The Anti-Money Laundering Act

Republic Act 9160, as amended

February 2013
What is money laundering?

It is the act of transferring monetary

proceeds derived from illicit activities into
funds with an apparently legal source.
Under the AMLA, it is defined as a crime
whereby the proceeds of an unlawful activity
are transacted thereby making them appear
to have come from legitimate sources (Sec.
4)

Declaration of State Policy

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 prosecution of persons involved in
money laundering activities wherever
committed (Sec. 2).

What is an unlawful activity?

Unlawful activity refers to any act or
omission or series or combination thereof
involving or having direct relation to the
crimes enumerated under Sec. 3(i) of the
AMLA.

What are the covered institutions under the

AMLA?

The first AMLA enumerated 14

unlawful activities. The recent amendment
however expanded the coverage to 34
unlawful activities.
Why do we need such a law?

Money laundering compromises the

stability, transparency, and efficiency of the
financial system and it undermines
economic prosperity.
Without a law against money laundering,
crime rates will continually increase
because the success of a criminal
enterprise is based on its ability to sanitize
ill-gotten gains by moving them through lax
and corrupt financial systems.
The Philippines is included in the list of NonCooperative Countries and Territories
issued by the Financial Action Task Force
prior to the enactment of the law. This
situation is not good for the economy.
History of the AMLA
September 2001
March 2003

June 2012

RA 9160 and its IRR

was enacted
First amendment, RA
9194
* The threshold for a
covered transaction
was reduced from 4
million to P500,000
Second amendment,
RA 10167
* Amendment relating
to freezing of
monetary instrument
and the and the

authority to inquire into

bank deposits
Third amendment, RA
10365
* expanded the crime
of money laundering

Covered institutions are classified as

follows:

Entities supervised and/or regulated by the

Bangko Sentral ng Pilipinas
Entities supervised and/or regulated by the
Insurance Commission
Entities supervised and/or regulated by the
Securities and Exchange Commission
Persons included under RA 10365
Specifically,
Sec. 3 (a) Covered persons, natural or
juridical, refer to:

1. banks, non-banks, quasi-banks, trust

entities, foreign exchange dealers,
pawnshops, money changers, remittance
and transfer companies and other similar
entities and all other persons and their
subsidiaries and affiliates supervised or
regulated by the Bangko Sentral ng
Pilipinas (BSP);
2. insurance companies, pre-need companies
and all other persons supervised or
regulated by the Insurance Commission
(IC);
3. (i) securities dealers, brokers, salesmen,
investment houses and other similar
persons managing securities or rendering
services as investment agent, advisor, or
consultant, (ii) mutual funds, close-end
investment companies, common trust funds,
and other similar persons, and (iii) other
entities administering or otherwise dealing
in currency, commodities or financial
derivatives based thereon, valuable objects,
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4.

5.

6.

7.
(i)
(ii)
(iii)
(iv)

cash substitutes and other similar monetary

instruments or property supervised or
regulated by the Securities and Exchange
Commission (SEC);
jewelry dealers in precious metals, who, as
a business, trade in precious metals, for
transactions in excess of One million pesos
(P1,000,000.00);
jewelry dealers in precious stones, who, as
a business, trade in precious stones, for
transactions in excess of One million pesos
(P1,000,000.00);
company service providers which, as a
business, provide any of the following
services to third parties: (i) acting as a
formation agent of juridical persons; (ii)
acting as (or arranging for another person to
act as) a director or corporate secretary of a
company, a partner of a partnership, or a
similar position in relation to other juridical
persons; (iii) providing a registered office,
business address or accommodation,
correspondence or administrative address
for a company, a partnership or any other
legal person or arrangement; and (iv) acting
as (or arranging for another person to act
as) a nominee shareholder for another
person; and
persons who provide any of the following
services:
managing of client money, securities or
other assets;
(ii) management of bank, savings or
securities accounts;
organization of contributions for the
creation, operation or management of
companies; and
creation, operation or management of
juridical persons or arrangements, and
buying and selling business entities.
Note: the term covered persons shall
exclude lawyers and accountants acting as
independent legal professionals in relation
to information concerning their clients or
where disclosure of information would
compromise client confidences or the
attorney-client relationship: Provided, they
are authorized to practice in the Philippines
and shall continue to be subject to the
provisions of their respective codes of
conduct and/or professional responsibility or
any of its amendments.
What are the obligations of covered
institutions?
Under Sec. 9 of the AMLA, the following are
their obligations:

