Anti-Terrorist Financing Regulations

(Article published in the Aug 22,2012 issue of Manila Standard Today)

Banks, insurance companies, companies, and all other institutions supervised or rulated by the
Banko Sentral ng Pilipinas (BSP) or the Insurance Commission (IC), or the Securities and Exchange
Commission (SEC) must secure pronto copies of the recently issued Implementing Rules and Regulations
(the “Regulations”) of Republic Act No. 10168. Republic Act No. 10168, among other things, criminalized
the financing of terrorism, thereby asserting to the international community, in unmistakeable terms, that
we are one with them in combating the common enemy called Terrorism.

The Regulations is available at our Anti-Money Laundering Council’s website and was published
in print in another broadsheet of general circulation in the second week-end of this August. It is a “must
read” not only for those involved in the handling of the flow of money but also for those interested in
drafting instructions for bureaucrats, both in government or in the private sector. Its greatest virtue,
almost to a fault, is its completeness. It is so detailed that, if I may be permitted to engage in some
exaggeration, it is like a how-to-sleep-well book that tells you on which side of the bed to sleep every
night of the calendar month of the year.

The mountain of detail in the Regulations, in fairness, is justified. R.A. No. 10168 is so drastic a
measure and so demanding of the persons directly affected (so much so that, from the point of view of
the more liberal amongst us, it can be seen as bordering on the undue invasive of one’s human rights,
particularly privacy), precisely because terrorism is, by nature indiscriminate as to victim and by design
geographically widespread. Terrorism is a menace that itself violates the humanity of everyone affected
in some way or another, be he or she a holder of high position and a video game addict, or both.
Consequently, its implementing rules cannot do justice to the law’s mission and vision without the
corresponding and necessary minutia.

A clear example is the trouble that the Regulations went through to show who can be tagged as
a terrorist with whom we ought, generally, not to have any financial dealings. To ensure that no one is
accidentally so tagged and irrationally dealt with, the Regulations went through a two-step process.

First, it took time to define the process of “designation” or “listing” of a terrorist. Rule 3.a.6 says
that the term “designation” or “listing” means “the identification of a person, organization, association,
or group of persons that is subject to targeted financial sanctions pursuant to the applicable United
Nations Security Council Resolutions.” Obvious is the attempt to stress that the process of designation or
listing of terrorists and terrorist organizations is not at all random like carpet bombing that used to be
done by attacking World War II airplanes. Instead, it is as scalpel-sharp and as laser-precise as post-War
of Iran guided missiles. Moreover, there is the assurance that the sanctions to be imposed on persons
and entities who had the misfortune of being so labelled are not purely local and home-grown. The
sanctions that can be imposed on those identified as terrorist are only those that can be imposed
“pursuant to the applicable United Nations Security Council Resolutions.”

In the same vein, the Regulations further insures that it neither adds to nor subtracts from what
R.A. No. 10168 itself considers “designated persons.” For this reason Rule 3.a.5 copies word for word
Section 3(e) of the law that defines a designated person. While the word “any” which precedes each
group of items enumerated suggests a broad sweep, the precision in listing of those mentioned,
characterized by the citation of the specific chapter and verse of local law, bars the temptation to expand
its scope beyond what the law intended.

Stickler that it is to precision, the Regulations, nevertheless, is not averse to completion; where
definitely beneficial to stakeholders, the Regulations does not hesitate to give, for their guidance, a
copious enumeration of instances that are clearly within the law, albeit only by reference.

Section 17 of R.A. No. 10168 makes the financing of terrorism, as principal (by direct participation
or being a conspirator) or as accomplice, or as accessory, a “predicate offense” to money laundering and
therefore “subject to its suspicious transaction reporting requirement.” The question for stakeholders on
the ground is therefore what facts that a covered institution becomes aware of would trigger an obligation
to report as suspicious of terrorist financing. The text of R.A. No. 10168 does not say.

