Nos. 455 and 1937;

11. Violations of Republic Act No. 8792, otherwise known as the Electronic Commerce
Act of 2000;

12. Hijacking and other violations under Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal Code, as amended;

13. Terrorism and conspiracy to commit terrorism as defined and penalized under
Sections 3 and 4 of Republic Act No. 9372;

14. Financing of terrorism under Section 4 and offenses punishable under Sections 5,
6, 7 and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing
Prevention and Suppression Act of 2012:

15. Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as amended,
and Corruption of Public Officers under Article 212 of the Revised Penal Code, as
amended;

16. Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216 of
the Revised Penal Code, as amended;

17. Malversation of Public Funds and Property under Articles 217 and 222 of the
Revised Penal Code, as amended;

18. Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the
Revised Penal Code, as amended;

19. Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-
Trafficking in Persons Act of 2003;

20. Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705,

otherwise known as the Revised Forestry Code of the Philippines, as amended;

21. Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise
known as the Philippine Fisheries Code of 1998;

22. Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known
as the Philippine Mining Act of 1995;

23. Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147, otherwise
known as the Wildlife Resources Conservation and Protection Act;

24. Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National
Caves and Cave Resources Management Protection Act;

25. Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of
2002, as amended;

26. Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended,

otherwise known as the decree Codifying the Laws on Illegal/Unlawful Possession,
Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or
Explosives;

27. Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing Law;
 28. Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022;

29. Violation of Republic Act No. 8293, otherwise known as the Intellectual Property
Code of the Philippines;

30. Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo
and Video Voyeurism Act of 2009;

31. Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child
Pornography Act of 2009;

32. Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic Act No.
7610, otherwise known as the Special Protection of Children Against Abuse,
Exploitation and Discrimination;

33. Fraudulent practice and other violations underRepublic Act No. 8799, otherwise
known as "TheSecurities Regulation Code of 2000;

34. Violation of Section 9 (a)(3) of Republic Act No.10697, otherwise known as the
"Strategic TradeManagement Act", in relation to the proliferation of weapons of
mass destruction and its financing pursuant to United Nations Security Council
Resolution Numbers 1718 of 2006 and 2231 of 2015;

35. Violation of Section 254 of Chapter II, Title X of the National Internal Revenue Code
of 1997, as amended, where the deficiency basic tax due in the final assessment is
in excess of Twenty-five million pesos (P25,000,000.00) per taxable year, for each
tax type covered and there has been a finding of probable cause by the
competent authority: Provided, further, That there must be a finding of fraud, willful
misrepresentation or malicious intent on the part of the taxpayer: Provided, finally,
That in no case shall the AMLC institute forfeiture proceedings to recover
monetary instruments, property or proceeds representing, involving, or relating to
a tax crime, if the same has already been recovered or collected by the Bureau of
Internal Revenue (BIR) in a separate proceeding and

36. Felonies and offenses of a similar nature that are punishable under the penal laws
of other countries.

(j) Precious metals shall mean gold, silver, platinum, palladium, rhodium, ruthenium,
iridium and osmium. These include alloys of precious metals, solders and plating
chemicals such as rhodium and palladium plating solutions and potassium gold
cyanide and potassium silver cyanide and silver cyanide in salt solution.

(k) Precious stones shall mean diamond, ruby, emerald, sapphire, opal, amethyst, beryl,
topaz, and garnet that are used in jewelry making, including those formerly classified
as semi-precious stones.
(j) For purposes of covered persons under Section 3(a)(8), the following terms are hereby
defined as follows:

1. Casino refers to a business authorized by the appropriate government agency to

engage in gaming operations:

Internet-based casino shall refer to casinos in which persons participate by

the use of remote communication facilities such as, but not limited to, internet,
telephone, television, radio or any other kind of electronic or other technology
for facilitating communication; and

Ship-based casino shall refer to casinos, the operation of which is undertaken

on board a vessel, ship, boat or any other water-based craft wholly or partly
intended for gambling;

2. Casino cash transaction refers to transactions involving the receipt of cash by a

casino paid by or on behalf of a customer; or transactions involving the payout of
cash by a casino to a customer or to any person in his/her behalf; and

3. Gaming operations refer to the activities or the casino offering games of chance
and any variations thereof approved by the appropriate government authority.

