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Continuing Education on

AML Compliance
A Home Study Training Program

AML REVIEWER

Global Compliance Group


v06302015

Declaration of Policy
The State to protect the integrity and confidentiality of bank accounts and to ensure that the Philippines
in general and the covered institutions herein described in particular shall not be used respectively as a
money laundering site and conduit for the proceeds of an unlawful activity as defined under R.A. 10365 (
AN ACT FURTHER STRENGTHENING THE ANTI-MONEY LAUNDERING LAW, AMENDING FOR THE PURPOSE
REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE ANTI-MONEY LAUNDERING ACT OF 2001, AS
AMENDED).
Money Laundering
Money laundering is committed by any person who, knowing that any monetary instrument or property
represents, involves, or relates to the proceeds of any unlawful activity:
1. transacts said monetary instrument or property;
2. converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or
property;
3. conceals or disguises the true nature, source, location, disposition, movement or ownership of
or rights with respect to said monetary instrument or property;
4. attempts or conspires to commit money laundering offenses referred to in paragraphs 1,2 or 3;
5. aids, abets, assists in or counsels the commission of the money laundering offenses referred to
in paragraphs 1, 2, or 3 above; and
6. performs or fails to perform any act as a result of which he facilitates the offense of money
laundering referred to in paragraphs 1,2, 3 above.
Money laundering is also committed by any covered person who, knowing that a covered or suspicious
transaction is required under the AMLA, as amended to be reported to the Anti-Money Laundering
Council (AMLC), fails to do so (R.A. 9160, as amended by R.A. 9194, R.A. 10167 and R.A. 10365).
Stages of Money Laundering
Money laundering is the criminal practice of processing ill-gotten gains, or dirty money, through a
series of transactions; in this way the funds are cleaned so that they appear to be proceeds from legal
activities. Money laundering generally does not involve currency at every stage of the laundering
process. Although money laundering is a diverse and often complex process, it basically involves three
independent stages, namely: placement, layering and integration that can occur simultaneously:
Placement. The first and most vulnerable stage of laundering money is placement. The goal is to
introduce the unlawful proceeds into the financial system without attracting the attention of financial
institutions or law enforcement. Placement techniques include structuring currency deposits in amounts
to evade reporting requirements or commingling currency deposits of legal and illegal enterprises. An
example may include: dividing large amounts of currency into less-conspicuous smaller sums that are
deposited directly into a bank account, depositing a refund check from a canceled vacation package or

insurance policy, or purchasing a series of monetary instruments (e.g., cashiers checks or money orders)
that are then collected and deposited into accounts at another location or financial institution.
Layering. The second stage of the money laundering process is layering, which involves moving funds
around the financial system, often in a complex series of transactions to create confusion and
complicate the paper trail. Examples of layering include exchanging monetary instruments for larger or
smaller amounts, or wiring or transferring funds to and through numerous accounts in one or more
financial institutions.
Integration. The ultimate goal of the money laundering process is integration. Once the funds are in the
financial system and insulated through the layering stage, the integration stage is used to create the
appearance of legality through additional transactions. These transactions further shield the criminal
from a recorded connection to the funds by providing a believable explanation for the source of the
funds. Examples include the purchase and resale of real estate, investment securities, foreign trusts, or
other assets.
Unlawful activity - refers to any act or omission or series or combination thereof involving or having
direct relation to the following (RA 10365):
1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal
Code, as amended;
2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise known as
the Comprehensive Dangerous Drugs Act of 2002;
3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended, otherwise known
as the Anti-Graft and Corrupt Practices Act;
4) Plunder under Republic Act No. 7080, as amended;
5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal
Code, as amended;
6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;
7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No.
532;
8) Qualified theft under Article 310 of the Revised Penal Code, as amended;
9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of the Revised Penal
Code, as amended;
10) Smuggling under Republic Act Nos. 455 and 1937;
11) Violations of Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000;

12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as
defined under the Revised Penal Code, as amended;
13) Terrorism and conspiracy to commit terrorism as defined and penalized under Sections 3 and 4
of Republic Act No. 9372;
14) Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6, 7 and 8 of
Republic Act No. 10168, otherwise known as the Terrorism Financing Prevention and
Suppression Act of 2012:
15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as amended, and
Corruption of Public Officers under Article 212 of the Revised Penal Code, as amended;
16) Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216 of the
Revised Penal Code, as amended;
17) Malversation of Public Funds and Property under Articles 217 and 222 of the Revised Penal
Code, as amended;
18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the Revised Penal
Code, as amended;
19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-Trafficking in
Persons Act of 2003;
20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705, otherwise known
as the Revised Forestry Code of the Philippines, as amended;
21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise known as the
Philippine Fisheries Code of 1998;
22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known as the
Philippine Mining Act of 1995;
23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147, otherwise known as the
Wildlife Resources Conservation and Protection Act;
24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National Caves and
Cave Resources Management Protection Act;
25) Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of 2002, as
amended;
26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended, otherwise known
as the decree Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing In,
Acquisition or Disposition of Firearms, Ammunition or Explosives;

27) Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing Law;
28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022;
29) Violation of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines;
30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo and Video
Voyeurism Act of 2009;
31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child Pornography
Act of 2009;
32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic Act No. 7610,
otherwise known as the Special Protection of Children Against Abuse, Exploitation and
Discrimination;
33) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the
Securities Regulation Code of 2000; and
34) Felonies or offenses of a similar nature that are punishable under the penal laws of other
countries.
Terrorist Financing
The motivation behind terrorist financing is ideological as opposed to profit-seeking, which is generally
the motivation for most crimes associated with money laundering. Terrorism is intended to intimidate a
population or to compel a government or an international organization to do or abstain from doing any
specific act through the threat of violence. An effective financial infrastructure is critical to terrorist
operations.
Terrorist groups develop sources of funding that are relatively mobile to ensure that funds can be used
to obtain material and other logistical items needed to commit terrorist acts. Thus, money laundering is
often a vital component of terrorist financing.
Terrorists generally finance their activities through both unlawful and legitimate sources. Unlawful
activities, such as extortion, kidnapping, and narcotics trafficking, have been found to be a major source
of funding. Other observed activities include smuggling, fraud, theft, robbery, identity theft, use of
conflict diamonds, and improper use of charitable or relief funds. In the last case, donors may have no
knowledge that their donations have been diverted to support terrorist causes.
Other legitimate sources have also been found to provide terrorist organizations with funding; these
legitimate funding sources are a key difference between terrorist financiers and traditional criminal
organizations. In addition to charitable donations, legitimate sources include foreign government
sponsors, business ownership, and personal employment.

Although the motivation differs between traditional money launderers and terrorist financiers, the
actual methods used to fund terrorist operations can be the same as or similar to those methods used
by other criminals that launder funds. For example, terrorist financiers use currency smuggling,
structured deposits or withdrawals from bank accounts; purchases of various types of monetary
instruments; credit, debit, or prepaid cards; and funds transfers. There is also evidence that some forms
of informal banking have played a role in moving terrorist funds. Transactions through informal banking
are difficult to detect given the lack of documentation, their size, and the nature of the transactions
involved. Funding for terrorist attacks does not always require large sums of money, and the associated
transactions may not be complex. (2014 FFIEC BSA/AML Examination Manual)
Your Protection Under the AMLA
When reporting covered or suspicious transactions to the Anti-Money Laundering Council (AMLC), the
Bank and its officers and employees shall not be deemed to have violated R.A. No. 1405, as amended,
(Bank Secrecy Law) R.A. No. 6426, as amended, (FCDU Law), R.A. No. 8791 (General Banking Law), and
other related laws. No administrative, criminal or civil proceedings shall be imposed against any person
for having made a covered or a 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 this Act or any
other law.
Notice to Clients for AMLA Requirements
In compliance with SEC Circular Memo No. 2 dated May 20, 2010, the following NOTICE TO CLIENTS FOR
AMLA REQUIREMENT ON THE SUBMISSION OF SUPPORTING DOCUMENTS shall be posted in the
conspicuous area of the branch, front-end office of Treasury, Trust, Special Assets Management Group
and the lending centers.
The notice shall be as follows:
To help the government fight money laundering activities, the Anti-Money Laundering Act, as
amended, requires all covered institutions to obtain, verify and record information that identifies each
person who opens an account.
In this regard, the Bank shall obtain information such as name, address, date of birth, business, TIN, SSS
or GSIS Nos. and presentation of your driver's license, passport or other competent evidence of identity
bearing your photograph and signature when you open an account or transact with us
Customer Acceptance Policy
It is the policy of the Bank that no account shall be opened or the transaction has to be conducted
where any of the following circumstances exists:
(a) New account to be opened or transaction to be conducted is under anonymous or fictitious
names.
(b) Where the branch, unit or office is unable to verify the identity of the customer

