Anti-Money Laundering Act (AMLA) of the Philippines (R.A. No. 9160, as amended by R.A. Nos. 9194, 10167, 10365, 10927, and 11521): Policy Overview

The Anti-Money Laundering Act of 2001 (R.A. No. 9160), as amended, outlines the policy and framework for combating money laundering activities in the Philippines. This legislation, coupled with its various amendments, demonstrates the country’s commitment to addressing money laundering as a grave threat to the economy, national security, and integrity of financial systems.

1. Policy Declaration

Under the AMLA, as amended, the policy of the State is clear and unequivocal: to protect and preserve the integrity of the financial system by ensuring that it is not used as a vehicle for money laundering, terrorism financing, or any illegal activities. This policy is encapsulated in the following core principles:

Integrity of Financial Institutions: Upholding the trust and stability in the financial sector by instituting strong deterrents and systems to detect and report illegal financial activities.
Compliance with Global Standards: Aligning domestic policies with international anti-money laundering (AML) standards, particularly those established by the Financial Action Task Force (FATF).
Promoting Transparency and Accountability: Implementing measures that increase transparency within financial transactions and provide accountability for suspicious activities.
Combating Money Laundering and Financing of Terrorism: The AMLA expressly states its goal to detect and deter money laundering activities and financing of terrorism, recognizing these as twin threats to the state and society.

2. Scope and Coverage

The AMLA applies to a wide array of institutions and individuals. Financial institutions and certain designated non-financial businesses and professions (DNFBPs) are covered under the Act. The main entities subject to AMLA regulations include:

Banks: Both domestic and foreign banks operating in the Philippines.
Quasi-Banks: Entities performing quasi-banking functions.
Non-Bank Financial Institutions: Insurance companies, pawnshops, money service businesses, and similar entities.
DNFBPs: Casinos, real estate agents, dealers in precious metals and stones, lawyers, accountants, and similar professionals involved in large financial transactions.

3. Legal Definition of Money Laundering

Under the AMLA, money laundering is defined as a process by which the proceeds of unlawful activities are transformed or transferred to disguise their illegal origins. Specifically, money laundering involves:

Conversion, Transfer, or Disposition of Proceeds: Converting or transferring proceeds of unlawful activities with the intent to disguise their illicit origins.
Concealment of the True Nature: Concealing or disguising the true nature, origin, location, disposition, movement, or ownership of the funds.
Acquisition, Possession, or Use of Proceeds: Acquiring, possessing, or using the proceeds of unlawful activities.

4. Unlawful Activities

The AMLA defines "unlawful activities" as offenses covered by Philippine laws or crimes committed outside the country but recognized as offenses within the Philippines. The law specifically lists several predicate crimes, including but not limited to:

Kidnapping for ransom
Drug trafficking and related crimes
Terrorism and financing of terrorism
Smuggling
Fraudulent practices
Corruption
Trafficking in persons
Tax evasion and similar offenses

5. Amendments and Key Legislative Changes

Each amendment to the AMLA has progressively expanded its scope, strengthened compliance requirements, and enhanced the powers of the Anti-Money Laundering Council (AMLC). Key changes introduced by the amendments include:

R.A. No. 9194: Introduced "covered institutions," expanded predicate crimes, and allowed ex parte applications for bank inquiry.
R.A. No. 10167: Provided the AMLC with the authority to freeze accounts involved in money laundering or financing terrorism without notice.
R.A. No. 10365: Expanded the definition of covered persons to include DNFBPs and added new predicate crimes.
R.A. No. 10927: Brought casinos under the AMLA, including online casinos and ship-based casinos.
R.A. No. 11521: Introduced several FATF-recommended enhancements, including real-time monitoring and additional reporting obligations for covered persons.

6. Anti-Money Laundering Council (AMLC)

The AMLC is the primary body responsible for implementing the AMLA, as amended. Its primary functions include:

Monitoring Compliance: Ensuring that covered institutions implement necessary AML procedures and comply with reporting requirements.
Investigative Powers: The AMLC has the power to investigate suspicious transactions and money laundering offenses.
Issuing Freeze Orders: Authorized to freeze assets and accounts involved in suspected money laundering activities.
Reporting to International Bodies: Ensures compliance with FATF requirements and coordinates with international AML counterparts.

7. Obligations of Covered Persons and Institutions

Under the AMLA, covered persons and institutions have specific obligations, including:

Customer Due Diligence (CDD): Conducting thorough due diligence on all clients to verify their identity and the legitimacy of their financial activities.
Record-Keeping: Retaining records of financial transactions for a minimum period, usually five years, to allow for possible future investigations.
Reporting of Suspicious and Covered Transactions: Reporting certain types of financial transactions to the AMLC within five days for covered transactions and immediately for suspicious transactions. Covered transactions refer to transactions exceeding a certain threshold, while suspicious transactions are those suspected of being related to unlawful activities.
Employee Training: Ensuring that staff are adequately trained to identify and report suspicious activities.

8. Penalties for Non-Compliance

Violations of the AMLA, as amended, carry significant penalties, including:

Administrative Penalties: The AMLC can impose administrative sanctions, including fines, on non-compliant covered persons and institutions.
Criminal Penalties: Criminal penalties, including imprisonment and substantial fines, may be imposed on individuals found guilty of money laundering offenses.
Corporate Liability: Corporations and other entities can be held liable for AMLA violations committed by their employees in connection with their functions.

9. International Cooperation and Compliance with FATF

The Philippines, through the AMLA, has committed to cooperating with international efforts to curb money laundering and terrorist financing. The country coordinates with international organizations such as the FATF to ensure compliance with global AML standards. The AMLC actively exchanges information with foreign counterparts to prevent cross-border financial crimes.

10. Key Enforcement and Reporting Mechanisms

The AMLA and its amendments grant the AMLC and other designated authorities mechanisms to enforce the law effectively:

Real-Time Monitoring: Institutions must implement monitoring systems to detect and report suspicious transactions in real-time.
Bank Inquiry and Freeze Authority: The AMLC has the power to request and conduct an inquiry into bank accounts linked to suspected money laundering activities without prior notice to account holders.
Enhanced Surveillance of Casinos and DNFBPs: Casinos, real estate agents, and other DNFBPs are now required to follow strict CDD and reporting requirements.

Conclusion

The AMLA, as amended, represents the Philippines’ robust legal response to the growing threats of money laundering and terrorist financing. By instituting comprehensive policies, stringent regulations, and effective enforcement mechanisms, the AMLA aims to deter illicit financial activities, safeguard the integrity of the financial system, and ensure compliance with global standards.