But the Regulations is happy to oblige. Rule 3.a.15 list the covered institutions a long list—as
many as 15 triggering circumstances, inclusive of the all-embracing “any other transaction that is similar,
identical, or analogous...” Among the more outstanding ones are (a) “wire transfers, between accounts,
without visible legal, economic, or business purpose, especially if the wire transfers are effected through
countries which are identified or connected with terrorist activities, (b) “repetitive deposits or
withdrawals that cannot be satisfactorily explained or do not make economic or business sense; (c)
“Transactions of individuals, companies, or Non-Governmental Organizations (NGOs)/Non-Profit
Organizations (NPOs) that are affiliated or related to people suspected of having connection with a
terrorist individual, organization, association or group of persons.”
 What jumps out of the page is both adherence to the letter and thoroughness beyond compare with
respect to its spirit. Once again, it puts the heavy burden of knowing-your-client (KYC) where it belongs,
on the sturdy shoulders of the covered, particularly financial, institutions.

REF: http://www.thetrustguru.com/mstoday/mstoday082212.htm
AMLC releases implementing rules of
Terrorist Financing Prevention Act
By Prinz Magtulis (The Philippine Star) | Updated August 12, 2012 - 12:00am

MANILA, Philippines - The Anti-Money Laundering Council (AMLC) has released the implementing rules
and regulations (IRR) of the newly enacted law criminalizing terrorist financing activities.

The IRR for Republic Act (RA) No. 10168 or “The Terrorist Financing Prevention and Suppression Act of
2012” takes effect 15 days after its publication in a national daily and in the Official Gazette.

Bank examination procedures as well as rules and exemptions on freezing of bank deposits were among
the salient features of the law spelled out in the IRR.

The law empowers the AMLC to freeze bank accounts ex parte or without a court order or the need to
notify the depositor concerned.

Once the IRR becomes effective, AMLC executive director Vicente Aquino said banks and non-bank
financial institutions “must report” any transactions involving property or funds with possible terror links.

“Also, failure on the part of covered institutions, including banks and relevant government agencies, to
comply with the AMLC’s freeze order is a criminal offense under the law,” Aquino explained in a text
message.

The IRR said AMLC may examine bank accounts “upon determination of probable cause” from a relevant
court.

Suspected accounts may be frozen for a maximum of 20 days by AMLC even without informing the
account holders. This could be extended up to six months upon order of the Court of Appeals (CA), the
IRR stated.

Before the new law was passed, freezing of accounts could only be done with a court order.

Meanwhile, once investigation commences, concerned banks and non-bank financial institutions are
expected to “promptly” give the AMLC “full access” to deposits under probe.

The IRR also provides for three instances when freezing of accounts may be partially or fully lifted. First is
when a depositor concerned turns out to be a victim of mistaken identity.

The IRR’s Rule 23 states that a claim of mistaken identity should be filed with the AMLC.

The second instance is when a person being probed gets de-listed from the roster of suspected terrorists
by the United Nations Security Council al-Qaeda Sanctions Committee, which punishes individuals with
connections to the terror network.

The third allows suspected terror financier to withdraw from his frozen accounts, as determined by the CA
or AMLC, to be “reasonably needed for monthly family needs and sustenance.”
Funds to be withdrawn shall cover basic expenses such as payments for food, rent or mortgage,
medicine, public utility charges and taxes. Legal fees needed during the trial are also covered.

The enactment of RA 10168 and RA 10167 or “An Act to Further Strengthen the Anti-Money Laundering
Law” last month saved the country from being blacklisted by the Financial Action Task Force (FATF), a
regional anti-money laundering organization of which the Philippines is a member.

A blacklist or a downgrade from the Paris-based FATF would make it more difficult and expensive for
foreign money, notably remittances from overseas Filipinos, to enter the country.

After the passage of the two laws, FATF eventually raised the Philippines’ standing to the “gray list” from
the “dark gray list.”

