GROUP 2

ANTI-MONEY LAUNDERING ACT

(GENERAL PROVISIONS, AMLC AND AMLC SECRETARIAT)

Members: BACATAN, LUISA O.

BELDUA, KENNETH VINCENT P.
Introduction:

The global scale of money laundering financial crime severely impacts every nation’s economic
development. It thrives particularly in countries with weak legislation and control over financial
institutions giving opportunity for criminals to inject and circulate illegal cash into national
financial systems with the appearance of normal business profits and cash flows.

According to a United Nations Office on Drugs and Crime report, criminal syndicates in 2009
have laundered approximately $1.6 Trillion, or 2.7% of the global GDP, consistent with the 2 to
5 percent range estimated by sources at the International Monetary Fund on the scale of
money-laundering.1

What is money laundering? How does it affect our society and our economy? What is the
government’s action in fighting this transnational organized crime?

Money Laundering

Money laundering is defined as the processing of criminal proceeds to disguise

its illegal origins.2 It allows criminals to enjoy their profits without jeopardizing their
source.3 It is a crime whereby the proceeds of an unlawful activity are transacted,
thereby making them appear to have originated from legitimate sources.4

It is a way to conceal illegally obtained funds 5 and works by transferring money in
elaborate and complicated financial transactions which mislead anyone who may
seek to trace and review the transactions. 6 The objective is to make it difficult to
identify the original party to the transaction, known as the launderer.7 However, at the
end of the convoluted scheme, the funds ultimately return back to the launderer.8

There are three stages involved in money laundering and these are:

(1) Placement
1 United Nations Office on Drugs & Crime (UNODC). Money: How much is out there?, UNODC.ORG, October 25,
2011. Available at: https://www.unodc.org/unodc/en/frontpage/2011/October/illicit-money_-how-much-is-
out-there.html.

2 Financial Action Task Force (FATF-GAFI). What is money laundering?, FATF-GAFI.ORG|FAQ|MONEY

LAUNDERING. Accessed on June 24, 2020. Available at: https://www.fatf-gafi.org/faq/moneylaundering/

3 Id.

4 RA 9160, AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING PENALTIES THEREFOR AND FOR
OTHER PURPOSES. Sec. 4, September 29, 2001.

5 Id.

6 Id.

7 Id.

8 Id.
 This stage is where the cash from its source is placed into circulation through
financial institutions, casinos, shops, bureau de change and other businesses,
both local and abroad.

(2) Layering
This stage is created to make the detection of laundering activity more difficult for
the law enforcement agencies. An example of such is cash converted into
monetary instruments.

(3) Integration
This is the movement of previously laundered money into the economy mainly
through the banking system and thus such monies appear to be normal business
earnings.9

Effect of Money Laundering to our society

The negative economic effects of money laundering on economic development are

difficult to quantify, yet it is clear that such activity damages the financial-sector
institutions that are critical to economic growth, reduces productivity in the
economy's real sector by diverting resources and encouraging crime and corruption,
which slow economic growth, and can distort the economy's external sector—
international trade and capital flows—to the detriment of long term economic
development.10 Developing countries' strategies to establish offshore financial
centers (OFCs) as vehicles for economic development are also impaired by
significant money laundering activity through OFC channels. 11 Effective anti-money-
laundering policies, on the other hand, reinforce a variety of other good-governance
policies that help sustain economic development, particularly through the
strengthening of the financial sector.12

Money laundering impairs the development of financial institutions for two reasons. 13
First, money laundering erodes financial institutions themselves due to the
correlation between money laundering and fraudulent activities undertaken by
employees.14 At higher volumes of money-laundering activity, entire financial
institutions in developing countries are vulnerable to corruption by criminal elements

9 United Nations Office On Drugs & Crime (UNODC).The Money Laundering Cycle, UNODC.ORG, Available at:
https://www.unodc.org/unodc/en/money-laundering/laundrycycle.html?
fbclid=IwAR1NUNBYkFs1ZEa08Oe68OyIPrgIXpT8r9tikKG1NDA1mJH9t4aCIyZw5Bc

10 Asian Development Bank (ADB), 2003. Manual on Countering Money Laundering and the Financing of
Terrorism, p. 14. ADB. Available at: https://www.adb.org/sites/default/files/publication/27932/countering-
money-laundering.pdf.