(c) Where the branch, unit or office is unable to obtain the required information and/or
documents due to non-cooperation of the customer or non-reliability of the data or
information furnished to the Bank or to the accredited Service Provider. In all cases, decision
to close an account should be taken at the next higher level of authority.
(d) Positive match vs. OFAC/SDN/Internal Negative File or with any person with known criminal
background or with banned entities such as individual terrorists or terrorist organizations
available from BSP, AMLC Circulars, host country regulatory or enforcement agencies and
other reputable/reliable sources i.e. Dow Jones.
AML Customer Risk Rating Methodology
It is the policy of the Bank to conduct risk assessment of its customers during account opening and
banking relationship to properly identify, evaluate and estimate the levels of AML risk involved in a
banking transaction and determine acceptable level of risk and accordingly provide appropriate
monitoring control to detect and report suspicious transaction in a timely manner.
Customer Risk Rating is assigned to customers at account opening stage based on several components
considered including the documentary and non-documentary evidence in knowing/identifying the
customer and subject to periodic review pursuant to the provisions hereof.
Customer Risk Rating is assigned to customers at account opening stage based on several components
considered including the documentary and non-documentary evidence in knowing/identifying the
customer and subject to periodic review pursuant to the provisions hereof.
Risk Rating Classification
After identifying, evaluating and estimating the levels of risk that a customer is likely to engage in money
laundering or terrorist financing, customers are classified as follows:
Low Risk - customer pose a minor risk compared to known money laundering typologies that it can
engage knowingly or unknowingly in money laundering or terrorist financing activities and is an ideal
level of risk;
Normal Risk - customer does not pose a significant risk compared to known money laundering
typologies that it can engage knowingly or unknowingly in money laundering or terrorist financing
activities and is an acceptable level of risk;
High Risk - customer pose a major risk comparable to known money laundering typologies that it can
engage knowingly or unknowingly in money laundering or terrorist financing activities although within
tolerable level of risk, but subject to enhanced monitoring.
Basic Risk Parameters
The risk parameters are generally classified into 3 categories, namely:

Account/Entity Risk - specific risk associated with the customer's type, nature of business, occupation or
declared/anticipated transaction activity.
Geographic Risk - specific risk associated with doing business in, opening accounts for customers from,
or facilitating transactions involving certain geographic locations.
Products and Services Risk - risk associated with the nature of specific products or services offered that
can facilitate a higher degree of anonymity, or involve the handling of high volume of currency or
currency equivalent.
Default Risk Classification of Selected Customers/Accounts
Regardless of the result of the Customer Risk Rating, the following are considered HIGH RISK and shall
be subject to Enhanced Due Diligence and require appropriate Senior Officer, Management Committee
or Board Committee approval:
1. Non-Governmental Organization (NGO); Non-Profit Organization (NPO), Foundation (amended
by Compliance Bulletin AMLDOM 016-2013 dtd Sep 9, 2013)
GENERAL AML POLICY FOR NGOs/NPOs/FOUNDATIONS:
Due to the recent developments involving abuse of government funds funneled to Non-Governmental
Organizations (NGOs); Non-Profit Organizations (NPOs) and/or Foundations, entering into business
relationship with NGOs/NPOs/Foundation shall require appropriate Senior Officer, Management
Committee or Board Committee approval.
Non-Governmental/Non-Profit Organization/Foundation shall refer to a legal person or arrangement or
organization that primarily engages in raising or disbursing funds for purposes such as charitable,
religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of
good works (FATF Best Practices to Recommendation 8)
Enhanced Due Diligence (EDD) is required to be conducted including background check of all
trustees/incorporators, senior management and authorized signatories to the account.
Quarterly review of transactions must be performed by the Branch AML Compliance Officer (in the case
of domestic branches) and/or Compliance Officer-Designate (for Head Office Unit) to ensure
transactions have legal purpose or economic reasons and account usage is consistent with its intended
purpose.
2.
3.
4.
5.
6.
7.

Money Changers/Foreign Currency Dealers


Remittance Companies/Agents
Casino and related gaming entities
Custom Brokerage
Jewels/Gem/Precious Metal Dealers
Gun Ammunition/Military Equipment Dealers

8. Politically Exposed Persons, (amended by Compliance Bulletin AMLDOM-005-2013 dated March


25, 2013)
A. Natural PEP
i. Heads of state or of government
President of the Republic of the Philippines
President of a foreign country
Prime Minister of a foreign country
ii. Senior national or local government officials
Vice-President
Cabinet members
Members of Senate (Senators) and Congress (Congressmen)
PNP Chief
Foreign ambassadors
Governors
Vice-Governors
Mayors
Vice Mayors
iii. Judicial Officials
Supreme Court Justices
Court of Appeals Justices
Sandiganbayan Justices
Ombudsman
Solicitor General
Signatories to the accounts of the above
iv. Senior Military Officials
Chief of Staff
Heads of its 4 major branches (i.e. Army, Navy, Marines, Air Force)
Signatories to the accounts and/or related accounts of AFP
v. Senior executives of Government Owned or Controlled Corporations (GOCCs)
government agencies, instrumentalities and LGUs
Heads of government agencies
Signatories to the accounts of GOCCs, government agencies (including Philippine
National Police) and local government units (LGUs)
vi. Important political party officials
Secretary General

vii. Other prominent public positions in the Philippines or in a foreign state


Foreign ambassadors
Consul-General
Signatories to the account(s) of an embassy
viii. Immediate family members (i.e, parents, children, spouse) and close associates of
PEPs
B. Juridical PEP
A private entity wherein a natural PEP sits as Chairman, Director, Senior Executive, signatory
to the account or owns at least 20% of the authorized capital stock of the said company shall
be considered Juridical PEP.
Note: For the purpose of this Manual, Senior Officer shall refer to the next higher
authority of the approving officer (i.e., Area Heads or Regional Heads of branches, Group
Heads or Sector Heads of Marketing Units).
Customer Risk Rating Risk Factors
Risk Factor Numeric Weight
RISK FACTOR RATING

NUMERIC WEIGHT

Low Risk

Normal Risk

High Risk

Individual:
RISK FACTOR

RATIONALE/REMARKS

Citizenship

Used for identifying Account/Entity Risk and


Geographic Risk, classified as follows based
on numeric weights:
1Filipino Citizen, whether resident or
non-resident
2-

Resident Alien other than No. 1 above

3-

Non-resident alien

Geographical Address

Used in identifying Geographic Risk, classified as


follows based on numeric weights:
1Present or permanent address is within
the branch vicinity known to branch personnel
and properly identified thru KYC documents.
2Present or permanent address is not
falling under any of the High Risk Philippine
Areas or outside the branch vicinity.
3Present or permanent address is within
the High Risk Philippine Areas and outside the
branch vicinity; or Non-Philippine address.

