How Committed | Money Laundering | Anti-Money Laundering Act (R.A. No.9160, as amended by R.A. Nos.9194, 10167, 10365, 10927, and 11521) | BANKING

Money Laundering Under the Anti-Money Laundering Act (R.A. No. 9160 as Amended)

I. Definition of Money Laundering

Money laundering is the process by which criminals attempt to hide or "launder" the origins of illegally obtained money to make it appear as if it were legally acquired. The Anti-Money Laundering Act (AMLA), or Republic Act No. 9160, as amended by R.A. Nos. 9194, 10167, 10365, 10927, and 11521, criminalizes money laundering and outlines specific acts that constitute the offense.

II. Elements of Money Laundering

The primary elements of money laundering under the AMLA are as follows:

1. There must be an unlawful activity that generates proceeds.
2. The accused performs certain acts involving these proceeds.
3. The acts are intended to conceal, disguise, or mask the origin, source, or ownership of the illegal proceeds.

III. How Money Laundering is Committed

Money laundering is committed by any person who knowingly performs any of the following acts with respect to proceeds generated from unlawful activities:

A. Transactions Involving Illegal Proceeds (Section 4(a))

• Definition: A person is deemed to commit money laundering if they knowingly transacts or attempts to transact money or property that represents, involves, or constitutes the proceeds of unlawful activity.
• Objective: The transaction aims to hide the true origin of the funds or give an appearance of legitimacy.

B. Conversion, Transfer, Disposition, Movement, Acquisition, Possession, Use of Illegally Obtained Assets (Section 4(b))

• Definition: Any person who knowingly converts, transfers, disposes, moves, acquires, possesses, or uses any money or property known to be from unlawful activity is guilty of money laundering.
• Objective: This act may involve using illicit funds to acquire assets, thus concealing their criminal origin.

C. Attempting to Hide the Origin of Illicit Funds (Section 4(c))

• Definition: Money laundering is also committed if a person attempts to conceal, disguise, or mask the origin of the proceeds, such as through layering (passing funds through multiple transactions) or integration (mixing illicit funds with legitimate money).
• Objective: The goal is to make the illegal source of the funds untraceable by creating layers of complex transactions.

D. Aiding or Assisting in Money Laundering (Section 4(e))

• Definition: A person who knowingly assists, abets, or conspires with others to commit money laundering is considered a principal by direct participation.
• Objective: This includes facilitating transactions, providing advice, or introducing intermediaries for money laundering purposes.

IV. Modes of Knowledge or Intent in Money Laundering

• Direct Knowledge: The person is aware that the proceeds are from unlawful activity and intentionally engages in actions to launder them.
• Willful Blindness: Even if the individual does not have direct knowledge, willful blindness to the unlawful origin can fulfill the element of knowledge.
• Negligence: Financial institutions and covered persons are required to exercise due diligence. Negligence in failing to detect or prevent money laundering may constitute liability.

V. Covered Transactions and Suspicious Transaction Reporting

• Covered Transactions: Transactions in excess of PHP 500,000 within a day must be reported to the Anti-Money Laundering Council (AMLC).
• Suspicious Transactions: These are transactions that, although not reaching the threshold, raise suspicion due to:
  1. Absence of economic or lawful purpose.
  2. Unusual circumstances or patterns that may indicate an attempt to avoid detection.
  3. Lack of personal or business relationship.
  4. Transactions that may involve a series of complex and large sums of money.

VI. Unlawful Activities Generating Proceeds Subject to Money Laundering

• Predicate Crimes: Under Section 3(i), predicate crimes include offenses such as corruption, illegal drug trafficking, human trafficking, fraud, terrorism financing, and environmental crimes, among others.
• Expanded Predicate Crimes (R.A. 10927 and R.A. 11521): Recent amendments have expanded the list of predicate crimes to include tax evasion and violations of environmental laws.

VII. Penalties for Money Laundering

• Penal Liability: Violators are subject to imprisonment ranging from 7 to 14 years and a fine that could be from PHP 500,000 to PHP 10,000,000, depending on the gravity and amount involved.
• Corporate and Financial Institution Liability: Covered institutions that fail to comply with reporting requirements face administrative penalties, including revocation of licenses.

VIII. Special Provisions and Recent Amendments

A. Expanded Powers of the AMLC (R.A. 10167)

• Authority to Freeze Assets: The AMLC can freeze assets without prior court approval for up to 20 days in cases involving probable cause.
• Bank Inquiry Powers: The AMLC can directly access bank records without a court order under specific circumstances, particularly for violations related to terrorism financing.

B. Inclusion of Casinos and Virtual Assets as Covered Persons (R.A. 10927 and R.A. 11521)

• Casinos: Included as covered institutions to regulate large transactions and prevent laundering through betting.
• Virtual Assets: With the rise of digital transactions, virtual assets such as cryptocurrencies are now within AMLA’s scope.

C. Administrative Sanctions for Non-Compliance

• The AMLC imposes fines, suspensions, and other sanctions on institutions that fail to report or comply with AMLA’s stringent reporting and due diligence requirements.

IX. Procedural Safeguards and Legal Recourses

• Right to Due Process: Entities and individuals affected by AMLC actions can seek judicial review and avail of remedies like injunctions.
• Provisional Remedies: The AMLC may impose provisional measures like asset freezes and preventively suspend individuals suspected of money laundering activities.

X. Compliance and Due Diligence Requirements

• KYC (Know Your Customer): Financial institutions must establish customer identity, origin of funds, and nature of the business to detect and prevent suspicious activities.
• Record-Keeping: Financial records, such as transaction histories and customer details, must be retained for at least five years.

XI. International Cooperation

• Exchange of Information: The AMLC cooperates with international anti-money laundering bodies and has extradition treaties to ensure the enforcement of AMLA on a global scale.
• Mutual Legal Assistance: The AMLA provides a framework for seeking and providing legal assistance with other jurisdictions, especially on criminal offenses involving transnational money laundering.

XII. Conclusion

The AMLA, as amended, imposes significant obligations on both individuals and financial institutions, backed by strict penalties and extensive investigative powers of the AMLC. The law is intended to provide robust defenses against money laundering while balancing due process rights, compliance costs, and the need for international cooperation in combatting transnational financial crime.