11 Id.

12 Id.

13 Id.

14 Id.
 seeking to gain further influence over their money-laundering channels. 15 Second,
particularly in developing countries, customer trust is fundamental to the growth of
sound financial institutions, and the perceived risk to depositors and investors from
institutional fraud and corruption is an obstacle to such trust.16

The integrity of the banking and financial services marketplace depends heavily on
the perception that it functions within a framework of high legal, professional and
ethical standards.17 A reputation for integrity is the one of the most valuable assets of
a financial institution.18 As for the potential negative macroeconomic consequences
of unchecked money laundering, one can cite inexplicable changes in money
demand, prudential risks to bank soundness, contamination effects on legal financial
transactions, and increased volatility of international capital flows and exchange
rates due to unanticipated cross-border asset transfers.19 Also, as it rewards
corruption and crime, successful money laundering damages the integrity of the
entire society and undermines democracy and the rule of the law.20

Government Actions

Rapid developments in financial information, technology and communication allow

money to move anywhere in the world with speed and ease.21 This makes the task of
combating money-laundering more urgent than ever.22

The deeper "dirty money" gets into the international banking system, the more
difficult it is to identify its origin. 23 Because of the clandestine nature of money-
laundering, it is difficult to estimate the total amount of money that goes through
the laundry cycle.24

Launderers are continuously looking for new routes for laundering their funds.
Economies with growing or developing financial centers, but inadequate controls, are
particularly vulnerable as established financial center countries implement
comprehensive anti-money laundering regimes.25

15 Id.

16 Id.

17 FATF, supra note 2.

18 Id.

19 Id.

20 Id.

21 Financial Action Task Force (FATF-GAFI). Money Laundering and Globalization, FATF-GAFI.ORG|FAQ|MONEY
LAUNDERING. Accessed on June 24, 2020. Available at: https://www.fatf-gafi.org/faq/moneylaundering/
https://www.unodc.org/unodc/en/money-laundering/globalization.html

22 Id.

23 Id.

24 Id.
 Differences between national anti-money laundering systems will be exploited by
launderers, who tend to move their networks to countries and financial systems with
weak or ineffective countermeasures.26

It is critically important that governments include all relevant voices in developing a

national anti-money laundering program.27 They should, for example, bring law
enforcement and financial regulatory authorities together with the private sector to
enable financial institutions to play a role in dealing with the problem. 28 This means,
among other things, involving the relevant authorities in establishing financial
transaction reporting systems, customer identification, record keeping standards and
a means for verifying compliance.29

International Efforts

In response to mounting concern over money laundering, the Financial Action Task
Force on money laundering (FATF) was established by the G-7 Summit in Paris in
1989.30 One of the first tasks of the FATF was to develop Recommendations, 40 in
all, which set out the measures national governments should take to implement
effective anti-money laundering programs.31

International organizations, such as the United Nations or the Bank for International
Settlements, took some initial steps at the end of the 1980s to address the problem. 32
Following the creation of the FATF in 1989, regional groupings – the European
Union, Council of Europe, Organization of American States, to name just a few –
established anti-money laundering standards for their member countries. 33 The
Caribbean, Asia, Europe and southern Africa have created regional anti-money
laundering task force-like organizations, and similar groupings are planned for
western Africa and Latin America in the coming years.34

Domestic Efforts

25 FATF, supra note 2.

26 Id.

27 Id.

28 Id.

29 Id.

30 FATF. History of the FATF. FATF-GAFI.ORG|FAQ|HISTORY. Accessed on June 24, 2020. Viewable at:
https://www.fatf-gafi.org/about/historyofthefatf/ .

31 ADB, supra note 10, at 4.

32 FATF, supra note 2.

33 Id.

34 Id.
 In the Philippines, RA 9160 otherwise known as the Anti-Money Laundering Act of
2001 (AMLA) was enacted. Its policy is to protect and preserve the integrity and
confidentiality of bank accounts and to ensure that the Philippines shall not be used
as a money laundering site for the proceeds of any unlawful activity 35. It shall also
extend cooperation in transnational investigations and prosecutions of persons
involved in money laundering activities whenever committed.36