Individual identification

Used for identifying Account/Entity Risk


classified as follows based on numeric weights:
1Use of primary and secondary photobearing Philippine Government issued IDs
2Use of primary or secondary photobearing Philippine Government issued IDs:
3Use of Foreign government photobearing issued ID

Occupation/Nature of work or Used for identifying Account/Entity Risk,


self-employment
classified as follows based on numeric weights:
1Employed locally; retired employee;
pensioner, OFW; beneficiary of an OFW
2Student; self-employed or unemployed
but with spouse income
3Expatriates,
Consular/ambassadorial
staff; UN staff, unemployed but income is not
derived from spouse or immediate family
member father,mother,son,daughter,brother or
sister).
Account Opening Method

Used for identifying Account/Entity Risk,


classified as follows based on numeric weights:
1-

Face-to-face

with

(all)

account

owner/s/signatory/ies and/or authenticated by


PNB domestic/overseas branch personnel
2Face-to-face with some account
owners/signatories but authenticated by a PNB
domestic/overseas branch personnel
3Face to face with some account
owners/signatories but authenticated by third
parties not PNB branch personnel.
High Risk Persons

Used for identifying Account/Entity Risk,


classified as follows based on numeric weights:
1Individual/s with Declared Monthly
Transaction Volume of less than P100,000.00
2Individual/s with Declared Monthly
Transaction Volume of over P100,000.00;
Designated Professional/s (FATF definition)
Designated Professionals:
Real estate agents
Lawyers, notaries, other independent
legal professionals and accountants
(this refers to sole practitioners,
partners or employed professionals
within professional firms. It is not
meant to
refer to internal
professionals that are employees of
other type of businesses, nor to
professionals working for government
agencies, who may already be subject
to measures that would combat money
laundering).
3Politically Exposed Persons and
associates; Jewel/Gem/precious metal dealers
or Designated Professionals or Individuals with
Declared Monthly Transactions Volume of over
P500,000.00

Opening Deposit

Used for identifying Account/Entity Risk and


Products and Services Risk classified as follows

based on numeric weights:


1Cash, other bank draft, managers
check, payroll check or other government
agency check up to P100,000.00;
2 - Cash and other bank draft of more than
P100,000.00 and up to P500,000.00
3Cash and other bank draft of over
P500,000.00
Gross Monthly Volume
Transaction (GMVT)

of Used for identifying Products and Services Risk


during re-assessment based on actual gross
account movements (credits only) classified as
follows based on numeric weights:
1Gross Monthly Volume of Transaction
up to P100,000.00;
2Gross Monthly Volume of Transaction is
over P100,000 and up to P500,000;
3Gross Monthly Volume of Transaction is
over P500,000;

Length of Relationship

Used for Account/Entity Risk and Products and


Services Risk classified as follows based on
numeric weights:
1Existing customer with relationship of at
least 1 year
2Existing customer with relationship of
less than 1 year
3-

Products and Services

No prior relationship

Used for identifying Products and Services Risk


classified as follows based on numeric weights:
Numeric
Weight

Products and Services

a.
Currency
withdrawals
b.

Check

deposits

or 1

deposits/ 1

encashment
c.

Purchase of MC/DD

d.

Internet banking

e.
Local
(PDDTS/RTGS)

fund

transfer 2

f.
Dollar savings account to 3
be used for sole proprietary
business
g.

Foreign Remittance

h.
Sale/Purchase of Foreign 3
Exchanges

Non-individual (Corporations, Partnerships, Associations, Charitable Institutions)


RISK FACTOR

RATIONALE/REMARKS

Place of Incorporation/ Registration

Used for identifying Account/Entity Risk


classified as follows based on numeric weights:
1Incorporated/registered
Philippines

in

the

2Incorporated/registered outside the


Philippines but country is not listed in FATF list .
3Incorporated/registered
outside the
Philippines and country is listed in the FATF list
(ANNEX A)
Corporate
address/Principal Used in identifying Geographic Risk, classified as
Headquarters/Head office
follows based on numeric weights:
1Present or permanent address is within
the branch vicinity known to branch personnel
and properly identified thru KYC documents
2Present or permanent address is not
falling under any of the High Risk Philippine

Areas and outside the branch vicinity


3Present or permanent address is within
the High Risk Philippine Areas (ANNEX B) and
outside the branch vicinity; or Non-Philippine
address

Corporate/Organization Documents

Used for identifying Account/Entity Risk


classified as follows based on numeric weights:
1Use of Philippine issued registration/
incorporation documents;
2Use of non-Philippine incorporation/
registration papers duly authenticated by
Philippine Consulate Office/s
3Use of registration documents as a
Remittance Agent, Money Changer, Money
Exchange Dealer or Money Service Business.

Nature/Type of Industry Business

Used of identifying Account/Entity Risk


classified as follows based on numeric weights:
1 Government owned and controlled
corporations; publicly listed companies; banking
institutions; trust entities and quasi-banks
authorized by the BSP; government agencies;
LGUs not listed under the High Risk Philippine
Areas
2 or 3

Businesses not listed numeric weight 1

3Newly
organized
charitable
institutions/foundations;
money
changers;
foreign
currency
dealers;
remittance
companies/agents; casino and related gambling
entities; custom brokerage; dealers of
jewels/gem/precious
metals;
gun/
ammunition/military equipment dealers; LGUs

listed under the High Risk Philippine Areas


Account Opening Method

Used for identifying Account/Entity Risk


classified as follows based on numeric weights:
1 - Face-to-face with all signatories/account
owners by domestic/overseas branch personnel;
2Face-to-face with some account
owners/signatories but authenticated by a PNB
overseas branch/office Officer
3Face-to-face with some account
owners/signatories authenticated by third
parties not PNB branch personnel

Designated Authorized Signatories

Used for identifying Account/Entity Risk


classified as follows based on numeric weights:
1Persons
professionals
2-

not

listed

as

designated

Designated professional

3Politically
Exposed
associate; non-resident alien

Person;

PEP

Actual/Declared Gross Monthly Used for identifying Products and Services Risk
during re-assessment based on actual gross
Volume of Transaction (GMVT)
account movements (credits only)classified
based on numeric weights:
1Gross Monthly Volume of Transaction of
less than and up to P5 Million or its equivalent
2Gross Monthly Volume of Transaction is
over P5 Million and up to P10 Million or its
equivalent
3Gross Monthly Volume of Transactions is
over P10 Million
Length of Relationship

Used for Account/Entity Risk and Products and


Services Risk classified as follows based on
numeric weights:

1Existing customer with relationship of at


least one year
2Existing customer with relationship of
less than 1 year
3-

No prior relationship

Used for identifying Products and Services Risk


classified as follows based on numeric weights:

Products and Services

Numeric
Weight

Products and Services

a. Currency deposits or withdrawals

b.

Purchase of MC/DD

c.

Internet banking

d.
Local
(PDDTS/RTGS)

fund

transfer

e. Check deposits(2nd Endorsed)

f.
Dollar savings account (if
business is not related to importexport
or
currency
exchange/trading)

g.

Foreign Remittance

h.
Sale/Purchase of Foreign
Exchange

Customer Risk Rating Process


Customer Risk Rating Range
Customer Risk Rating Total (CRRT) refers to the overall result when all the Risk Factors are summed up
according to each of their relative numeric weights. The risk rating range is as follows:
Risk Rating

Numeric Range

Low Risk

14 or less

Normal Risk

15-25

High Risk

26 or higher

Customer Risk Rating Tools (CRR)


There are 2 CRR tools to be used by the branch:
a. Individual this CRR tool is used for individuals when opening and during periodic risk
assessment of Current/Checking Account, Savings Account or Time Deposit Account
b. Non-Individual this CRR tool is used to non-individuals when opening and during periodic risk
assessment of Current/Checking Account, Savings Account or Time Deposit Account
Tagging of Customers in Appropriate Systems
All customers must be tagged in the various CIS and support systems with the following customer risk
rating code:

Customer Type
Individual
Corporate/Juridical Entity
Politically Exposed Person (PEP)
PNB Employee's Account
US Person
Government Account
NGOs/NPOs/Foundation

HIGH
A
A
D
EA
FA
GA
HA

CUSTOMER RISK RATING CODE


FLEXCUBE
SYSTEMATICS
NORMAL LOW HIGH NORMAL LOW
B
C
300
500
400
B
C
300
500
400
200
E
120
100
F
360
600
G
320
800
H
370
700

Tagging shall be performed by the designated bank personnel and must be approved by the authorized
bank officer/s only. Day 2 validation of customer information encoded in the system vis-a-vis properly
accomplished forms and identification documents is necessary to ensure customer data integrity in the
system
The bank has customer risk rating score models used to assign the appropriate initial customer risk
rating at account opening. The customer risk ratings are subject to periodic reviews based on defined
"cycles" for high risk, normal risk and low risk customers.
PNB Employees
All new and existing employees of the bank. Normally tagged Eor 100. However, if employee has
been a subject of investigation related to internal fraud or AML related financial crimes, account should
be tagged EAor 120