4. Offshore gaming operator refers to an entity engaged in offering online games of

chance or sporting events via the internet using a network and software program,
by themselves or through local service providers.

5. Service providers refer to duly constituted business corporations who provide

components of offshore gaming operations to offshore gaming operators.

(m) Real estate developer refers to any natural or juridical person engaged in the
business of developing real estate development project for the account of the
developer and offering them for sale or lease.

(n) Real estate broker refers to a duly registered and licensed natural person who, for a
professional fee, omission or other valuable consideration, acts as an
agent of a party in a real estate transaction to offer, advertise, solicit, list, promote,
mediate, negotiate, or effect the meeting of the minds on the sale, purchase,
exchange, mortgage, lease or joint venture, or other similar transaction on real estate
or any interest therein.

(0) Targeted financial sanctions refer to both asset freezing and prohibition to prevent
funds or other assets from being made available, directly or indirectly, for the benefit
of any individual, natural or legal persons or entity designated pursuant to relevant
United Nations Security Council resolution and its designation processes.
(p) Proliferation financing refers when a person:

1. Makes available an asset; or

2. Provides a financial service; or

3. Conducts a financial transaction; and the person knows that, or is reckless as to

whether, the asset, financial service or financial transaction is intended to, in
whole or in part, facilitate proliferation of weapons of mass destruction in relation
to UN Security Council Resolution Number 1718 0f 2006 and 2231 of 2015

Section 4
Money Laundering Offense.

Money laundering is a crime whereby the proceeds of an unlawful activity are transacted,
thereby making them appear to have originated from legitimate sources.

Primary Offenses and Activities:

1. It is committed by the following:

a. If you transact any monetary instrument/ property that is connected to that

illegal activity.

b. If you:

Convert
Transfer
Dispose of
Moves
Acquires
Possesses
Uses

Of said monetary instrument or property:

c. Conceal/ Disguise the:

Nature
Source
Location
Disposition
Movement/ ownership of
Rights

With respect to said monetary instrument or property.

d. Attempts or conspires to commit money laundering offenses referred to in (a),

(b), or (c) above

e. Aids, abets, assists in, or counsels the commission of the money laundering
offenses referred to in (a), (b), or (c) above;
 f. Performs or fails to perform any act as a result of which he facilitates the
offense of money laundering referred to in items (a), (b), or (c) above

2. Money laundering is also committed by any covered person who, knowing that a
covered or suspicious transaction required under this act to be reported to
ANTI MONEY LAUNDERING COUNCIL (AMLC), fails to do so.

Section 5
Jurisdiction of Money Laundering Cases.

Regional Trial Court VS Sandiganbayan:

Regional Trial Court (RTC)

The RTC handles money laundering cases that involve private individuals and public
officers who do not fall under the Sandiganbayan's jurisdiction

Sandiganbayan

The Sandiganbayan has jurisdiction over money laundering cases involving high-ranking
public officers (those covered by the Sandiganbayan law, such as governors, mayors, and
other officials at certain ranks) and any private persons conspiring with these officials.

Note: It primarily revolves around who is involved in the crime and their relationship to
public office.

Section 6
Prosecution of Money Laundering.

Republic Act No. 10365, which amended the Anti-Money Laundering Act in 2013, explicitly
states that the prosecution of the money laundering offense shall proceed independently
of any action relating to the unlawful activity:

(a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as herein defined.

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

Prosecutions of Money Laundering and Unlawful Activity: Prosecutions for money

laundering and associated unlawful activity proceed independently, allowing
charges and convictions for both offenses against any individual.

Separate Elements of Money Laundering: The elements of money laundering are

distinct from the elements of the associated unlawful activity, where the latter's
details need not be proven beyond a reasonable doubt in money laundering
cases.
 Knowledge Establishment: Knowledge in money laundering cases may be proven
through direct or circumstantial evidence. Failure to implement preventive
measures as per AMLA guidelines can contribute to establishing knowledge of
money laundering offenses.