Customer Identification
Record Keeping

Reporting of Covered and Suspicious

Transactions
Customer Identification
Covered institutions shall establish
and record the true identity of their clients
based on official documents and shall
maintain a system of verifying the true
identity of their clients.
For natural persons, specified
minimum information and documents such
as personal and work information and
government-issued identification documents
are required.
For juridical persons, their legal
existence, organizational structure, and
identity and authority of all persons acting
on their behalf should be verified. Specified
minimum information and documents such
as articles of incorporation or partnership by
laws, list of directors, and principal
stockholders are required.
Q: Are anonymous accounts under fictitious
names such as princessbutterfly-xoxo or
similar accounts allowed?
A: No. Covered institutions are mandated by
law to maintain accounts only in the true
and full name of the account owner or
holder.
Q: Are numbered accounts allowed?
A: Yes. Peso and foreign currency nonchecking accounts shall be allowed,
provided the true identity of the customer is
obtained and recorded that is open to
examination by the BSP, SEC, and
Insurance Commission.
Record Keeping
All records of transactions of
covered institutions shall be maintained and
safely stored for 5 years from the date of
transactions.
With respect to closed accounts,
records on customer identification, account
files, and business correspondence shall be
preserved and safely stored for at least 5
years from the date the account was closed.
However, if a money laundering
case has been filed, the records of the
transaction shall be retained beyond 5 years
until the case has been finally resolved or
terminated by the court.

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Reporting of Covered and Suspicious

Transactions
Q: What is a transaction?
A: It 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 covered
institutions (Sec. 3 (h) ).
Only covered and suspicious transactions
are subject to the AMLA.
Q: What is a covered transaction?
A: It is a transaction in cash or other
equivalent monetary instrument involving a
total amount in excess of Five Hundred
Thousand Pesos within one banking day.
Q: What are suspicious transactions?
A: These are transactions, regardless of
amount, where any of the following
circumstances exists:
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 to account all known circumstances,
it may be perceived that the clients
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 clients past
transactions with the covered institution;
6. The transaction is in any way related to an
unlawful activity or any money laundering
activity or offense under the AMLA that is
about to be, is being, or has been
committed; or
7. Any transaction similar, analogous, or
identical to any of the foregoing.
Covered institutions shall report to
the Anti-Money Laundering Council (AMLC)
all covered and suspicious transactions
within 5 working days from the date of the
transaction unless the AMLC prescribes a
longer period not exceeding 15 days.
Reports shall be made in the forms
prescribed by the AMLC and submitted
electronically.

Q: Is there a violation of the Secrecy of

Bank Deposits (SBD) and similar laws when
reporting covered or suspicious
transactions?
A: None. When reporting covered or
suspicious transactions to the AMLC,
covered institutions and their officers and
employees, shall not be deemed to have
violated the SBD and similar laws.
In fact, no administrative, criminal, or
civil proceedings shall lie against any
person for having made a covered or
suspicious 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 law. This is a safe harbor provision.
Covered institutions and their
officers and employees are however
prohibited from communicating, directly or
indirectly, in any manner or by any means,
to any person, entity, the media, that a
covered or suspicious transaction report
was made, the contents thereof, or any
information in relation thereto. Neither may
such reporting be published or aired in any
manner or form by the mass media,
electronic mail, or other similar devices. In
case of violation, the concerned officers and
employee of the covered institutions or
media shall be held criminally liable.
Examples of Suspicious Transactions
Respectively
1. If a business man consistently earns a
certain amount for years and suddenly
earns big amounts successively as shown
in his accounts (but not exceeding
P500,000.00) without showing or proof of
any obligation or business from where the
big amounts had come from.
2. Texas Man Sentenced for Role in
Black Market Peso Exchange Scheme:
On September 11, 2013, in Houston, Texas,
Willie Whitehurst with four others were
sentenced to 151 months in prison for his
role as one of the leaders of a criminal
conspiracy that laundered more than $20
million through shell business bank
accounts.
In August 2012, a federal grand jury in
Houston indicted the five defendants for
their parts in a large Black Market Peso
Exchange scheme. From October 2009 to
September 2011, the defendants placed
United States currency gained through the
sale of drugs into bank accounts held in the
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names of the organizations shell

companies.
The money was then transferred to different
accounts in the United States and in
Mexico. In exchange, pesos were
transferred back to accounts owned by the
organizations clients.
3. AMLA Case against RET. LT. GEN.
JACINTO C. LIGOT, ERLINDA Y. LIGOT,
PAULO Y. LIGOT, RIZA Y. LIGOT, and
MIGUEL Y. LIGOT
On June 27, 2005, the Republic of the
Philippines, represented by the Anti-Money
Laundering Council, filed an Urgent ExParte Application for the issuance of a
freeze order with the CA against certain
monetary instruments and properties of the
petitioners, pursuant to Section 10 of
Republic Act No. 9160. This application was
based on the February 1, 2005 letter of the
Office of the Ombudsman to the AMLC,
recommending that the latter conduct an
investigation on Lt. Gen. Ligot and his family
for possible violation of RA No. 9160.
Lt. Gen. Ligot declared in his SALN that as
of December 31, 2003, he had assets in the
total amount of P3,848,003.00. In contrast,
his declared assets in his 1982 SALN
amounted to only P105,000.00.
But aside from these declared assets, the
Ombudsmans investigation revealed that
Lt. Gen. Ligot and his family had other
properties and bank accounts, not declared
in his SALN, amounting to at
least P54,001,217.00.
Undeclared Assets

