Rules and Regulations Implementing the Anti-Money Laundering Act of 2001.     page 3

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RULE 4

MONEY LAUNDERING OFFENSES

Section 1. Money Laundering Offenses and their Corresponding Penalties. – Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is a process

comprising of three (3) stages, namely, placement or the physical disposal of the criminal proceeds, layering or the separation of the criminal proceeds from their source by creating layers of financial transactions to disguise the audit trail, and integration or the provision of apparent legitimacy to the criminal proceeds. Any transaction involving such criminal proceeds or attempt to transact the same during the placement, layering or integration stage shall constitute the crime of money laundering.

(a) When it is committed by a person who, 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, the penalty is imprisonment from seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos (Php3,000,000.00) but not more than twice the value of the monetary instrument or property involved in the offense.
 

(c) When it is committed by a person who, knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the AMLC, fails to do so, the penalty is imprisonment from six (6) months to four (4) years or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both.

Sec. 2. Unlawful Activities. - These refer to any act or omission or series or combination thereof involving or having relation to the following:

1. Kidnapping for ransom under Article of Act No. 3815, the Revised Penal Code, as amended;
2. Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the same Code;
3. Qualified theft under Article 310 of the same Code;
4. Swindling under Article 315 of the same Code;
5. Piracy on the high seas under the same Code and Presidential Decree (P.D.) No. 532;
6. Destructive arson and murder as defined under the same Code and hijacking and other violations under Republic Act (R.A.) No. 6235, including those perpetrated by terrorists against non-combatant persons and similar targets;
7. Jueteng and Masiao punished as illegal gambling under P.D. No. 1602;
8. Smuggling under R.A. Nos. 455 and 1937;
9. Section 3, paragraphs B, C, E, G, H and I of R.A. No. 3019, the Anti-Graft and Corrupt Practices Act, as amended;
10. Sections 3, 4, 5, 7, 8 and 9 of Article Two of R.A. No. 6425, the Dangerous Drugs Act of 1972 as amended;
11. Plunder under R.A. No. 7080, as amended;
12. Violations under R.A. No. 8792, the Electronic Commerce ct of 2000;
13. Fraudulent practices and other violations under R.A. No. 8799, the Securities Regulation Code of 2000; and
14. Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.

Sec. 3. Jurisdiction of Money Laundering Cases. – The Regional Trial Courts shall have the jurisdiction to try all cases on money laundering. Those committed by public officers and private persons who are in conspiracy with such public officers shall be under the jurisdiction of the Sandiganbayan.

Sec. 4. Prosecution of Money Laundering. –

(a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as defined under Section 3 (i) of the AMLA.

(b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation under the AMLA without prejudice to the issuance by the AMLC of a freeze order with respect to the deposit, investment or similar account involved therein and resort to other remedies provided under the AMLA.

(c) Knowledge of the offender that any monetary instrument or property represents, involves, or relates to the proceeds of an unlawful activity or that any monetary instrument or property is required under the AMLA to be disclosed and filed with the AMLC, may be established by direct evidence or inferred from the attendant circumstances.

(d) All the elements of every money laundering offense under Section 4 of the AMLA must be proved by evidence beyond reasonable doubt, including the element of knowledge that the monetary instrument or property represents, involves or relates to the proceeds of any unlawful activity. No element of the unlawful activity, however, including the identity of the perpetrators and the details of the actual commission of the unlawful activity need be established by proof beyond reasonable doubt. The elements of the offense of money laundering are separate and distinct from the elements of the felony or offense constituting the unlawful activity.

(e) No case for money laundering may be filed to the prejudice of a candidate for an electoral office during an election period. However, this prohibition shall not constitute a bar to the prosecution of any money laundering case filed in court before the election period.

(f) The AMLC may apply, in the course of the criminal proceedings, for provisional remedies to prevent the monetary instrument or property subject thereof from being removed, concealed, converted, commingled with other property or otherwise to prevent its being found or taken by the applicant or otherwise placed or taken beyond the jurisdiction of the court. However, no assets shall be attached to the prejudice of a candidate for an electoral office during an election period.

(g) Where there is conviction for money laundering under Section 4 of the AMLA, the court shall issue a judgment of forfeiture in favor of the Government of the Philippines with respect to the monetary instrument or property found to be proceeds of one or more unlawful activities. However, no assets shall be forfeited to the prejudice of a candidate for an electoral office during an election period.

(h) Restitution for any aggrieved party shall be governed by the provisions of the New Civil Code.