Rules of Procedure: Proceedings related to money laundering prosecutions are

governed by the Rules of Court. The Department of Justice, along with the Office of
the Ombudsman, handles the prosecution of money laundering cases as per the
Rules on Criminal Procedure.

Money Laundering Cases During Election Period: Candidates for electoral office
are immune from money laundering charges during an election period, ensuring
that such cases cannot be filed against them at that time.

Section 7
Creation of Anti-Money Laundering Council (AMLC).

Anti-Money Laundering Council (AMLC)

A government agency established to combat money laundering and other financial crimes
in the country. It was created to implement the provisions of the Anti-Money Laundering
Act of 2001, which aims to prevent the use of the Philippine financial system for money
laundering purposes

The AMLC is composed of three key government institutions as members:

1. The Bangko Sentral ng Pilipinas (BSP)

2. The Securities and Exchange Commission (SEC)

3. Insurance Commission (IC).

Note: Shall act unanimously in the discharge of its functions.

Role: To enhance its ability to investigate and prosecute money laundering cases, as well
as to cooperate with international organizations and other countries in the fight against
financial crimes

Core Functions of AMLC:

1. Investigation

Investigates suspicious transactions and money laundering activities.

Look into any transactions considered suspicious or connected to unlawful

activities.

2. Verification of Ownership

Issues orders to determine the actual owner of assets tied to suspicious or

flagged transactions.

Cooperates with foreign states needing assistance on similar issues.

3. Legal Proceedings

Starts civil forfeiture actions (to seize assets linked to crime) through the
Office of the Solicitor General.

Files complaints with the Department of Justice or Ombudsman for

prosecuting money laundering.

4. Freezing Assets

Requests the Court of Appeals to freeze assets believed to be linked to

unlawful activities.

5. Counteracting Money Laundering

Implements anti-money laundering measures as required by law.

6. International Cooperation

Assists foreign countries in their anti-money laundering efforts.

7. Education

Develops programs to raise awareness about money laundering, its methods,

and its impact on society.

8. Government Collaboration

Enlists help from any government agency, using their resources to detect,
prevent, and prosecute money laundering cases.

9. Administrative Sanctions:

Imposes fines or sanctions for violations of AML laws and regulations.

10. Real Estate Reporting:

Requires reports on real estate transactions over PHP 500,000 within 15 days of
registration.

11. Search and Seizure:

Applies for court-issued search and seizure orders when necessary.

12. Subpoenas:

Requests subpoenas to compel testimony or the production of documents

during investigations.

Shall apply for the issuance of subpoena ad testificandum and/or subpoena

duces tecum with any competent court;

13. Sanctions on WMD Financing:

Enforces financial sanctions against assets tied to the proliferation of

weapons of mass destruction per UN Security Council Resolutions.
 14. Asset Management

Manages, preserves, or disposes of frozen assets according to court orders,

with operational costs deducted before turning over to the government.

INVESTIGATION AND LAW ENFORCEMENT AMLC Investigation

The AMLC shall investigate Money Laundering (ML)/ Terrorism Financing (TF) offenses and
other violations of the AMLA and Terrorism Financing Prevention and Suppression Act
(TFPSA).

Note: The Supervising Authorities (SAs), Law Enforcement Agencies (LEAs) and Other
Government Agencies (OGAs) investigating the unlawful activities

Section 9
Prevention of Money Laundering - Customer Identification and Record Keeping

(a) Customer Identification

Customer Identity Verification: Covered institutions must establish and document

the true identity of clients based on official documents.

Corporate Clients: A system must verify legal existence, organizational structure,

and authority of those acting on behalf of corporate clients.

Anonymous & Fictitious Accounts: Strictly prohibited, regardless of existing laws.

Non-Checking Numbered Accounts: Peso and foreign currency non-checking

numbered accounts are allowed.

Non-Checking Numbered Accounts: Peso and foreign currency non-checking

numbered accounts are allowed.

Prohibition Against Certain Accounts: Covered Institutions shall maintain accounts only in
the true and full name of the account owner or holder. The provision of existing laws to
contrary notwithstanding, anonymous accounts, accounts under fictitious names, and
other similar account shall be absolutely prohibited.

