How does the law define money laundering?

Section 4 of Republic Act (RA) 10365, otherwise known as the "Anti-Money Laundering Act of 2001", defines money laundering offenses as follows:

"SEC. 4. Money Laundering Offense. – 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:

"(a) transacts said monetary instrument or property;

"(b) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property;

"(c) conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property;

"(d) attempts or conspires to commit money laundering offenses referred to in paragraphs (a), (b) or (c);

"(e) aids, abets, assists in or counsels the commission of the money laundering offenses referred to in paragraphs (a), (b) or (c) above; and

"(f) performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraphs (a), (b) or (c) above.

"Money laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under this Act to be reported to the Anti-Money Laundering Council (AMLC), fails to do so."

Pertinent to the foregoing, the separate opinion of Associate Justice Amy Lazaro-Javier in the recent case of Lingad vs. People (GR 224945, Oct. 11, 2022), an En banc decision of the Supreme Court, is illuminating regarding the permutation of the definition of money laundering, thus:

"The definition in the amended Section 4 of RA 10365 is the prevailing definition of Money Laundering to date.

"Note the permutations of the definition of money laundering in Section 4:

"any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity

"(a) transacts said monetary instrument or property;

"(b) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property;

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"(c) conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property;"

Applying the foregoing, the prevailing definition of money laundering is the act of transacting a monetary instrument or property; or the conversion, transfer, disposal of, moving, acquiring, possessing or use of said monetary instrument, or property; or the concealment or disguise of the true nature, source, location, disposition, movement, or ownership of or rights with respect to said monetary instrument or property — by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity.

In addition, money laundering is also defined as the failure to report to the Anti-Money Laundering Council of any covered person who, knowing that a covered or suspicious transaction is required under the anti-money laundering Act to be reported.

Source: Manila Times

PHL faces blacklisting risk by FATF

The Philippines’ continued inclusion in the Financial Action Task Force’s (FATF) “gray list” may result in reputational consequences, as well as increases the likelihood of inclusion in the dirty money watchdog’s blacklist, the Anti-Money Laundering Council (AMLC) said. 

This, as President Ferdinand R. Marcos, Jr. earlier directed the AMLC and all government agencies to work on exiting the gray list by October this year, after failing to meet the January deadline. 

The Philippines has been under the FATF’s gray list of countries under increased monitoring for money laundering and terrorism financing risks for two years and seven months or since June 2021.

In an e-mail interview with BusinessWorld, AMLC Executive Director Matthew M. David said the FATF only encourages its members and all jurisdictions to consider the FATF information on the listed country in their financial dealings.   

“Nevertheless, continued inclusion in the gray list may pose some reputational consequences, with some financial institutions considering Philippine-related transactions to be of higher risk,” he said.   

“Continuous inclusion in the FATF gray list also increases risk of blacklisting.”

Despite remaining in the gray list, Mr. David noted the FATF has not called for enhanced due diligence or any countermeasures against the Philippines.   

“In published statements of the FATF, it has recognized the high-level political commitment of the Philippine government in addressing its deficiencies,” he said.

“Furthermore, the FATF has recognized progress made by the Philippines in strengthening its anti-money laundering and combating the financing of terrorism regime.”

In October 2023, the FATF said the country needs to further strengthen its action plan to address strategic deficiencies related to casino junkets, nonprofit organizations, and beneficial ownership.   

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. earlier said that if the Philippines failed to exit the gray list this year, correspondent banks may start to cut ties with the Philippines. These are financial institutions that provide services to another bank, usually in another country.

But Mr. Remolona has said the country is unlikely to be blacklisted by the FATF.

According to Mr. David, if a country is placed on the FATF’s blacklist of countries with high risk of money laundering and terrorism financing, countermeasures may be imposed.

Financial institutions from other jurisdictions may be prohibited from establishing subsidiaries, branches, or offices in the country. These institutions will not be able to rely on third parties located in the blacklisted country as well.

Financial institutions would be required to review, amend, or terminate any correspondent relationships with banks and other financial firms in the blacklisted country, Mr. David said.   

Other countries would also increase its supervisory examination and external audit requirements for branches and subsidiaries of financial institutions.

Asked if there is a possibility that the Philippines will be blacklisted, Mr. David said the AMLC is optimistic the country will be able to address all deficiencies identified by the FATF within the year.

He said all measures needed to strengthen the country’s anti-money laundering/countering the financing of terrorism (AML/CFT) system are producing good results. 

“All agencies should continue this momentum to eventually exit the gray list. What is crucial now is the support from the private sector,” he said.   