  

RULE 5

PREVENTION OF MONEY LAUNDERING

Section 1. Customer Identification Requirements. –

(a) True Identity of Individuals as Clients. Covered institutions shall establish appropriate systems and methods based on internationally compliant standards and adequate internal controls for verifying and recording the true and full identity of their customers.

For this purpose, they shall develop clear customer acceptance policies and procedures when conducting business relations or specific transactions, such as, but not limited to, opening of deposit accounts, accepting deposit substitutes, entering into trust and other fiduciary transactions, renting of safety deposit boxes, performing remittances and other large cash transactions.

When dealing with customers who are acting as trustee, nominee, agent or in any capacity for and on behalf of another, covered institutions shall verify and record the true and full identity of the person(s) on whose behalf a transaction is being conducted. Covered institutions shall also establish and record the true and full identity of such trustees, nominees, agents and other persons and the nature of their capacity and duties. In case a covered institution has doubts as to whether such persons are being used as dummies in circumvention of existing laws, it shall immediately make the necessary inquiries to verify the status of the business relationship between the parties.

(b) Minimum Information/Documents required for Individual Customers. Covered institutions shall require customers to produce original documents of identity issued by an official authority, preferably bearing a photograph of the customer. Examples of such documents are identity cards and passports. Where practicable, file copies of documents of identity are to be kept. Alternatively, the identity card or passport number and/or other relevant details are to be recorded. The following minimum information/documents shall be obtained from individual customers:

1. Name;
2. Present address;
3. Permanent address;
4. Date and place of birth;
5. Nationality;
6. Nature of work and name of employer or nature of self-employment/business;
7. Contact numbers;
8. Tax identification number, Social Security System number or Government Service and Insurance System number;
9. Specimen signature;
10. Source of fund(s); and
11. Names of beneficiaries in case of insurance contracts and whenever applicable.

(c) Minimum Information/Documents Required for Corporate and Juridical Entities. Before establishing business relationships, covered institutions shall endeavor to ensure that the customer that is a corporate or juridical entity has not been or is not in the process of being, dissolved, wound up or voided, or that its business or operations has not been or is not in the process of being, closed, shut down, phased out, or terminated. Dealings with shell companies and corporations, being legal entities which have no business substance in their own right but through which financial transactions may be conducted, should be undertaken with extreme caution. The following minimum information/documents shall be obtained from customers that are corporate or juridical entities, including shell companies and corporations:

1. Articles of Incorporation/Partnership;
2. By-laws;
3. Official address or principal business address;
4. List of directors/partners;
5. List of principal stockholders owning at least two percent (2%) of the capital stock;
6. Contact numbers;
7. Beneficial owners, if any; and
8. Verification of the authority and identification of the person purporting to act on behalf of the client.

 

 (d) Verification without Face-to-Face Contact. – To the extent and through such means allowed under existing laws and applicable rules and regulations of the BSP, the SEC and the IC, covered institutions may create new accounts without face-to-face contact. However, such new accounts shall not be valid and effective unless the customer complies with the requirements under the two (2) immediately preceding subsections and such other requirements that have been or will be imposed by the BSP, the SEC and the IC, as the case may be, pursuant to Rule 5 of these Rules and/or their respective charters, within ten (10) days from the creation of the new accounts. Unless such requirements have been fully complied with, no transaction shall be honored by any covered institution respecting an account created without face-to-face contact.

(e) Acquisition of Another Covered Institution. – When a covered institution acquires the business of another covered institution, either in whole or as a product portfolio, it is not necessary for the identity of all existing customers to be re-established: Provided, That all customer account records are acquired with the business and due diligence inquiries do not raise any doubt as to whether or not the acquired business has fully complied with all the requirements under the AMLA and these Rules.

(f) Risk-monitoring and Review. Covered institutions shall adopt programs for on-going monitoring of high-risk accounts and risk management, subject to such rules and regulations as may be prescribed by the appropriate Supervising Authority. Regular reviews of customer base should be undertaken to ensure that the nature of accounts and potential risks are properly identified, monitored and controlled.

(g) Prohibition against Certain Accounts. Covered institutions shall maintain accounts only in the true name of the account owner or holder. The provisions of existing laws to the contrary notwithstanding, anonymous accounts, accounts under fictitious names, incorrect name accounts and all other similar accounts shall be absolutely prohibited.

(h) Numbered Accounts. Peso and foreign currency non-checking numbered accounts shall be allowed: Provided, That the true identity of the customer is satisfactorily established based on official and other reliable documents and records, and that the information and documents required under Section 1 (b) and (c) of Rule 5 of these Rules are obtained and recorded by the covered institution. The BSP may conduct annual testing for the purpose of determining the existence and true identity of the owners of such accounts.