(a) Anonymous accounts are those where the user’s identity is hidden and unverified,
often used to protect privacy or for activities requiring anonymity.

(b) Accounts under Fictitious Names are registered with false identities, typically
conceal the true owner’s identity for various reasons.

(c) Other Similar Account refers to any account types that, like anonymous or
fictitious accounts, obscure the true identity of the owner.

Prohibition against opening of Accounts without Face-to-Face Contact: No new

accounts shall be opened and created without face-to-face contact and full compliance
with the requirements under “Minimum Information/Documents Required for Individual
Customers”.
 Exception:

Non-checking Numbered Accounts: Peso and foreign currency non-checking

numbered accounts shall be allowed. Provided, the true identity of the customers of all
and foreign currency non-checking numbered accounts are satisfactorily established
based on official and other reliable documents and records, and that the information
and documents required under the provision of this Rules are obtained and recorded
by the covered institutions.

(b) Record Keeping

Transaction Records: Institutions must retain transaction records securely for 5

years from the transaction date.

Closed Accounts: Records on customer identification, account files, and business

correspondence must be kept for 5 years after account closure.

(c) Reporting of Covered and Suspicious Transactions

Reporting Requirement: Covered persons must report all covered and suspicious
transactions to the Anti-Money Laundering Council (AMLC) within 5 working days (or
up to 15 days if specified).

Exceptions for Professionals: Lawyers and accountants are exempt from reporting if
information is obtained under professional secrecy or legal privilege.

Dual Transactions: Transactions deemed both covered and suspicious should be

reported as suspicious.

Confidentiality of Reporting: Covered institutions are prohibited from disclosing any

information regarding reports to anyone, including the media, and violators may face
criminal liability.

Protection for Reporting: Individuals reporting in good faith are protected from
administrative, civil, or criminal proceedings.

Beneficial Ownership

Origin of Beneficial Ownership

Introduced in the 12th century during the Crusades, “beneficial ownership” was believed to
originate from the United Kingdom. The story begins with a crusader who owns and
cultivates his own land for a living. Long after, the crusader needed to leave his country for
years to fight for England.
Knowing that he has property he will abandon as he leaves, he has undergone into an
agreement with another farmer with whom he entrusted his land with, while he is away. He
gave the farmer the temporary possession and legal ownership of the land on the
condition that he retains the ultimate ownership over the land and that he possesses the
power to take it back at any time he wants and/or whenever he will be needed to do so.

To exercise care over the land, the original owner vested the farmer with the rights of a
legal owner to serve as a steward for the said property.

This idea is called Split Ownership. In this scenario, the legal ownership was obtained by the
farmer/trustee. He cultivates, administers, and takes care of the land. However, it was not
for his own benefit but rather for the original owner—the crusader.

Although the term beneficial ownership is currently applied to a wide variety of situations
that goes beyond this example of trust, its essence which refers to the individual or human
being who ultimately controls an asset and may benefit therefrom, continues to be the
same.

Difference between Legal Owner and Beneficial Owner/Actual Owner

In law, the legal owner and beneficial owner are distinct, though they may refer to different
types of control or benefits associated with the same property or asset.

Legal Owner

Any natural or juridical person whose name is on the official title or registration of an
asset or entity (e.g., real estate, bank accounts, or stocks).

They appear in public records and are recognized as the official owner by law.

Beneficial Owner

Any natural person who has the actual right to use, enjoy, and benefit from the asset
and/or on whose behalf a transaction is being conducted; even if their name is not listed
on legal documents.

They are usually “hidden” from public records because they are not the registered owner.