US Persons1 should be tagged FAor 360 (HIGH RISK) shall be assigned if CRR total is 26 or HIGHER.
For 600shall be assigned if US Person CRR total is less than 26.
A US person is one who is:
US Individual
US Citizen (by birth or naturalization)
a. A dual citizen where one country of citizenship is the US
b. Non-US citizen that is a US permanent resident (i.e. green card holder)
c. Non-US citizen with substantial presence in US (greater than 183 days)
d. Holds a U.S. passport
e. Is a resident of the U.S.
U.S. Partnership
U.S. Corporation, Company or Association created or organized in the U.S. or under laws of the
U.S.
U.S. Trust or Estate
U.S. Indicia:
Any of the following which may indicate U.S. status:
has a U.S. address (resident or correspondence)
has U.S. telephone number
has a care of address, a hold mail address, or a U.S. Post Office address that is the sole
address on file with respect to the account holder
has granted Power of Attorney to a person with a U.S. address
has provided Standing Instructions to transfer funds to an account maintained in the U.S. or
directions received from a U.S. address

Government
GAor 320(HIGH RISK) shall be assigned if CRR total is 26 or HIGHER. Gor 800shall be assigned if
CRR total is less than 26.2 Hence, there is a need to re-assess the CRR of Government agencies with the
following types transactions, viz:
Disbursements of government agencies that passed through the Modified
Disbursement Scheme (MDS), which disbursements are payable to private
entities; non-governmental organizations (NGOs) non-profit, charitable or
religious foundations; or to individual persons. (Modified Disbursement
Scheme is mostly used where disbursements of national government
agencies chargeable against the Treasury are made through government
servicing banks.); and

Disbursements of government agencies coursed through other depository


banks, other than the MDS accounts, that are payable to private entities;
non-governmental organizations (NGOs) non-profit, charitable or religious
foundations; or to individual persons.
An account has indications of Government if:
Government Owned and Controlled Corporations of the Republic of the
Philippines;
Local Government Units;
Philippine Government Agencies and Instrumentalities including Police
and Military; or
Philippine Consulate
The accounts of the following government agencies should be immediately tagged GAor 320in
Flexcube and Systematics Systems:
National Agribusiness Corporation (NABCOR)
Livelihood Corporation (LIVECOR)
ZNAC Rubber Estate
NGOs/NPOs/Foundation
Non-Governmental/Non-Profit Organization/Foundation shall refer to a legal person or arrangement or
organization that primarily engages in raising or disbursing funds for purposes such as charitable,
religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of
good works (FATF Best Practices to Recommendation 8)
NGOs/NPOs/Foundations are generally HIGH RISK and should be tagged HA or 370 except for the
following NGOs/NPOs/Foundations which shall be tagged as H or 700 (Normal Risk)3
ABS-CBN Lingkod Kapamilya Foundation
ABS-CBN Foundation
Bantay Bata 163
Gawad Kalinga
GMA Kapuso Foundation
Habitat for Humanity, International
Philippine National Red Cross
Salvation Army
Tan Yan Kee Foundation, Inc
The YMCA
UNICEF World Vison

Enhanced Due Diligence (EDD)


EDD for High Risk customers is especially critical in understanding their transactions and implementing a
suspicious transaction monitoring system that reduces the banks reputation, compliance and
transaction risks. High Risk customers and their transactions should be reviewed more closely at account
opening and more frequently throughout the term of their relationship with the Bank.
When to Conduct EDD
Branches/Offices/Operating Units shall apply EDD when any of the following circumstance exists/occurs:
Raises doubt as to the accuracy of any information or document provided or the ownership of
the entity;
Justifies re-classification of the customer from low or normal risk to high-risk pursuant to AMLC,
BSP rules and regulations or the Banks policy or when there is knowledge in the activity changes
(e. g, low risk rate upon opening but later subject of suspicious transaction reporting; change
from regular to Politically Exposed Person account or vice versa and the like). Should there be a
need to maintain and change customer risk rating (e.g., expected account activity, change in
employment or business relations), approval of a Senior Officer is required. (See Section 9.4 for
the definition of Senior Officer)
Any of the circumstance for the filing of suspicious transaction exists but not limited to the
following:
a. Transacting without any underlying legal trade, purpose or economic
justification
b. Transacting an amount that is not commensurate with the business or
financial capacity of the customer or deviates from his profile;
c. Structuring transactions in order to avoid being the subject of covered
transaction reporting; or\
d. Knowing that a customer was or is engaged or engaging in any unlawful
activity defined under the AMLA
Additional Measures When Conducting EDD
Whenever enhanced due diligence is applied as required by BSP Circular 706, the Branch AML
Compliance Officer/Operating Unit shall in addition to profiling of customers and monitoring of
customers transactions do the following:
1. Obtain additional information other than the minimum information and/or documents.
For individuals:
List of banks where the individual has maintained or maintaining an account
List of companies where he is a director, officer or stockholder
Banking services to be availed of

For corporate or juridical entities:


List of prior or existing bank references
Name, present address, date and place of birth, nature of work, nationality and source of
funds of each of the primary officers (President, Treasurer and authorized signatory/ies),
stockholders owning at least 20% of the voting stock, and directors/trustees/parties as
well as their respective identification documents
2. Conduct validation procedures on any or all the information provided
3. Obtain senior management approval for establishing business relationship
Customer Verification Procedures
Verification of procedures for individual customers shall include but not limited to the following:
Confirming the date of birth from a duly authenticated official document
Verifying the permanent address through evaluation of utility bills, bank credit card statement,
or other documents showing permanent address or through on-site visitation
Contacting the customer by phone, email or letter (such as sending of thank you letters); and
Determining the authenticity of the identification documents through validation of its issuance
by requesting a certification from the issuing authority or by any other means.
Validation procedures for corporate or juridical entities shall include but not limited to the following:
Require the submission of audited financial statements conducted by a reputable
accounting/auditing firm;
Inquiring from the supervising authority the status of the entity
Obtaining bank references;
On-site visitation of the company; and
Contacting the entity by phone, email or letter (such as thank you letters).

IMPORTANT: Where additional information cannot be obtained, or any information or document


provided is false or falsified, or result of the validation process is unsatisfactory, the
Branch/Office/Operating Unit shall not allow account opening or initiate termination of the banking
relationship with the individual or entity without prejudice to the reporting of a suspicious transaction
to the AMLC when circumstances warrant.

Customer Identification
Customer Identification Process has to be carried out at different stages:
While establishing a business relationship
While carrying out a financial transaction

When the Branch/Office has doubt about the veracity or the adequacy of the previously
obtained customer information or identification data.
Customer identification4 shall mean establishing and recording the true identity of the customer based
on valid identification documents (Section 11.3 of 2014 MLPP). Branch/Offices need to obtain sufficient
information necessary to establish, the identity of each customer and the purpose of the intended
nature of banking relationship. The following shall be taken into account during the customer
identification stage.
Background and source of funds
Country of origin and place of operations
Public or high profile position of the customer or its directors/trustees, stockholders, officers
and/or authorized signatories
Linked accounts/Other accounts maintained
Watchlist of individuals and entities engaged in illegal activities or terrorist financing related
activities as circularized by BSP, AMLC and other international entities or organizations such as
the OFAC and UN Sanctions List
Business activities
Types of services/products and transactions to be entered with the Bank
In all instances, approving Officers must ensure the KYC process for a specific customer was
documented; the required information and documents were complied with.
Minimum Information and Documents Required for Individual Customers and Authorized
Signatory/ies of Corporate/Juridical Entities
Individual customers shall open and maintain the account only in the true and full name of the account
owner or owners, their true and full identity fully established. For sole proprietorship entities, the bank
must establish the relationship of the trade name with the registered owner and the customer account.
The following minimum information shall be required to be obtained from individual customers or
authorized signatory(ies) of corporate or juridical entities classified as Low Risk or Normal Risk
customers. This information shall be confirmed with the valid identification documents mentioned
under Section 11.3 of the Banks MLPP.
Name
Present address
Date and place of birth
Nature of work, name of employer or nature of self-employment/business;
Contact details
Specimen signature
Source of funds
Permanent address;

Nationality;
Tax identification number, SSS or GSIS number, if any; and
Name, present and permanent address, date and place of birth, nature of work and source
of funds of beneficial owner or beneficiary, whenever applicable.