The Paris-based FATF re-included the Philippines in the gray list in June 2021 after the country failed a mutual evaluation by the Asia Pacific Group on Money Laundering. 

The body earlier identified 18 deficiencies in the country’s measures against money laundering and terrorist and proliferation financing. The AMLC said eight are still outstanding.   

To avoid being blacklisted, a whole-of-nation approach is needed to address the eight strategic deficiencies identified by the FATF, which are clustered into five action plans, Mr. David said.

First, relevant government agencies should demonstrate effective risk-based supervision of designated nonfinancial businesses and professions (DNFBPs), he said.

“This includes the registration as covered persons by lawyers, accountants, company service providers, jewelry dealers and real estate developers and brokers with the AMLC,” he said.

“Corporations should also increasingly submit their beneficial ownership declarations to the Securities and Exchange Commission (SEC) to further enhance the country’s beneficial ownership database.”

He said all registered DNFBPs are subjected to risk profiling and compliance examinations. These nonfinancial firms should also increase the filing of transaction reports to the AMLC. 

Meanwhile, designated authorities or nonpublic bodies should use the proper AML/CFT controls to mitigate risks in casino junkets.   

“The Philippine Amusement and Gaming Corp. should ensure that casinos are able to apply fit and proper rules and conduct customer due diligence on both the junket operator and the individual junket players. The appropriate sanctions should be implemented on casinos who fail to do so,” he said.   

The Philippines should also increase its money laundering and terrorism financing investigations and prosecutions, he said.

Aside from the AMLC, relevant law enforcement agencies should file more ML/TF financing criminal cases with the Department of Justice and courts.   

Cross-border measures should also be applied to all main sea or airports of the country, Mr. David said.

“The Bureau of Customs should continue to enhance implementation of cross-border declaration measures across all international air and seaports. This should include increasing capacity for the detection of false declarations and corresponding confiscation actions should be made,” he said.   

All AML/CTF stakeholders such as supervisors, regulators, law enforcement agencies, prosecutors, other government agencies, and covered persons in the private sectors should address the deficiencies wherever applicable, he added.

In October 2023, Mr. Marcos required the urgent implementation of the government’s National Anti-Money Laundering, Counter-Terrorism Financing and Counter-Proliferation Financing Strategy 2023-2027 and ordered concerned agencies to support efforts against money laundering and terrorism financing.

Only three countries are currently in the FATF’s blacklist — North Korea, Iran and Myanmar.

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework.

The Philippines was removed from the blacklist in 2003 after the passage of Republic Act (RA) No. 9160 or the Anti-Money Laundering Act of 2001 as well as its amendments through RA 9194.

Source: Business World

PH told to plug gaps in dirty money control

The Paris-based Financial Action Task Force (FATF) asked the Philippine government to swiftly implement its action plan to address strategic deficiencies on anti-money laundering (AML) campaign and combatting the financing of terrorism (CFT).

The Philippines was added to the “grey list” in June 2021. Jurisdictions under this list are under increased monitoring by the watchdog.

FATF said that when a jurisdiction is under increased monitoring, it means the country “has committed to resolve swiftly the identified strategic deficiencies” in its AML and CFT framework.

“The FATF urges the Philippines to swiftly implement its action plan to address the … strategic deficiencies as soon as possible as all deadlines expired in January 2023,” FATF said.

The international agency acknowledged in its latest report that since June 2021, the Philippines had taken steps towards improving its AML/CFT regime. The FATF, however, listed some areas where more should be done to address the country’s strategic deficiencies in those matters.

It recommended that the Philippines demonstrate that it was making use of AML and CFT controls “to mitigate risks associated with casino junkets”.

The Philippines missed the deadline to comply with the FATA requirements in January 2023. The Bangko Sentral ng Pilipinas said in June the country was given a one-year extension or until January 2024 to meet the financial standards needed to get off the risk list of the FATF.

The Office of the President earlier issued a memorandum circular emphasizing the urgent implementation of the country’s “National Anti-Money Laundering, Counter-Terrorism Financing and Counter-Proliferation Financing Strategy 2023-2027″.

The document was developed to help the Philippines to exit the FATF’s grey list by January 2024.

The BSP said the country should address eight measures to comply with the FATA requirements and be taken off the watchdog’s “grey list”.

Remolona, who is just six weeks into his new job as BSP chief for the next six years, said there are two important proposed legislation that they are supporting to help convince the Paris-based FATF to remove the Philippines from the grey list, and these are the bills Amending the Bank Secrecy Law and the Anti Financial Account Scamming Act (AFASA).

Source: Manila Standard