Key Concepts of Beneficial Ownership and its Role in Anti-Money Laundering Act (AMLA)

Rationale:

Money launderers and terrorists often use complex structures, such as layers of
corporations, nominees, agents, or trust structures to disguise their true identities. This
"cloak of anonymity" helps them avoid being tracked by authorities, prevents asset
freezing, and keeps their criminal proceeds intact. By identifying beneficial owners,
authorities can pierce this veil of anonymity and take action against those who are
involved in criminal activities.
Control and Economic Benefit:

Beneficial ownership isn’t just about legal title; it involves identifying the person who has
control or enjoys the benefits of an asset. A beneficial owner might not be on paper as the
"owner" but is the person with real influence or financial gain from an asset. Under AMLA,
the aim is to look past legal names and uncover the true economic interests to prevent
criminals from using front companies or nominees.

How do we identify a beneficial owner?

A beneficial owner may be identified through the following:

Through ownership interest: The natural person who ultimately has controlling ownership
interest (at least 25% of the voting shares, capital or voting rights) in the reporting
corporation, directly or indirectly or through a chain of ownership.

Through other means: The natural person exercising control of the reporting corporation
through other means.

Through position of control in the company: The natural person composing the Board of
Directors/Trustees or any similar body and/or the senior managing official of the reporting
corporation.

Risk Assessment and Due Diligence:

The AMLA issued guidelines which provide that covered persons must identify beneficial
owners, not just the listed account/title holders. Covered persons must conduct an
assessment of the risks posed by the customer and the beneficial owners. If a beneficial
owner is deemed high-risk (e.g., politically exposed persons, persons from high-risk
jurisdictions), enhanced due diligence (EDD) measures are needed to verify their identity
and assess the legitimacy of their funds.

To identify beneficial owners, covered institutions often take the following actions:

1. Review shareholder structures to find individuals with significant ownership.

2. Examine voting rights and control rights across multiple entities, especially where
indirect control may exist.

3. Conduct due diligence on board members and senior officials to assess who has
significant decision-making authority.

Detecting Suspicious Activities:

Having beneficial ownership information enables institutions and regulatory bodies to

detect suspicious patterns and transactions. Without knowing the beneficial owner, it
becomes difficult to assess whether a transaction is legitimate or linked to criminal
activities. Anti-Money Laundering mechanisms rely on beneficial ownership data to flag
unusual or suspicious activities that could indicate money laundering or terrorism
financing.
Conclusion:

Transparency around beneficial ownership is essential in the Philippines’ fight against

money laundering. By identifying the actual individuals behind transactions and assets,
authorities are better positioned to detect illicit financial flows, thereby reducing avenues
for illegal activities in the financial sector.

Safe Harbor

Safe Harbor Provision

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, whether or not such reporting results in any criminal prosecution under the AMLA or
any other Philippine law.

Definition

(a) It is a Legal Provision: it is a specific order of our government designed to address

particular issues, which is enforceable in the court.

(b) It Eliminates Legal or Regulatory Liability: it ensures that if a person or organization

reports suspicious activities, such individual or entity cannot be held legally liable for
their actions, even if the outcome is not favorable or leads to further investigations.

(c) In Certain Situations as long as Certain Conditions are Met: certain situations, in this
case, include the reporting of suspicious and covered transactions. On the other hand,
certain conditions include Good Faith Reporting; thus, the person who reported must
have believed that they were helping to prevent money laundering from happening.
Compliance with AMLA requirements, such as conducting customer due diligence and
maintaining appropriate records of transactions, can demonstrate that a reporting
entity is acting in good faith.

1. Legal Basis and Its Intent: The intent behind Safe Harbor Provision is to encourage
individuals to report any suspicious financial activities without fear of legal
consequences, as long as their report is made in good faith and as part of their
professional responsibilities.

2. Good Faith Requirement: No Malicious Intent

3. Section 14 of the Republic Act of 9160:

Malicious and bad faith reporting shall be subject to

Imprisonment: 6 months to 4 years

Fine: not less than 100,000 but not more than 500,000 in Philippine peso
 Section 10
Freezing Monetary Instrument or Property

Freeze order is a provisional remedy that blocks or restrains monetary instruments or

properties related to unlawful activities from being transacted, withdrawn, deposited,
transferred, removed, converted, concealed, or otherwise moved or disposed of, without
affecting ownership.

1. Issuance: The AMLC Secretariat authorized by the Council, files a verified ex parte
petition for issuance of freeze order before the Court of Appeals through the Office
of Solicitor General. The Court of Appeals must determine that there is a probable
cause that the monetary instrument or property is related to unlawful activity.