Amount

Jacinto Ligots undeclared assets

P
41,185,583.53

Jacinto Ligots childrens assets

1,744,035.60

Tuition fees and travel expenses

P 2,308,047.87

Edgardo Yambaos assets relative

to the real properties

P 8,763,550.00

Total

P
54,001,217.00

With Lt. Gen. Ligots main source of income

was his salary as an officer of the AFP, his
wife and childrens lack of any other
substantial sources of income, the
Ombudsman declared the assets registered
in Lt. Gen. Ligots name, as well as those in

his wifes and childrens names, to be

illegally obtained and unexplained wealth.
Such amount is clearly not commensurate
with Lt. Gen. Ligot's and his family's
financial capacity considering the
circumstances.
4. Republic vs. Eugenio Gr. 174629:
Where the AMLC filed before the
RTC Makati for the issuance of the order to
examine the various bank accounts and
investments of Alvarez, Trinidad, Liongson
and Cheng Yong, the persons involved in
the alleged corruption concerning the NAIA
terminal 3. The bank accounts of
respondents consisted of several accounts
on various banking institution in the country.
The main issue in this case,
however, is whether or not said order can
be granted by the court ex parte. The
Supreme Court ruled in favor of the
respondents because, according to the
court, unlike in the case of a freeze order,
the subject records of transaction of the
examination order cannot be hidden or
taken away and the absence of a provision
in the AMLA providing the issuance of the
order ex parte when Congress could have
easily added said term. The subsequent
amendments in the AMLA law however
addressed this problem by providing that an
examination order may now be issued ex
parte.
5. To determine whether an act is
unusually different from a clients profile,
certain records have to be reviewed to
ascertain the former transactions he or she
has regularly entered into. More often than
not, clients who have dormant accounts
which suddenly engage in active and
aggressive money wiring or transfer should
raise a level of suspicion on the part of the
bank. Aside from such, these are other acts
linked to money-laundering on any
circumstance relating to the transaction
which is observed to deviate from the profile
of the client and/or the clients past
transactions with the covered institution:
a. Buying and selling of a security
with no discernible purpose or in
circumstances which appear unusual.
b. The intensity of transactions for
an inactive trading account suddenly
increases without plausible reason.
c. The entry of matching buys and
sells in particular securities, creating an
illusion of trading. Such trading does not
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result in a bona fide market position, and

might provide cover for a money launderer.
d. Unusually short period of holding
securities.
e. Frequent selling of securities at
significant losses.
f. Structuring transactions to evade
substantial shareholding.
g. Simultaneous transfer of funds to
a group of customers accounts from a third
party
h. Larger or unusual settlements of
securities transactions in cash form.
i. Opening of trading accounts with
large cash sum (above RM 50,000).
j. The crediting of a customers
margin account using cash and by means of
numerous credit slips by a customer such
that the amount of each deposit is not
substantial, but the total of which is
substantial.
k. A customer who suddenly starts
making investments in large amounts when
it is known to the Reporting Institution that
the customer does not have the capacity to
do so.
l. Transactions that cannot be
matched with the investment and income
levels of the customer.
m. Requests by customers for
investment management services (either
foreign currency or securities) where the
source of the funds is unclear or not
consistent with the customers apparent
standing.
n. In a situation where multiple
accounts are used to transfer funds
between accounts by generating offsetting
losses and profits in different accounts.

In September 2007, Joseph Estrada was

convicted by the Philippine Sandiganbayan
(anti-graft court) of the crime of Plunder.
According to an unofficial copy of the court
decision obtained through the website of the
Chan and Robles law firm, Mr. Estrada was
accused in an Amended Information filed on
April 19, 2001 of having amassed, while
serving as President from 1998 to 2001,
$87.3 million in unexplained wealth and that
the funds were derived from bribes, kickbacks, and protection money collected from
illegal gambling operators. The chief
government witness against him in the
Plunder trial was Governor Luis "Chavit"
Singson, his co-conspirator in the collection
of protection money from illegal gambling
operators.
Ruling: The court stated that some of the
illegal proceeds had been deposited in Mr.
Estrada's Erap Muslim Youth Foundation
and a bank account that Mr. Estrada
opened in the false name of "Jose Velarde."
He was also convicted of having coerced
two government agencies to purchase
shares in a gaming company owned by an
associate and collecting commissions from
the sale of the shares. In addition to a
sentence of life imprisonment, Mr. Estrada
was ordered to forfeit his mansion and more
than $15 million in assets, including the illicit
proceeds from the illegal gambling
operators that had been transferred to the
account of the Erap Muslim Youth
Foundation and the "Jose Velarde"
account.
Discussion:
The bank account was used as funnel for
monies derived from illegal activity. Placed
under a bank account, dirty money soon
becomes integrated in the financial system
by passing it off as fruits of legitimate
pursuits.

6. Joseph E. Estrada v. Sandiganbayan

(G.R. No. 148560, November 19, 2001)

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