An individual account that is eventually used for business or trade related transactions must be replaced
with the account name of the register name of the business enterprise.
Business or trade related transactions shall mean transactions of covered persons natural or juridical
referred to below:
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. Securities dealers, brokers, salesmen, investment houses and all 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, cash substitutes and other similar monetary
instruments or property supervised or regulated by the Securities and Exchange
Commission (SEC);
4. Jewelry dealers in precious metals, who, as a business, trade in precious metals;
5. Jewelry dealers in precious stones, who, as a business, trade in precious stones;
6. 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
7. Persons who provide any of the following services:

a) Managing of client money, securities or other assets;


b) Management of bank, savings or securities accounts;

c) Organization of contributions for the creation, operation or


management of companies; and
d) Creation, operation or management of juridical
arrangements, and buying and selling business entities.

persons

or

Notwithstanding the foregoing, 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, that these lawyers and accountants 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.
Minimum Required Information/Documents Required for Corporate and Juridical Entities
The following minimum information shall be required to be obtained from corporate or juridical entities
classified as Low Risk or Normal Risk customers.
Certificates of Registration issued by the Department of Trade and Industry for single
proprietorships or Securities and Exchange Commission for corporations and partnerships
and by the BSP for money changers, foreign exchange dealers and remittance agents;
Articles of incorporation or Association and by-laws
Principal business address
Board or Partners Resolution duly certified by the Corporate/Partners Secretary
authorizing the signatory to sign on behalf of the entity;
Latest General Information Sheet which lists the names of directors/trustees/partners,
principal stockholders owning at least twenty (20%) of the outstanding capital stock and
primary officers such as the President and Treasurer;
Contact numbers of entity and authorized signatory/ies
Source of funds and nature of business
Name, present and permanent address, date and place of birth, nature of work and
source of funds of beneficial owner or beneficiary; if applicable; and
For entities registered outside the Philippines, similar documents and/or information shall
be obtained duly authenticated by the banks branch officer or authorized bank
representative or Philippine Consulate where said entities are registered.

Approving Officers shall have the primary responsibility of requesting credit investigation on the
business activity and validation of business registration documents to ensure that the entity has not
been or in the process of being, dissolved, struck-off, wound up, terminated, or otherwise placed under
receivership or liquidation. In instances wherein the bank officer is not comfortable and/or fully
satisfied with the information provided, additional verification may be conducted by requesting credit
investigation on business operations and authorized signatories of the company. Credit investigation is
optional for companies listed in the Philippine Stock Exchange or in the Top 1000 Corporations in the
Philippines.
Valid IDs
The following guidelines govern the acceptance of valid ID cards for all types of financial transaction by a
customer and the authorized signatory/ies of a corporate or juridical entity, including financial
transactions involving Overseas Filipino Workers (OFWs), in order to promote access of Filipinos to
services offered by formal financial institutions, particularly those residing in areas wherein bank
branches are not accessible, as well as to encourage and facilitate remittances of OFWs through the
banking system.
a. Customers and authorized signatory/ies of a corporate or juridical entity who
engage in a financial transaction with the Bank for the first time shall be
required to present the original copy and submit clear copy of valid photobearing IDs with signature issued by an official authority5.

LOW/NORMAL RISK

HIGH RISK

Any 1 of the valid IDs


(primary or secondary ID)

2 valid IDs- 1 primary and 1 secondary;


or 2 primary IDs AND
Submission of any 1 of the following:
-

Latest
bank/brokers/
statements

Latest telephone bills

Latest utility/cable bills

Latest credit card bills

Latest club membership bills

Latest GIS submitted to SEC as proof of

insurance

being a Director/ Officer of an entity

FOREIGN NATIONALS
2 valid IDs Passport WITH ACR issued by Bureau of Immigration AND
-

National ID; or
Internal Revenue Service (IRS) ID or;
Social Security System (SSS) ID; or
Work permit issued by DOLE (mandatory requirement) if employed in
the Philippines

Valid IDs include the following:


Primary:
Valid Passport
Drivers license with Official Receipt
Unified Multi-Purpose ID
SSS ID
GSIS e-Card
PRC ID
IBP Lifetime Membership ID
NBI Clearance
Work permit issued by DOLE for foreign nationals

Secondary:
Police Clearance
Postal ID
Voters ID
Tax Identification Number Card
Barangay Certification
Senior Citizen Card
OWWA ID
OFW ID
Seamans book
Alien Certification of Registration/Immigrant Certificate of Registration
Government Office and GOCC ID (e.g. AFP, HDMF IDs)
Certification from NCWDP
DSWD Certification
IBP ID
Phil-Health ID Health Insurance Card ng Bayan

Company IDs issued by private entities or institutions registered with or


supervised or regulated either by the BSP, SEC or IC
Foreign Government Issued IDs
Valid Passport
Drivers License
National ID
Internal Revenue Service (IRS) ID
Social Security System (SSS) ID

b. Students who are beneficiaries of remittances/fund transfers and who are not
yet of voting age, may be allowed to present the original and submit a clear
copy of one (1) valid photo-bearing school ID duly signed by the principal or
head of the school.
c. Where the customer or authorized signatory is a non-Philippine resident, similar
IDs duly issued by the foreign government where the customer is a resident or a
citizen may be presented.
d. The bank shall require their customers or authorized signatory to submit a clear
copy of one (1) valid ID on a one-time basis only at the commencement of
business relationship. They shall require their clients to submit an updated
photo and other relevant information on the basis of risk and materiality.
e. The bank may classify identification documents based on its reliability and
ability to validate the information indicated in the identification document with
that provided by the customer.
f.

Whenever it deems necessary, the bank may accept other IDs not enumerated
above provided that it shall not be the sole means of identification.

g. In case the identification documents mentioned above or other identification


documents acceptable to the covered institution do not bear any photo of the
customer or authorized signatory, or the photo bearing ID or a copy thereof
does not clearly show the face of the customer or authorized signatory, a
covered institution may utilize its own technology to take the photo of the
customer or authorized signatory.
It is encouraged that the customer submits at least two valid IDs, one of which must be photo bearing
and with signature.

Conducting the Initial Interview and Establishing Identity


SALES AND SERVICE ASSOCIATE - NEW ACCOUNTS/ ACCOUNT OFFICER OF TRUST/TREASURY/SAMS/
LENDING UNITS:
1. Briefs the prospective client on the requirements and features of the account being opened
and/or transaction being conducted.
2. Conducts an initial Interview and performs exploratory questioning to establish information
pertaining to:
Personal circumstances
Purpose of opening the account and/or transaction applied for
Nature of Business
Source of funds
Identification of Beneficial Owner(s)
Expected Transaction Amount
Expected Transaction Volume/Count
Reason for choosing PNB particularly when the residence of client is outside
the territorial jurisdiction of the concerned branch

3.

Observes unusual behavior of client during the conduct of interview and looks for the following
warning signs:
Customer has unusual or nervous demeanor
Customer discusses Banks record keeping or reporting responsibilities
Customer uses unusual or suspicious identification documents that cannot
be readily verified.
Customer is reluctant when establishing a new account, to provide
complete information about the nature and purpose of its business,
anticipated account activity, prior banking relationships, names of its
officers and directors, or information on its business location.
Customers home/business telephone is disconnected.
Customer uses a temporary address, like a hotel room or a pension house.
Customer is a national of a country which belongs among the List of
Jurisdictions with Strategic AML/CFT Deficiencies. The list is prepared by the
Financial Action Task Force (FATF) and enumerates all countries that are
viewed as not being cooperative in the fight against money laundering and
terrorist financing.
Customers background differs from that which would be expected based on
his or her business activities.
A business or new customer asks to be exempted from reporting or recordkeeping requirements.