Sec. 2. Recordkeeping Requirements. – Covered transactions shall prepare and maintain documentation on their customer accounts, relationships and transactions such that any account, relationship or transaction can be so reconstructed as to enable the AMLC, the law enforcement and prosecutorial authorities, and/or the courts to establish an audit trail for money laundering.

(a) Existing and New Accounts and New Transactions. All records of existing and new accounts and of new transactions shall be maintained and safely stored for five (5) years from October 17, 2001 or from the dates of the accounts or transactions, whichever is later.

(b) Closed Accounts. With respect to closed accounts, the records on customer identification, account files and business correspondence shall be preserved and safely stored for at least five (5) years from the dates when they were closed.

(c) Retention of Records in Case a Money Laundering Case Has Been Filed in Court. – If a money laundering case based on any record kept by the covered institution concerned has been filed in court, said file must be retained beyond the period stipulated in the two (2) immediately preceding subsections, as the case may be, until it is confirmed that the case has been finally resolved or terminated by the court.

(d) Form of Records. – Records shall be retained as originals or certified true copies on paper, microfilm or electronic form: Provided, That such forms are admissible in court pursuant to existing laws and the applicable rules promulgated by the Supreme Court.

(e) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6) months to one (1) year or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person convicted for a violation of Section 9 (b) of the AMLA.

  Sec. 3. Money Laundering Prevention Programs. – Covered institutions shall formulate their respective money laundering prevention programs in accordance with Section 9 and other pertinent provisions of the AMLA and Sections 1 and 2 of Rules 3 and 4 and other pertinent provisions of these Rules, subject to such guidelines as may be prescribed by the Supervising Authority and approved by the AMLC. Every covered institution shall submit its own money laundering program to the Supervising Authority concerned within a non-extendible period of sixty (60) days from the date of effectivity of these Rules.

Every money laundering program shall establish detailed procedures implementing a comprehensive, institution-wide "know-your-client" policy, set-up an effective dissemination of information on money laundering activities and their prevention, detection and reporting, adopt internal policies, procedures and controls, designate compliance officers at management level, institute adequate screening and recruitment procedures, and set-up an audit function to test the system.

Covered institutions shall adopt, as part of their money laundering programs, a system of flagging and monitoring transactions that qualify as covered transactions except that they involve amounts below the threshold to facilitate the process of aggregating them for purposes of future reporting of such transactions to the AMLC when their aggregated amounts breach the threshold. Covered institutions not subject to account secrecy laws shall incorporate in their money laundering programs the provisions of Section 1, Rule 3 of these Rules and such other guidelines for the voluntary reporting to the AMLC of all transactions that engender the reasonable belief that a money laundering offense is about to be, is being, or has been committed.

Sec. 4. Training of Personnel. – Covered institutions shall provide all their responsible officers and personnel with efficient and effective training and continuing education programs to enable them to fully comply with all their obligations under the AMLA and these Rules.

 

RULE 6

FORFEITURE

Section 1. 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. However, no assets shall be forfeited to the prejudice of a candidate for an electoral office during an election period.

Sec. 2. Claim on Forfeited Assets. - Where the court has issued an order of forfeiture of the monetary instrument or property in a criminal prosecution for any money laundering offense under Section 4 of the AMLA, the offender or any other person claiming an interest therein may apply, by verified petition, for a declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or property corresponding thereto. The verified petition shall be filed with the court which rendered the judgment of conviction and order of forfeiture, within fifteen (15) days from the date of the order of forfeiture, in default of which the said order shall become final and executory. This provision shall apply in both civil and criminal forfeiture.

Sec. 3. Payment in lieu of Forfeiture. - Where the court has issued an order of forfeiture of the monetary instrument or property subject of a money laundering offense under Section 4 of the AMLA, and said order cannot be enforced because any particular monetary instrument or property cannot, with due diligence, be located, or it has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, directly or indirectly, attributable to the offender, or it has been concealed, removed, converted or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof, or it is located outside the Philippines or has been placed or brought outside the jurisdiction of the court, or it has been commingled with other monetary instruments or property belonging to either the offender himself or a third person or entity, thereby rendering the same difficult to identify or be segregated for purposes of forfeiture, the court may, instead of enforcing the order of forfeiture of the monetary instrument or property or part thereof or interest therein, accordingly order the convicted offender to pay an amount equal to the value of said monetary instrument or property. This provision shall apply in both civil and criminal forfeiture.