2. Court Action on Petition: The Court shall act on the petition to freeze within twenty-
four (24) hours from filing the petition.

3. Notification Requirements: Upon receipt of the notice of the freeze order, covered
institutions shall immediately furnish a copy of the notice of the freeze order upon
the owner or holder of the monetary or property or related accounts. Within 24
hours of receiving the freeze order or freezing the related account, the covered
institutions must submit a written detailed return to the Court of Appeals and the
AMLC by personal delivery.

Note: The covered person must also submit an electronic detailed return to the
AMLC through the internet, in a format prescribed by the AMLC.

4. Effectivity and Extension of Freeze Order: The freeze order shall be effective for
twenty (20) days unless extended by the Court of Appeals upon motion by the
AMLC. Before the twenty (20) day period of the freeze order issued by the Court of
Appeals expires, the AMLC may file a motion with the same court for an extension of
said period (not exceeding 6 months).

Note: Only the Supreme Court can issue a temporary restraining order or a writ of
injunction against a freeze order.

5. Lifting of Freeze Order: If no case is filed within the period determined by the Court
of Appeals, freeze order shall be deemed ipso facto lifted.

Election Period Protection - No asset shall be frozen to the prejudice of a candidate for an
electoral office during an election period.
 Section 11
Authority to Inquire into Bank Deposits.

Bank Inquiry

It is the right to examine any particular deposit or investment with any banking institution
or non-bank financial institution.

1. General Rule: The Anti-Money Laundering Council must obtain a court order to
legalize the investigation process.

Process:

A covered person shall first report any suspicious transactions to the Anti-
Money Laundering Council (AMLC).

If they deem it necessary to investigate further, the AMLC Secretariat must file
an ex parte application through the Office of the Solicitor General. The
application must include the probable cause for wanting to conduct a bank
inquiry, which may include threats posed by money laundering and any other
unlawful activities.

The court of appeals is required to make a decision regarding the application

within 24 hours.

Once the reporting entity obtains the bank inquiry order, they can proceed with
the investigation, which remains valid for a specified period, typically 120 days,
with an option for extension if necessary.

2. Exception to the Rule: the Anti-Money Laundering Council need not obtain a court
order to legalize the investigation process under certain circumstances including:

Kidnap for Ransom

Destructive Arson

Terrorism

Section 12
Forfeiture Provisions

General Rule

Asset forfeiture proceedings can be initiated without the need for a prior criminal charge,
ongoing case, or conviction related to illegal activities or money laundering. During an
election period, assets cannot be seized to the detriment of a candidate.

Asset Forfeiture in Money Laundering Cases

Asset forfeiture proceedings can be initiated without the need for a prior criminal charge,
ongoing case, or conviction related to illegal activities or money laundering. During an
election period, assets cannot be seized to the detriment of a candidate.
Claim on Forfeited Assets

Persons can apply for a legitimate claim on assets forfeited due to money laundering
within 15 days of the final forfeiture order. The same provision applies to both criminal and
civil forfeiture cases.

Payment in Lieu of Forfeiture

In cases where the assets subject to forfeiture cannot be located, are destroyed, or are
outside the court's jurisdiction, the convicted offender can be ordered to pay an amount
equivalent to the value of the assets. This provision is applicable to both civil and criminal
forfeiture situations.

No court shall issue a temporary restraining order (TRO) or a writ of injunction against any
provisional asset preservation order or asset preservation, except the Court of Appeals or
the Supreme Court.

Section 14
Penal Provisions

A. Penalties for the Crime of Money Laundering

This section defines the specific penalties for various offenses related to money
laundering, emphasizing the severity of the crime and the commitment of the
Philippine government to combat it.

The penalty of imprisonment ranging from 7 to 14 years and a fine of not less than
P3,000,000 but not more than twice the value of the monetary instrument or
property involved in the offense, shall be imposed upon a person convicted under
Section 4(a), (b), (c) and (d) of this Act.