4. Requests client to produce the original of documents of identity issued by an official authority
bearing his photograph such as passport, drivers license, company identification cards, SSS card,
GSIS card and other valid IDs enumerated under Section 11.3 of the Banks MLPP.
5. Examines carefully the documents of identity presented looking for any sign of erasures,
alterations and tampering.
6. Interviews client to validate information/data elicited during the initial interview and
exploratory questioning against the presented identity documents.
7. Observes the following steps if the customer lacks the proper documents and/or results of the
interview and exploratory questioning are poor.
8. Requests the client to submit acceptable IDs before allowing the opening of account or
processing the transaction/service applied for if he lacks the proper documents.
9. Courteously decline the application for account opening and/or transaction
if the customer fails to satisfactorily explain discrepancies between the information
elicited during the preliminary interview/questioning and documents presented
There are signs of erasures and tampering of documents presented.
Displayed suspicious and questionable behavior.
10. Requests client to fill out account opening forms and Customer Profile Form for
deposit/investment accounts of Trust Division and Treasury Division, and provide the Bank
with a photocopy of documents of identity presented if he/she satisfactorily meet our
requirements and passed the initial interview and questions. Ensures that the account opening
forms and customer profile form are properly accomplished.
11. Accomplish Customer Risk Rating sheet to determine the customer AML risk rating (i.e. Low
Risk, Normal Risk, High Risk, PEP, PNB Employee, Government, NGO/NPO/Foundation, FATCA,
etc)
12. Forwards all documents to Sales and Service Head (SSH)/ Trust/Treasury Marketing/SAMS Sales
Division/Lending Units Head for review and approval.
Encoding AML CIF Mandatory Information
1.

The Sales and Service Associate should ensure that the following mandatory information
and its corresponding Flexcube Fast Paths are encoded immediately upon account
opening.

Minimum Information
FULL NAME
PRESENT ADDRESS

Fast Path (FP)


7101 - IC Short Name Change
CIM09 Mailing Address

PERMANENT ADDRESS

CIM09 Permanent Address

DATE OF BIRTH

CIM09 Individual Customer Info

PLACE OF BIRTH

CIM09 User Defined Fields

NATURE OF WORK

CIM09 Individual Customer Info

CONTACT NUMBERS

CIM09 Mailing Address

MOBILE NUMBER

CIM09 Permanent Registration

TIN, SSS, GSIS (other IDS presented

TIN CIM09 Basic Information/SSS, GSIS


CIM09 User Defined Fields
Valid IDs presented by client CIM09
User Defined Fields

CLIENT RISK CLASSIFICATION

CIM09 User Defined Fields

SOURCE OF FUNDS

CIM09 User Defined Fields

Other Relevant Information (if applicable)


Customer Detail Maintenance

CIM11 (Name of Employer and Spouse


Name)

Corporate Customer Details

CIM17 (Business Commencement Date,


Business License Nature of Business,
Major Shareholder Names)

Face-to-face Contact
No new account shall be opened and created without face-to-face contact and personal interview
between the Banks duly authorized personnel.
No Business Arrangement with Shell Banks
A shell bank is a shell company incorporated as a bank or made to appear to be incorporated as a bank
but has no physical presence and no affiliation with a regulated financial group. It can also be a bank
that:
Does not conduct business at a fixed address in a jurisdiction in
which the shell bank is authorized to engage;
Does not employ one or more individuals on a full time business at
this fixed address;

Does not maintain operating records at this address;


Does not subject to inspection by the banking authority that
licensed it to conduct banking activities.

The bank should refuse to enter into, or continue a correspondent relationship with shell banks. The CBC
should not use the banks product and services to engage in business with the shell banks.
Electronic Monitoring Systems for Money Laundering
Electronic Monitoring Systems of the Bank are being utilized by the Domestic AML Compliance and
Overseas AML Compliance Departments of the Global Compliance Group primarily in detecting,
monitoring and reporting covered and suspicious transactions. Enhancements, modifications and system
upgrades are handled by the Compliance Systems Support Department also of the Global Compliance
Group in close coordination with the Infrastructure Technology Group and affected business units.
Giftsweb EDD
The Bank acquired the Giftsweb EDD System in 2005, the electronic AML monitoring system compliant
with the requirements of BSP Circular 495 issued in 2006. The system has undergone series of system
enhancements and system interfaces from Flexcube Corporate and Retail System, TAPS Trust System,
OPICS Treasury System, Remittance Systems (IRS, GSR, ARS) and the AML Data Capture System. These
system enhancements resulted to the roll-out of the Giftsweb EDD System to other foreign branches like
PNB New York, PNB Singapore, PNB Tokyo, PNB Hong Kong and PNB London.
The Giftsweb EDD System adopted by the Bank can detect suspicious activity that may ultimately link to
money laundering and terrorist financing activity.
Dow Jones Risk and Compliance Software
The Bank subscribed to Dow Jones Risk and Compliance Software for accurate, complete and up-to-date
risk data for robust compliance with anti-money laundering and Know Your Customer regulation. Dow
Jones Watchlist contains data on the relatives and close associates of Politically Exposed Persons,
helping to alert organizations to individuals who may require closer scrutiny. Dow Jones's team of
researchers and analysts update a global collection of law enforcement, government sanction lists and
other information on a daily basis.
AML Data Capture/Entry System (ADCS/AMLADES)
ADCS is an internally developed system primarily to ensure transactions not supported by the front-end
applications are captured and uploaded to Giftsweb EDD System for transaction monitoring and analysis
and covered transactions are processed by the ACGS for reporting to the AMLC.

Centralized Watchlist System (CWS)


The CWS, an internally developed system designed to help the Bank minimize its exposure to risk of
financial crime and to comply with Philippine and international AML-CFT rules and regulations. The CWS
contains the following lists:
1.
2.
3.
4.
5.

OFAC-SDN
United Nations (UN) Sanction Lists
Her Majesty Treasury-Bank of England
Philippine National Senior Government Officials
Internal Watchlist

When to use CWS:


Branches, Offices and Operating Units are required to screen the clients name, purchaser, payee,
remitter or beneficiary (depending on the type of transaction) against CWS when:
1.
2.
3.
4.
5.

Establishing business relationship/opening an account


Sale of bank drafts
Over the counter payment of remittances
FXOTT, RTGS or PDDTS
Conducting enhanced due diligence

What to do in case of a name-match


In the event of a name-match, please refer to Branch Head or Division Head for guidance and subject
to EDD. If upon further verification of the Branch Head or Division Head confirmed positive match, the
transaction should not proceed. Responsible Unit must submit a STR within 48 hours to Global AML
Compliance Division Domestic AML Regulations and MIS Department. In case of positive-match vs UN
Sanction List involving over-the-counter payment of remittance, payment of remittance must not
proceed.
Responsible Unit/Branch must inform without delay or call immediately Global AML Compliance Division
for appropriate disposition and guidance. (added by Compliance Bulletin AMLDOM-010-2014).
Reporting of Covered Transactions
Covered transaction is a single transaction in cash or other equivalent monetary instrument involving an
amount exceeding FIVE HUNDRED THOUSAND PESOS (P500,000) within one banking day.
All covered transactions generated by the Banks electronic AML System shall be reported to AMLC in
electronic form within ten (10) working days from occurrence.
REPORTABLE TRANSACTIONS (BRANCH)FOR AMLDCS:

1. Sale/Issuance of Managers Check, Demand, Bank Draft (Peso/Dollar/3rd


Currency) funded by cash or processed vs. GL accounts. No data entry is
needed if transaction is funded by a debit from clients savings or current
account using the following Flexcube Fast Paths (FP):
FP 1010 Bank Check (BC) Sale Against Account
FP 1014 Demand Draft (DD) Sales Against Account
FP 8318 Telegraphic Transfer (TT) Sale Against Account
2. Encashment of Managers Check, Demand Draft (Peso/Dollar)
3. Outgoing Remittances
Outgoing Telegraphic Transfer (OTT) Peso/FX
Philippine Dollar Domestic Transfer System (PDDTS)
4. Purchase/Sale of FX notes
5. Cancelled/Stale Managers, Cashiers, Travellers Check, Demand Draft (if
already posted)
FOR AMLADES:
1. Sale/Issuance of Managers, Gift Check, Demand Draft
2. Purchase/Sale of FX Notes and Third currency transactions
3. Outgoing Remittances
Outgoing Telegraphic Transfer (OTT) Peso/FX
Philippine Dollar Domestic Transfer System (PDDTS)
4. Inward Remittances Telegraphic Transfer (TT) and Pay-out arrangements
5. Transactions processed using DM-Ordinary and CM-Ordinary Transaction
Codes (TCs)
6. Cancelled/Stale Managers, Cashiers, Travelers Check, Demand Draft (if
already posted)
Note: Supervisors must ensure that remitter and beneficiary, purchaser and/or payee of checks or
telegraphic transfer transactions are validated against the CWS before approving the transaction.