RA 10168 otherwise known as The Terrorism Financing Prevention and Suppression

Act of 2012 (TFPSA) is likewise enacted. Its policy is to protect life, liberty, and
property from acts of terrorism and to condemn terrorism and those who support and
finance it and to recognize it as inimical and dangerous to national security and the
welfare of the people, and to make the financing of terrorism a crime against the Filipino
people, against humanity, and against the law of nations. 37 Likewise, it recognizes and
adheres to international commitments to combat the financing of terrorism, specifically to
the International Convention for the Suppression of the Financing of Terrorism, as well
as other binding terrorism-related resolutions of the United Nations Security Council
pursuant to Chapter 7 of the Charter of the United Nations. 38 The State shall reinforce its
fight against terrorism by criminalizing the financing of terrorism and related offenses,
and by preventing and suppressing the commission of said offenses through freezing
and forfeiture of properties or funds while protecting human rights. 39

Anti-Money Laundering Council

By virtue of R.A. 9160 otherwise known as Anti-Money Laundering Act of 2001, The
Anti-Money Laundering Council (AMLC) was created. It is an independent
government instrumentality mandated to implement the AMLA and TFPSA. 40 The
Council was created to protect the integrity and confidentiality of bank accounts and
to ensure that the Philippines shall not be used as a money laundering site for the
proceeds of any unlawful activity.41 It is the Philippine’s Financial Intelligence Unit.42 It
upholds the continuous development of a team of highly ethical and professional
personnel and implements efficient processes in the delivery of its mandate.43

35 R.A. 9160, Sec. 2.

36 Id.

37 REPUBLIC ACT NO. 10168, AN ACT DEFINING THE CRIME OF FINANCING OF TERRORISM, PROVIDING
PENALTIES THEREFOR AND FOR OTHER PURPOSES, 15th Congress. Sec. 2. June 20, 2012

38 Id.

39 Id.

40 2018 Implementing Rules and Regulations (IRR) of Republic Act No. 9160, as amended, Chapter 2, Rule 5, Sec.
1.1.

41 R.A. 9160, Sec. 2.

42 2018 IRR, R.A. 9160, Chapter I, Rule 1, Sec. 3(a).

43 Id.
 The AMLC is responsible in safeguarding the integrity and independence of its
operations.44 It shall ensure the confidentiality of its records and the security of its
systems, and limit access to its premises to authorized persons.45

The AMLC’s vision is to be a world-class financial intelligence unit that will help
establish and maintain an internationally compliant and effective anti-money
laundering regime which will provide the Filipino people with a sound, dynamic, and
strong financial system in an environment conducive to the promotion of social
justice, political stability, and sustainable economic growth.46

The Council is composed of the following:

1. Chairperson – Governor of Bangko Sentral ng Pilipinas;

2. Member – Commissioner of the Insurance Commission;
3. Member – Chairperson of the Securities and Exchange Commission47

The AMLC shall act unanimously in the discharge the following functions as provided
for under R.A. 9160:
(1) to require and receive covered transaction reports from covered institutions;
(2) to issue orders addressed to the appropriate Supervising Authority or the
covered institution to determine the true identity of the owner of any monetary
instrument or property subject of a covered transaction report or request for
assistance from a foreign State, or believed by the Council, on the basis of
substantial evidence, to be, in whole or in part, wherever located, representing,
involving, or related to, directly or indirectly, in any manner or by any means, the
proceeds of an unlawful activity;
(3) to institute civil forfeiture proceedings and all other remedial proceedings
through the Office of the Solicitor General;
(4) to cause the filing of complaints with the Department of Justice or the
Ombudsman for the prosecution of money laundering offenses;
(5) to initiate investigations of covered transactions, money laundering activities
and other violations of this Act;
(6) to freeze any monetary instrument or property alleged to be proceeds of any
unlawful activity;
(7) to implement such measures as may be necessary and justified under this
Act to counteract money laundering;
(8) to receive and take action in respect of, any request from foreign states for
assistance in their own anti-money laundering operations provided in this Act;

44 2018 IRR, R.A. 9160, Chapter II, Rule 5, Sec. 1.2.

45 2018 IRR, R.A. 9160, Chapter II, Rule 5, Sec. 1.3.