The penalty of imprisonment ranging from 7 to 14 years and a fine of not less than
P3,000,000 but not more than twice the value of the monetary instrument or
property involved in the offense, shall be imposed upon a person convicted under
Section 4(a), (b), (c) and (d) of this Act.

The penalty of imprisonment from 6 months to 4 years or a fine of not less than
P100,000 but not more than P500,000, or both, shall be imposed on a person
convicted under the last paragraph of Section 4 of this Act.

B. Penalties for Failure to Keep Records

Imprisonment and Fines: 6 months to 1 year imprisonment or a fine of not less

than P 100,000 but not more than P 500,000, or both.

C. Malicious Reporting

Imprisonment and Fines: 6 months to 4 years imprisonment and a fine of not less
than P100,000 but not more than P500,000.
D. Breach of Confidentiality

Imprisonment and Fines: 3 to 8 years imprisonment and a fine of not less than
P500,000 but not more than P1,000,000

Additional Provisions:

Corporate Liability

If a corporation commits an offense, responsible officers can be held accountable.

This provision ensures that individuals cannot evade responsibility by hiding
behind corporate structures.

Public Officials

Additional penalties for public officials serve as a deterrent against corruption and
misuse of power.

Deportation for Aliens

This clause reflects a commitment to enforcing the law strictly against foreign
offenders, signaling that the Philippines will not tolerate money laundering,
regardless of the offender’s nationality.

Section 15
System of Incentives and Rewards

This Section of RA 9160 is deleted by RA 9194.

Section 16
Prohibitions Against Political Harassment

This provision safeguards against the misuse of the AMLA for political gain.

This provision is crucial in ensuring that the AMLA is not used as a tool for political
vendettas or to stifle competition.

Protection of Political Candidates

By prohibiting money laundering cases against candidates during election

periods, this section helps safeguard democratic processes and ensures that
individuals can run for office without fear of unjust legal action.

Integrity of AMLA

This reinforces public trust in the AMLA as a legitimate tool for combating crime,
rather than a means of political maneuvering.
 Section 17
Restitution

Restitution provisions under this section ensure that victims of money laundering have a
legal pathway to reclaim their losses.

New Civil Code Reference

By aligning restitution with the New Civil Code, the law provides a structured
approach for aggrieved parties to seek compensation.

Restorative Justice
This aligns with broader principles of justice, emphasizing the importance of
making victims whole and addressing the harms caused by financial crimes.

Emphasis on Victim Recovery

This approach acknowledges the financial harm suffered by victims, thereby
enhancing public confidence in the legal system and the effectiveness of the
AMLA.

Section 18
Implementing Rules and Regulations

BSP, IC, SEC Responsibilities

The Bangko Sentral ng Pilipinas (BSP), Insurance Commission (IC), and Securities and
Exchange Commission (SEC) must issue the implementing rules within 30 days of the Act's
effectivity.

Covered Institutions' Compliance Programs

Covered institutions must create money laundering prevention programs that include
information dissemination, detection, reporting, and training.

Casino-Specific Rules

The AMLC, PAGCOR, and other agencies must issue casino-related rules within 90 days.
Rules for other institutions don’t automatically apply to casinos unless specified.

Section 19
Congressional Oversight Committee

Committee Composition: 7 members from the Senate and 7 from the House of
Representatives.

Appointed by the Senate President and House Speaker.

At least 2 members from each chamber must represent the minority

Committee Powers: Can establish rules, oversee implementation of the Act, and review or
revise AMLC rules within 30 days of promulgation.
 Section 20
Non-Intervention in the Bureau of Internal Revenue (BIR) Operations

Nothing contained in this Act nor in related antecedent laws or existing agreements
shall be construed to allow the AMLC to participate in any manner in the operation of
the BIR. The AMLC, may, however, coordinate with the BIR On investigations in relating
to violations of Section 254 of NIRC, as amended, as a predicate offense to money
laundering.

This section of the law establishes a strict separation of powers between the Anti-Money
Laundering Council (AMLC) and the Bureau of Internal Revenue (BIR). It explicitly prohibits
the AMLC from interfering in any way with the BIR's operations.It underscores the distinct
roles and responsibilities of these two government agencies in the Philippines. The BIR is
primarily responsible for tax collection and administration, while the AMLC focuses on
preventing and combating money laundering and terrorism financing.