A positive match of the name of the purchaser/payee and or remitter/beneficiary vs. the CWS list will
require the branch personnel to conduct enhanced due diligence to reject transaction and refer the
transaction to AML Compliance immediately for possible suspicious transaction reporting. While a
negative match of the name vs. CWS list should allow the branch to proceed with the sale or issuance of
the bank drafts and telegraphic transfers.
To comply with the regulatory requirements on aggregation/structuring, transactions shall be reported
regardless of amount and currency. For Purchase/Sale of FX notes, only transaction amount of above Php
500,000.00 or its equivalent in other currency shall be reported.
The amount to be encoded via AMLDCS/AMLADES shall include all fees and charges incidental to the
execution of the transaction.
Checker shall ensure all transactions required to report are posted by the Maker within the prescribed
reporting period and the information is complete and accurate.
Reporting Suspicious Transactions
Suspicious Transaction is a transaction, regardless of amount, where any of the following circumstance
exists:
a) there is no underlying legal or trade obligation, purpose or economic justification;
b) the client is not properly identified;
c) the amount involved is not commensurate with the business or financial capacity of the client;
d) taking into 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;
e) 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;
f) the transaction is in any way related to an unlawful activity or any money laundering activity or
offense under the AMLA, as amended, is being or has been committed;
g) any transaction that is similar, analogous or identical to any of the foregoing.

Reporting of suspicious transactions to the Anti-Money Laundering Council (AMLC) shall be the
responsibility of the branch/office maintaining the account.
Transactions which, in the judgment of branches/offices other than the maintaining branch, are deemed
suspicious shall document and submit their findings to the branch maintaining the account for additional
verification measures and/or reporting to the AMLC.
Further STR filing is required for the following cases covered in Report on Crimes and Losses (RCL):
Case
a. Internal fraud arising from qualified theft
and/or estafa charges vs erring bank
employees

Unit to File STR


Unit where erring bank employee
is assigned

b. ATM Skimming

ATM Center

c. Credit card skimming

Credit Card Division

d. Negotiation of spurious or fraudulent check


detected/intercepted by Central Clearing
Division

Central Clearing Division

e. Negotiation of spurious or fraudulent check


detected/intercepted thru local clearing

Branch maintaining the account

The Philippine AML Review Committee


The Philippine AML Review Committee is tasked primarily to evaluate and approve the filing of
Suspicious Transaction Report (STR) to the Anti-Money Laundering Council (AMLC). Furthermore, the
AML Review Committee may recommend changes to existing operational policies and procedures as
well as formulate new policies and procedures to ensure sustained compliance by the bank to antimoney laundering and CFT laws, regulations and implementing guidelines.
The Philippine AML Review Committee shall be composed of the following:
Chief Compliance Officer

Chairman

Global AML Compliance Division Head

Vice Chairman

& Deputy Compliance Officer


Designated AML Legal Counsel

Member

Designated Representative of

Member

the Business/Support Group*


Domestic AML Regulations and MIS Dept. Head

Member & Secretariat

*The designated representative of the Business Group or Support Group must have a minimum rank of
Vice President.
AML Training and Countering of Terrorist Financing Training Program
It is the policy of the bank to ensure that all its directors, officers and employees wherever located, are
informed and adequately trained in matters covered by the Banks Money Laundering and Terrorist
Financing Prevention Program to enable them to fully comply with their obligations and responsibilities

under the AMLA as amended, its Revised Implementing Rules and Regulations, TF Suppression Act and
its Implementing Rules and Regulations, BSP Circulars, Letters, Memoranda and AMLC Resolutions.
Global Compliance Group in close coordination with the Human Resource Group is required to conduct
Anti-Money Laundering (AML) training to all its Employees. Ongoing education of bank personnel is an
important element in the compliance function to maintain a sound compliance program. The purpose
of the training is to make all personnel aware of the banking laws and regulations as well as the Banks
policies and procedures that affect their areas of responsibilities. The number of AML trainings and
frequency will depend on the business needs and priorities of the Bank. All new hires must undergo
compliance and AML awareness training prior assumption of duties while existing employees are
required to participate in refresher courses within a period of 18 to 24 months. AML trainings shall be in
the form of classroom trainings, modular workshops, on-site trainings, branch / unit meetings,
compliance reviews and surveys.
5 components of AML Compliance Risk:
1. Board and Senior Management Oversight reflects the efficiency and capability
of the unit/entity to escalate to Board/Senior Management money
laundering/terrorist financing issues and concerns as well as resolution of
findings/exceptions noted by the internal/external auditors and regulators.
2. Policies and Procedures reflects the units/entitys adequacy of AML/CFT
policies and procedures vis--vis Philippine/host-country laws and regulations
and adequacy of access to Cybermag-Knowledge Base and I-comply/Homepage
or similar sites where the policies and procedures, MLPP, AMLCFT Policy
Guidelines and Compliance Bulletins are electronically accessed.
3. Internal control and MIS reflects adequacy and soundness of the monitoring
and compliance testing conducted by the AML Compliance Officer/Compliance
Officer-Designate to identify, measure, monitor and control money laundering
risks as well as compliance with the Philippine and/or host-country AML laws
and regulations.
4. Implementation reflects the level of effectiveness in the implementation of
the MLPP which include customer acceptance and identification, covered and
suspicious transaction reporting, transaction monitoring, record-keeping and
retention.
5. Training reflects the level of awareness and understanding of Units/entitys
personnel to AML laws, rules, regulations, policies and procedures.

Likewise, the 4-level composite rating shall be implemented as follows:


Overall
Rating

Description

Sound. High level of effectiveness. All of mostly 4 with no


sub-component rating less than 3

Adequately sound. Acceptable level of effectiveness. All or


mostly 3 but no sub-component rating of 2

Vulnerable. Implementation needs improvement. All 2 or no


subcomponent rating of 1

Grossly inadequate. Poor implementation. All or mostly 1

AML Compliance Certification Process


The AML Compliance Certification is aligned with the BSP-AML Risk Rating System (ARRS) issued on April
4, 2012 under BSP Memorandum No. M-2012-017 and intended to maintain a thorough understanding
of the Banks operating units level of AML compliance thru self-assessment.
Under the revised AML Compliance Certification, each branch, business and/or operating unit is
assigned a Composite Rating based on their self-assessment on the 5 components of AML Compliance
Risk. The component factors are as follows:
1. Board and Senior Management Oversight the rating reflects the efficiency and capability
of the unit to escalate to Senior Management money laundering/terrorist financing issues
and concerns as well as resolution of findings/exceptions noted by the internal/external
auditors and regulators.
2. Policies and Procedures - the rating reflects the units adequacy of access to CybermagKnowledge Base and I-Comply sites where Banks policies and procedures, MLPP, AMLCFT
Policy Guidelines and Compliance Bulletins are electronically accessed
3. Internal Control and MIS the rating reflects the adequacy and soundness of the monitoring
and compliance testing conducted by the Branch AML Compliance Officer/Compliance
Officer-Designate to identify, measure, monitor and control money laundering risks as well
as compliance with the AMLA, its IRR and BSP rules and regulations;
4. Implementation the rating reflects the level of effectiveness in the implementation of the
MLPP which include customer acceptance and identification, covered and suspicious
transaction reporting, record-keeping and retention and updating of customer records,
among others;

5. Training the rating reflects the level of awareness and understanding of branch/operating
units personnel to AML laws, rules, regulations, policies and procedures.
Composite rating is assigned based on a 1 to 4 numerical scale. The highest rating of 4 indicates the
strongest risk management system and most effective operational practices that entail the least degree
of GCG supervision. The lowest rating of 1 on the other hand signifies the weakest risk management
system and defective implementation which requires the highest degree of GCG concern
The Composite Ratings are defined as follows:
OVERALL
Rating

Description

Sound. High level of effectiveness. All or mostly 4 with no sub-component rating


less than 3

Adequately Sound. Acceptable level of effectiveness. All or mostly 3 but no subcomponent rating of 2.