The IRR, dated Aug.6, was signed by Bangko Sentral ng Pilipinas Gov. Amando Tetangco as AMLC
chairman, and Securities and Exchange Commission chair Teresita Herbosa and Insurance Commission
chief Emmanuel Dooc as members.

Meanwhile, the military lauded the release of the IRR.

“This will enhance further our global fight against terror,” Armed Forces of the Philippines spokesman Col.
Arnulfo Burgos said. “While we have already the Human Security Act, we are having difficulty in tracing
the money trail of suspected terror groups. With this new law and through the ATC, it would be somewhat
easy for us trace the source of terror funds,” Burgos said. – With Jaime Laude

REF:http://www.philstar.com/headlines/2012/08/12/837458/amlc-releases-implementing-rules-
terrorist-financing-prevention-act

REF: (PDF Combating Terrorism) http://www.un.org/en/sc/ctc/specialmeetings/2012/docs/philippines-

1373%20presentation%20(11.20.12).pdf
Senate passes 3rd AMLA
amendment
By: Kate Evangelista - @inquirerdotnet
INQUIRER.net / 05:47 PM June 06, 2012

MANILA, Philippines – The Senate on Wednesday approved on third and final reading
Senate Bill 3127 or the Terrorism Financing Prevention and Suppression Act of 2012
which will allow authorities to look into and freeze bank accounts of suspected terrorist
groups without a court order.

SB 3127, sponsored by Senators Teofisto Guingona III and Sergio Osmeña III, amends
Republic Act 9160 or the Anti-Money Laundering Act of 2001 which states that the
Anti-Money Laundering Council is authorized to freeze any account only upon
confirmation of probable cause to do so. The amendment would include terrorist
financing in its coverage.

Guingona said the bill defines terrorist financing as “any person who directly or
indirectly, willfully and unlawfully provides, collects or uses property or funds, or
makes available property, funds financial services or other related services” with the
intent of supporting terrorist activities. The bill will also criminalize terrorist financing
as “an independent punishable offense.”

“Approval of this important measure is a positive step towards thwarting terrorism by

slashing its ultimate lifeline – financing. Criminalizing the act of terrorist financing is in
compliance with our international commitments, in particular, the United Nations
International Convention for the Suppression of Terrorist Financing, which the Senate
concurred with on January 7, 2004,” Guingona said.

The bill will also allow the government to run after those involved in international
terrorist-financing activities, the Senator said. The bill allows the Philippines, “subject
to the principle of reciprocity, consider the International Convention for the
Suppression of the Financing of Terrorism as a legal basis for requesting or granting
extradition in respect of the offenses set forth under the Act.”

“Unlike before when the government found it difficult to run after internationally
funded terrorist activities, the government can now take action and request for foreign
assistance, such as in extradition of suspects,” Guingona said.

SB 3127 is one of the three bills amending RA 9160 which the Senate needs to pass in
order for the Philippines not to be blacklisted by the Financial Action Task Force
(FATF).

The FATF is a Paris-based inter-governmental body which develops and promotes

policies against money laundering and terrorist financing. FATF will be assessing the
progress made by the Philippines in the fight against money laundering from June 18 to
22.

The other bills are SB 3009, which would introduce a new provision on ex-parte
applications for bank inquiries and SB 3123 which aims to expand the coverage of the
AMLA to several institutions and individuals like foreign exchange corporations,
money changers, remittance and transfer companies, pre-need firms, casinos, real estate
agents and dealers of precious minerals.

Earlier on Wednesday, the bicameral conference committee approved SB 3009 during

the Senate’s Wednesday plenary session, said that the Congress agreed to adopt the
senate version of SB 3009 as its working bill. The Senate, in its plenary session,
approved and ratified the result of the bicameral meeting.

REF: http://newsinfo.inquirer.net/207953/senate-passes-3rd-amla-amendment