However, AMLC is allowed to coordinate with BIR for investigations specifically involving
violations which relates to tax evasion. Since tax evasion is considered a predicate offense
under AMLA (an activity that can lead to or involve money laundering), this section
enables AMLC and BIR to collaborate in such cases.

Section 21
Implementing Rules and Regulations

The authority to inquire into or examine the main account and the related accounts
shall comply with the requirements of Article III, Sections 2 and 3 of the 1987
Constitution, which are hereby incorporated by reference. Likewise, the constitutional
injunction against ex post facto laws and bills of attainder shall be respected in the
implementation of this Act.

This section mandates that the Anti-Money Laundering Council (AMLC)’s authority to
inquire into or examine main and related accounts must adhere to the requirements of the
1987 Constitution, specifically Article III, Sections 2 and 3.

By adhering to such requirements, the law ensures that AMLC’s powers are balanced with
individual rights, reinforcing that any investigation involving financial records must respect
privacy rights and adhere to legal processes.

Brief Description of the Sections 2 and 3

Section 2: Protection against unreasonable searches and seizures

Section 3: Privacy of communication and correspondence

AMLC is also required to uphold the prohibition against ex post facto laws and bills of
attainder. Further explained as follows:

Prohibition of Ex Post Facto Laws: The law prohibits the application of laws
retroactively to punish individuals for actions that were not illegal at the time they
were committed. This ensures that individuals are not unfairly punished for past
actions that were not criminalized at the time.
 Prohibition of Bills of Attainder: The law prohibits the use of bills of attainder, which
are legislative acts that declare a person guilty of a crime without a trial. This
further safeguards individual rights and ensures that all individuals are entitled to
a fair trial.

Section 22
Appropriations Clause

The AMLC shall be provided with an initial appropriation of Twenty-five million Philippine
pesos (Pshp 25,000,000.00) to be drawn from the national government. Appropriations
for the succeeding years shall be included in the General Appropriations Act.

This section of the law addresses the funding mechanism for the Anti-Money Laundering
Council (AMLC). It outlines how the AMLC will receive its initial funding and how subsequent
appropriations will be handled.

Initial Appropriation:

Php 25,000,000.00: The AMLC is granted an initial appropriation of twenty-five million

Philippine pesos. This initial funding is intended to kickstart the AMLC's operations and
provide necessary resources for its establishment.

Source of Funds: The initial appropriation will be drawn from the National Government,
indicating that it will come from public funds.

Subsequent Appropriations:

General Appropriations Act: The law states that appropriations for subsequent years will
be included in the General Appropriations Act. This means that the AMLC's annual budget
will be subject to the legislative process, where the Philippine Congress will determine the
amount of funding allocated to the AMLC for each fiscal year.

Section 23
Separability Clause

If any provision or section of this Act or the application thereof to any person or
circumstance is held to be invalid, the other provisions or sections of this Act, and the
application of such provision or section to other persons or circumstances, shall not be
affected thereby.

If any part or provision of the law is found to be invalid or unconstitutional, the remaining
parts of the law will continue to be in effect. This type of clause ensures that the invalidity
of a single section or provision does not render the entire law unenforceable.
 Section 24
Repealing Clause

All laws, decrees, executive orders, rules and regulations or parts thereof, including the
relevant provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as
amended; Republic Act No. 8791, as amended and other similar laws, as are inconsistent
with this Act, are hereby repealed, amended or modified accordingly.

It generally provides that any existing laws, rules, or regulations that are inconsistent with
the AMLA are repealed or modified to align with the new law.

Section 25
Effectivity

This Act shall take effect fifteen (15) days after its complete publication in the Official
Gazette or in at least two (2) national newspapers of general circulation.

This allows time for the public, businesses, and government agencies to become aware of
the new regulations. The publication serves as an official notice, giving everyone a
chance to understand their rights and responsibilities under the new law before it is
enforced.