Vulnerable. Implementation needs improvement. All 2 and no sub-component


rating of 1

Grossly inadequate. Poor implementation. All or mostly 1

The AML Compliance Quarterly Certification shall be submitted to Global AML Compliance Division
every 10th day of the month after the reference quarter by the following:
Compliance Officer-Designates of Head Office Units
Trust Compliance Officer
In the case of Domestic Branches, Branch Operations Review Department (BORD) Head as Compliance
Officer-Designate shall submit a consolidated report to Global AML Compliance Division.
Record Keeping and Retention Period
As required by the AMLA as amended, closed accounts (KYC documents and business correspondences)
shall be preserved and safely stored for at least 5 years from date of closure. If a money laundering case
has been file in Court, records must be retained beyond the 5 year retention period and until it is
confirmed that the case has been finally resolved or terminated by the court.

Customer records and documents


a)

Group Heads shall designate at least two (2) officers who will be jointly responsible and
accountable in the safekeeping of all records and documents required to be retained by
the AMLA as amended.

b)

The designated officers shall have the obligation to make the customer records and
documents available without delay during BSP regular or special examinations and/or
AMLC requests for customer records.

Designation of Officers shall be:


Domestic Branches: Branch Head and 1 Officer
Business Units and Support Departments: Department head and 1 Officer
c)

Group Heads must ensure the designation in the safekeeping of records is reviewed
annually (every March)

ENTERPRISE MANAGEMENT OF FREEZE ORDER /ASSET PRESERVATION ORDER (MERGED BANK)


1.

All Freeze Orders/Asset Preservation Orders (Provisional or otherwise) issued by the Court of
Appeals (CA) or the Regional Trial Courts (RTC) shall be immediately referred to Legal Group;

2.

Legal Group shall notify and coordinate with the following units for immediate implementation of
and compliance with the Freeze/Asset Preservation Order;
a. Branch Operations Division Head for domestic branches
b. Treasury Operations Services Division Head
c. Trust Banking Group thru TBG Compliance Officer
d. Overseas Offices Operations Division Head for overseas branches, offices, and subsidiaries
e. Domestic Subsidiaries and Affiliates Group Head for domestic subsidiaries and affiliates

3.

Branches/Units shall immediately implement the effects of the Freeze/Asset Preservation Order
and immediately submit a written return to Legal Group and enable the handling lawyer to file
within the 24-hour period (mandated by law), the Banks return-compliance with the CA/RTC.
Branches/Units must, when necessary, resort to previously conducted KYC measures, to
determine whether or not an account is a MATERIALLY-LINKED.
Materially linked accounts include but are not limited to the following:
1. All accounts or monetary instruments belonging to the same person whose accounts, monetary
instruments or properties are the subject of the freeze order;
2. All accounts or monetary instruments held, owned or controlled by the owner or holder of the
accounts, monetary instruments or properties subject of the freeze order, whether such
accounts are held, owned or controlled singly or jointly with another person;

3. All accounts or monetary instruments the funds of which are transferred to the accounts,
monetary instruments or properties subject of the freeze order without any legal or trade
obligation, purpose or economic justification;
4. All In Trust For (ITF) accounts where the person whose accounts, monetary instruments or
properties are the subject of the freeze order is either the trustee or the trustor;
5. All accounts held for the benefit or in the interest of the person whose accounts, monetary
instruments or properties are the subject of the freeze order;
6. All accounts or monetary instruments under the name of the immediate family or household
members of the person whose accounts, monetary instruments or properties are the subject of
the freeze order if the amount or value involved is not commensurate with the business or
financial capacity of the said family or household member;
7. All accounts of corporate and juridical entities that are substantially owned, controlled or
effectively controlled by the person whose accounts, monetary instruments or properties are
subject of the freeze order;
8. All shares or units in any investment accounts and/or pooled funds of the person whose
accounts, monetary instruments or properties are subject of the freeze order; and
9. All other accounts, shares, units or monetary instruments that are similar, analogous or
identical to any of the foregoing.
4.

The Legal Group shall submit, within 24-hours from receipt of the Freeze or Preservation Order, a
written-return to Court of Appeals/Regional Trial Court, Anti-Money Laundering Council and
furnish Global AML Compliance Division Head and Chief Compliance Officer copy of the duly filed
return-compliance.

5.

Legal Group is expected to maintain an enterprise database of Freeze Order/Asset Preservation


Order and must be updated regularly to reflect status/actions taken on specific court order.

Glossary of Anti-Money Laundering Terms


Money laundering, in general, is the name given to the process by which the origin of illicit funds is
disguised. The need to indulge in money laundering is primarily to cover up the means by which such
funds have been acquired with the aim of legitimizing them. According to the United Nations, the term
Money Laundering is defined as Any act or attempted act to disguise the source of money or assets
derived from criminal activity. It is the process whereby dirty money produced through criminal
activity- is transformed into clean money. The terms given below are arranged here to for information
purpose only and might not have any standing for legal purposes etc.
Covered Institution - shall refer to Banks, Offshore banking units, quasi-banks, trust entities, non-stock
savings and loan associations, pawnshops, foreign exchange dealers, money changers, remittance
agents, electronic money issuers and other financial institutions which under special laws are subject to
BSP supervision and/or regulation, including their subsidiaries and affiliates as herein defined wherever
they may be located:
Subsidiary - means an entity more than fifty percent (50%) of the outstanding voting stock of which is
owned by a bank, quasi-bank, trust entity or any other institution supervised and/or regulated by the
BSP.

Affiliate - means an entity the voting stock of which, to the extent of fifty percent (50%) or less, is owned
by a bank, quasi-bank, trust entity, or any other institution supervised and/or regulated by the BSP.

Bank Secrecy -This prohibits banks to disclose information about an account without the consent of the
consumer.
Beneficial Owner - The person(s) entitled to the benefits of ownership even though another party such
as a broker or bank - the nominal owner - actually has possession and title to the security.
CFT - Countering Financing of Terrorism
EDD - Enhanced Due Diligence
EFT- Electronic Funds Transfer
Foreign Shell Bank - A foreign Bank without a physical presence in any country and has no
employees.
Forfeiture -When the government or a regulatory authority confiscates property or assets due to failure
to comply with law.
Front Company -It is the company used by the money launderer for the purpose of
concealing the true identity of the owner
Gate Keepers- Gate Keepers is a term that is being applied to qualified professionals such as lawyers,
accountants etc that can facilitate the laundering of money or assets to enable the conversion and
ultimate inclusion of the assents in legitimate financial circles.
INTERPOL - International Police Organization, based in France Integration It is the third stage of money
laundering process in which the funds are moved back into the country of origin at which stage the
black money is whitened. Other two stages are Placement and Layering.
KYB - Know Your Business
KYC- Know Your Customer/Client.
KYCB - Know Your Correspondent Bank
KYCC - Know Your Customers Customer
KYE - Know Your Employee
Layering - It is the second stage of money laundering process in which funds are either transferred to
another account somewhere around the world on a false pretext or are used to buy
securities/instruments so as to move the funds away from the source.

Money Services Business (MSB). -This include non-bank financial institutions, currency dealers,
exchange companies and travelers cheque issuers.
OFAC - The Office of Foreign Assets Control of the United States
PEP Politically Exposed Persons:- Individuals who are prominent public functionaries.
Predicate Offences Crimes - underlying money laundering or terrorist financing activity.
These may include drug trafficking, gambling and prostitution rings, arms trade, smuggling, and even
embezzlement, insider trading, bribery etc.
Red Flag - A potentially suspicious or money laundering situation raises a Red Flag, a warning signal
Safe Harbor -A provision in law that provide protection to financial institutions, NFBP and their officers
from civil or criminal liability for disclosing/furnishing information, suspicious transaction reporting etc
STR - Suspicious Transaction Report
Shell Bank - A bank that exists merely on paper. It does not have a physical presence in any country
Smurfing -This entails a process whereby many individuals deposit cash or purchase bank drafts in
amounts just under the reporting threshold.
Typology - A term used by FATF and APG to refer to money laundering and terrorist financing methods
and techniques.