Authority to Inquire, Freezing, and Forfeiture under the Anti-Money Laundering Act (R.A. No. 9160, as amended)

1. Statutory Basis and Scope of Authority

The Anti-Money Laundering Act of 2001 (AMLA), or Republic Act No. 9160, provides the legal framework in the Philippines for combating money laundering. This law has been amended multiple times, expanding the Anti-Money Laundering Council’s (AMLC) authority to inquire, freeze, and forfeit assets associated with money laundering activities. The amendments, particularly under R.A. Nos. 9194, 10167, 10365, 10927, and 11521, have broadened the powers of the AMLC to monitor and investigate suspicious financial transactions and to prevent the use of the financial system in money laundering schemes.

2. Authority to Inquire into Bank Deposits and Investments

General Rule: The AMLC has the authority to examine bank deposits and investments to determine if they are connected to money laundering activities.
With Court Order: Generally, the AMLC must secure a court order before inquiring into or examining bank deposits. This judicial authorization ensures a balance between the state’s interest in combatting financial crimes and the individual's right to privacy.
Exceptions to the Court Order Requirement: Under certain conditions, the AMLC can proceed without a court order:
- If there is probable cause that the deposits or investments are linked to any of the unlawful activities listed under the AMLA, specifically kidnapping for ransom, drug trafficking, or hijacking, among others.
- In cases involving terrorism financing under the Terrorism Financing Prevention and Suppression Act (R.A. No. 10168).
Confidentiality Provision: The law mandates strict confidentiality in handling such inquiries. Any person, including bank officials, who discloses the existence of an investigation or the results thereof may face criminal liability.

3. Freezing of Assets

The freezing of assets under the AMLA is a provisional remedy aimed at preserving the availability of funds that may eventually be subject to forfeiture. The freezing authority works as follows:

Authority to Freeze: The AMLC has the authority to issue freeze orders directly, but it must seek confirmation from the Court of Appeals within 24 hours of issuing the order.
Duration of Freeze Order:
- An initial freeze order by the AMLC is valid for 20 days, subject to extension upon the Court of Appeals' order.
- The Court of Appeals may extend the freeze order up to six months, depending on the merits of the case.
- After the lapse of the freeze order, the funds can only remain frozen if forfeiture proceedings are initiated within the specified period.
Circumstances for Immediate Freezing: The AMLA allows for the immediate freezing of assets when there is probable cause to believe that the funds are related to unlawful activities or terrorism financing, particularly in cases of urgent national security concerns.

4. Forfeiture of Assets

The final step in the AMLA process, after inquiring and freezing assets, is the forfeiture of assets related to money laundering. This process is governed by strict procedural requirements:

Initiation of Forfeiture Proceedings:
- The AMLC, upon gathering sufficient evidence, can initiate forfeiture proceedings before the Regional Trial Court to permanently seize assets linked to unlawful activities.
- The action is civil in nature, meaning it targets the assets themselves rather than the individual who may have committed the unlawful activity.
Burden of Proof:
- The burden of proof in forfeiture cases is based on preponderance of evidence, which is a lower threshold than the criminal standard of "beyond reasonable doubt."
- The AMLC must prove that the assets are proceeds of unlawful activities as defined by the AMLA.
Types of Property Subject to Forfeiture: This includes any property, proceeds, or instrumentalities directly or indirectly connected to money laundering offenses.
Return of Forfeited Assets to the State: If the court grants the forfeiture, the seized assets are turned over to the government for potential use in restitution to victims, if applicable, or for use by the government in anti-crime efforts.
Right to Due Process: Individuals or entities whose assets are subject to forfeiture are entitled to due process, including the right to be notified of the proceedings and to be heard in court.

5. Rights of Aggrieved Parties and Remedies

Right to Contest the Freeze Order: Any individual or entity whose accounts are frozen may file a petition to lift the freeze order, but they must provide sufficient justification.
Protection of Bona Fide Third Parties: The law provides safeguards for bona fide third parties who may have legal rights to the frozen or forfeited property, allowing them to petition for exclusion of their assets from forfeiture if they can prove legitimate ownership.
Appeal Process: Decisions by the AMLC or the court regarding freezing or forfeiture can be appealed to higher courts, ensuring that the process remains subject to judicial scrutiny.

6. Responsibilities of Covered Institutions

Covered institutions, which include banks, insurance companies, securities dealers, and other financial intermediaries, are required to cooperate with the AMLC by reporting suspicious transactions and ensuring compliance with freeze orders.
Know-Your-Customer (KYC) Rules: These institutions must adhere to strict customer identification protocols to prevent their services from being used in money laundering schemes.
Duty of Confidentiality: While cooperating with the AMLC, covered institutions are prohibited from notifying the account holder or any other party about the existence of an AMLC inquiry, freeze, or forfeiture action.

7. International Cooperation and Mutual Legal Assistance

The AMLA, as amended, recognizes the international nature of money laundering and provides for cooperation with foreign jurisdictions:

Requests for Assistance: The AMLC can respond to requests from foreign countries for assistance in investigating money laundering cases, freezing assets, or conducting forfeiture actions.
Reciprocity: The AMLC may also request foreign counterparts to assist in freezing and forfeiting assets located abroad.
Alignment with International Standards: The amendments under R.A. Nos. 10365 and 11521 bring Philippine laws in line with international standards, particularly the recommendations of the Financial Action Task Force (FATF), thereby enhancing the country's credibility in the global fight against money laundering.

8. Penalties for Violations

Violations of the AMLA, such as non-compliance by covered institutions, tipping-off account holders, or interfering with the AMLC’s authority, are punishable by fines and imprisonment.
Criminal Liability: Apart from civil forfeiture, individuals involved in money laundering activities may face criminal charges, with penalties including significant fines and imprisonment.

Summary

The Anti-Money Laundering Act, as amended, equips the AMLC with robust powers to prevent, detect, and sanction money laundering activities within the Philippines. The Act balances the AMLC’s authority to inquire, freeze, and forfeit assets with necessary procedural safeguards and provides mechanisms for international cooperation in the global effort against money laundering and terrorism financing.