46 Anti-Money Laundering Council. Vision. AMLC.GOV.PH| ABOUT US. Republic of the Philippines. Viewable at:
http://www.amlc.gov.ph/about-us

47 R.A. 9160, Sec. 7.

 (9) to develop educational programs on the pernicious effects of money
laundering, the methods and techniques used in money laundering, the viable
means of preventing money laundering and the effective ways of prosecuting and
punishing offenders; and
(10) to enlist the assistance of any branch, department, bureau, office, agency or
instrumentality of the government, including government-owned and -controlled
corporations, in undertaking any and all anti-money laundering operations, which
may include the use of its personnel, facilities and resources for the more
resolute prevention, detection and investigation of money laundering offenses
and prosecution of offenders.48

AMLC Secretariat

The Council shall establish and organize the AMLC Secretariat to assist in the
discharge of its functions.49 It shall, in accordance with its authority, determine and
provide for such operating units and other offices of the AMLC as may be necessary
and appropriate for the proper and efficient conduct of the operations and the
accomplishment of the objectives of the AMLC.50 The functions and duties of such
operating units and other offices shall be determined by the Council. 51 Provided, that
the determination of the appropriate number and rank of its personnel shall be
subject to the approval of the BSP’s Monetary Board.52

The AMLC secretariat shall be headed by the Executive Director. He shall be

appointed by the Council for the term of 5 yrs.

Qualifications of the Executive Director as provided for under the law are as follows:

1. Must be a member of the Philippine Bar;

2. 35 years of age;
3. With good moral character, unquestionable integrity, and known probity;53
4. Have served, continuously or cumulatively, for, at least, five (5) years either at
the BSP, the SEC or the IC;54

Qualifications for the members of AMLC Secretariat are as follows:

48 RA 9160, Sec. 7.

49 2018 IRR, R.A. 9160, Chapter II, Rule 5, Sec. 3.1.

50 Id.

51 Id.

52 Id.

53 R.A. 9160, Sec. 8.

54 2018 IRR, R.A. 9160, Chapter II, Rule 5, Sec. 4.

 1. Must have served 5 years, continuously or cumulatively 55, either in the Insurance
Commission , the Securities and Exchange Commission, or the Bangko Sentral
ng Pilipinas;56

The members of the AMLC Secretariat shall hold fulltime permanent position within
the BSP.57

The Executive Director shall be the chief executive officer of the AMLC, and shall
perform the following functions as delegated by the Council:

(a) to act, in such capacity and in accordance with the specific instructions from the
Council, as the principal representative of the Council and of the AMLC, in all
dealings with other agencies of the government and all other persons or entities,
public or private, whether domestic or international;

(b) to prepare the agenda for the meetings of the Council, and submit for
consideration of the Council policies and measures necessary to carry out the
purposes and provisions of the AMLA and TFPSA;

(c) to supervise the execution and administration of policies and measures approved
by the Council;

(d) to direct and supervise the operations and internal administration of the AMLC.
The Executive Director may delegate certain of his administrative responsibilities
to other officers or may assign specific tasks or responsibilities to any unit of the
AMLC whenever he may deem fit or subject to such rules and regulations as the
Council may prescribe;

(e) to sign administrative issuances “For the AMLC” on policies and measures
already approved, and subject to conditions imposed, by the Council;

(f) to exercise functions that may be delegated by the Council under such guidelines
it may determine, and such other functions that are incidental and necessary
thereto.58

Conclusion:

The effects of a weak policy and ineffective measures governing a nation’s financial system
damages and distorts the economic development. The failure to act upon the flow of illegal
funds and its integration to the financial system erodes the integrity of the financial institutions,
55 2018 IRR, R.A. 9160, Chapter II, Rule 5, Sec. 3.2.

56 RA 9160, supra note 4, at Sec. 8.

57 Id.

58 2018 IRR, R.A. 9160, Chapter II, Rule 6, Sec. 2..

thus allowing the proliferation of transnational organized crime. By interrupting the laundering
process, it cuts off the funding and resources of criminal sydicates and other groups, such as
terrorists and traffickers.

R.A. 9160 otherwise known as The Anti-Money Laundering Act of 2001, as amended, was
enacted to address the global problem of money laundering practiced by criminals involving
financial institutions world-wide. The enactment of the law protects and preserves the integrity
and confidentiality of bank accounts and ensures that Philippines shall not be used as a money
laundering destination for the proceeds of any unlawful activity.59 This law as formulated is
consistent with larger legislative efforts to secure the rights of every Filipino to life, liberty, and
property as enshrined in our Constitution

[ends]

59 R.A. 9160, Sec. 2.