 

RULE 7

MUTUAL ASSISTANCE AMONG STATES

Section 1. Request for Assistance from a Foreign State. - Where a foreign state makes a request for assistance in the investigation or prosecution of a money laundering offense, the AMLC may execute the request or refuse to execute the same and inform the foreign state of any valid reason for not executing the request or for delaying the execution thereof. The principles of mutuality and reciprocity shall, for this purpose, be at all times recognized.

Sec. 2. Powers of the AMLC to Act on a Request for Assistance from a Foreign State. - The AMLC may execute a request for assistance from a foreign state by: (a) tracking down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity under the procedures laid down in the AMLA and in these Rules; (b) giving information needed by the foreign state within the procedures laid down in the AMLA and in these Rules; and (c) applying for an order of forfeiture of any monetary instrument or property in the court: Provided, That the court shall not issue such an order unless the application is accompanied by an authenticated copy of the order of a court in the requesting state ordering the forfeiture of said monetary instrument or property of a person who has been convicted of a money laundering offense in the requesting state, and a certification or an affidavit of a competent officer of the requesting state stating that the conviction and the order of forfeiture are final and that no further appeal lies in respect of either.

 

Sec. 3. Obtaining Assistance From Foreign States. - The AMLC may make a request to any foreign state for assistance in (a) tracking down, freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity; (b) obtaining information that it needs relating to any covered transaction, money laundering offense or any other matter directly or indirectly related thereto; (c) to the extent allowed by the law of the foreign state, applying with the proper court therein for an order to enter any premises belonging to or in the possession or control of, any or all of the persons named in said request, and/or search any or all such persons named therein and/or remove any document, material or object named in said request: Provided, That the documents accompanying the request in support of the application have been duly authenticated in accordance with the applicable law or regulation of the foreign state; and (d) applying for an order of forfeiture of any monetary instrument or property in the proper court in the foreign state: Provided, That the request is accompanied by an authenticated copy of the order of the Regional Trial Court ordering the forfeiture of said monetary instrument or property of a convicted offender and an affidavit of the clerk of court stating that the conviction and the order of forfeiture are final and that no further appeal lies in respect of either.

 

Sec. 4. Limitations on Requests for Mutual Assistance. - The AMLC may refuse to comply with any request for assistance where the action sought by the request contravenes any provision of the Constitution or the execution of a request is likely to prejudice the national interest of the Philippines, unless there is a treaty between the Philippines and the requesting state relating to the provision of assistance in relation to money laundering offenses.

 

Sec. 5. Requirements for Requests for Mutual Assistance from Foreign States. - A request for mutual assistance from a foreign state must (a) confirm that an investigation or prosecution is being conducted in respect of a money launderer named therein or that he has been convicted of any money laundering offense; (b) state the grounds on which any person is being investigated or prosecuted for money laundering or the details of his conviction; (c) give sufficient particulars as to the identity of said person; (d) give particulars sufficient to identify any covered institution believed to have any information, document, material or object which may be of assistance to the investigation or prosecution; (e) ask from the covered institution concerned any information, document, material or object which may be of assistance to the investigation or prosecution; (f) specify the manner in which and to whom said information, document, material or object obtained pursuant to said request, is to be produced; (g) give all the particulars necessary for the issuance by the court in the requested state of the writs, orders or processes needed by the requesting state; and (8) contain such other information as may assist in the execution of the request.

 

Sec. 6. Authentication of Documents. - For purposes of Section 13 of the AMLA and Rule 7 of these Rules, a document is authenticated if the same is signed or certified by a judge, magistrate or equivalent officer in or of, the requesting state, and authenticated by the oath or affirmation of a witness or sealed with an official or public seal of a minister, secretary of state, or officer in or of, the government of the requesting state, or of the person administering the government or a department of the requesting territory, protectorate or colony. The certificate of authentication may also be made by a secretary of the embassy or legation, consul general, consul, vice consul, consular agent or any officer in the foreign service of the Philippines stationed in the foreign state in which the record is kept, and authenticated by the seal of his office.

Sec. 7. Extradition. – The Philippines shall negotiate for the inclusion of money laundering offenses as defined under Section 4 of the AMLA among the extraditable offenses in all future treaties.

RULE 8

AMENDMENTS AND EFFECTIVITY

Section 1. Amendments. – These Rules or any portion thereof may be amended by unanimous vote of the members of the AMLC and approved by the Congressional Oversight Committee as provided for under Section 19 of the AMLA.

Sec. 2. Effectivity. – These Rules shall take effect after its approval by the Congressional Oversight Committee and fifteen (15) days after the completion of its publication in the Official Gazette or in a newspaper of general circulation.

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