Republic of the Philippines
Bangko Sentral nf Pilipinas
Manila
Bangko Sentral nf Pilipinas
Manila
Circular No. 706
Subject: Updated Anti-Money Laundering Rules and Regulations
By the authority vested to the Bangko Sentral ng
Pilipinas (BSP) to issue guidelines and circulars on anti-money
laundering (AML) in order to effectively implement the provisions of
Republic Act No. 9160, otherwise known as the "Anti-Money Laundering Act
of 2001", as amended by Republic Act No. 9194 (AMLA, as amended), under
Rule 17.1 (b) of the Revised Implementing Rules and Regulations (RIRR),
the Monetary Board, in its Resolution No. 1801 dated 16 December 2010,
approved the adoption of this Updated Anti-Money Laundering Rules and
Regulations and the amendment of Part Eight of the Manual of Regulations
as well as the repeal of other BSP Circulars that are inconsistent
herewith.

Section X802. Scope of Regulations -
These regulations shall apply to all covered institutions supervised and
regulated by the BSP. The term "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:
(a) A 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 institutions supervised
and/or regulated by the BSP.
(b) An 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.
Pursuant to Section 20 of the General Banking Law of
2000, a bank authorized by BSP to establish branches or other offices
within or outside the Philippines shall be responsible for all business
conducted in such branches and offices to the same extent and in the
same manner as though such business had all been conducted in the head
office. A bank and its branches and offices shall be treated as one
unit.
Whenever local applicable laws and regulations of a
branch, office, subsidiary or affiliate based outside the Philippines
prohibit the implementation of these Rules or any of the provisions of
AMLA, as amended, its RIRR, and the supervising authority in that
foreign country issues a directive forbidding said branch, office,
subsidiary or affiliate, the covered institution shall notify the BSP of
this situation and furnish a copy of the supervising authority’s
directive.
Section X803. Definition of terms -
Excepts as otherwise defined herein, all terms used shall have the same
meaning as those terms that are defined in the AMLA, as amended, and its
RIRR.
(A) Money laundering is a crime whereby the proceeds
of an unlawful activity as herein defined are transacted, thereby making
them appear to have originated from legitimate sources. It is committed
by the following:
(1) Any person knowing that any monetary instrument
or property represents, involves, or relates to, the proceeds of any
unlawful activity, transacts or attempts to transact said monetary
instrument or property.
(2) Any person knowing that any monetary instrument
or property involves the proceeds of any unlawful activity, performs or
fails to perform any act as a result of which he facilitates the offense
of money laundering referred to in paragraph (1) above.
(3) Any person knowing that any monetary instrument
or property is required under the act to be disclosed and filed with the
Anti-Money Laundering Council, fails to do so.
(B) Covered transaction (CT) is a transaction in cash
or other equivalent monetary instrument involving a total amount in
excess of five hundred thousand pesos (P500,000) within on banking day.
(C) Suspicious transactions (ST) are transactions
with covered institutions, regardless of the amount involved, where any
of the following circumstances exist:
1. There is no underlying legal or trade obligation, purpose or economic justification;
2. The client is not properly identified;
3. The amount involved is not commensurate with the business or financial capacity of the client;
4. Taking into account all known circumstances, it
may be perceived that the client’s transaction is structured in order to
avoid being the subject of reporting requirements under the AMLA, as
amended;
5. Any circumstance relating to the transaction which
is observed to deviate from the profile of the client and/or client’s
past transactions with the covered institution;
6. The transaction is in any way related to an
unlawful activity or any money laundering activity or offense under
AMLA, as amended, that is about to be, is being or has been committed;
or
7. Any transaction that is similar or analogous to any of the foregoing.
(D) Monetary instrument refers to:
(1) Coins or currency of legal tender of the Philippines, or of any other country;
(2) Drafts, check, and notes;
(3) Securities or negotiable instruments, bonds,
commercial papers, deposit certificates, trust certificates, custodial
receipts or deposit substitute instruments, trading orders, transaction
tickets and confirmations of sale or investments and money market
instruments;
(4) Contracts or policies of insurance, life or non-life, and contracts of suretyship; and
(5) Other similar instruments where title thereto passes to another by endorsement assignment or delivery.
(E) Transaction refers to any act establishing any
right or obligation or giving rise to any contractual or legal
relationship between the parties thereto. It also includes any movement
of funds by any means with a covered institution.1avvphil
(F) Unlawful activity refers to any act or omission
or series or combination thereof involving or having direct relation to
the following:
(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal Code, as amended;
(2) Section 4, 5, 6, 8, 9, 10, 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 Revised Penal Code, as amended and Presidential Decree No. 532;
(8) Qualified theft under Article 310 of Revised Penal Code, as amended;
(9) Swindling under Article 310 of the Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations under 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, including those perpetrated by terrorists
against non-combatant persons and similar targets;
(13) Fraudulent practices and other violations under
Republic Act No. 8799, otherwise known as the Securities Regulation Code
of 2000;
(14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.
(G) Customer - refers to any person or entity
that keeps account, or otherwise transacts business with a covered
institution and any person or entity on whose behalf an account is
maintained or a transaction is conducted, as well as the beneficiary of
said transactions. A customer also includes the beneficiary of a trust,
an investment fund, a pension fund or a company or person whose assets
are managed by an asset manager, or a grantor of a trust.
(H) Shell Company - Legal entities which have no business substance in their own right but through which financial transactions may be conducted.
(I) Shell Bank - 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 (a) does not conduct business at a fixed
address in a jurisdiction in which the shell bank is authorized to
engage; (b) does not employ one or more individuals on a full time basis
at this fixed address; (c) does not maintain operating records at this
address, and (d) is not subject to inspection by the authority that
licensed it to conduct banking activities.
(J) Beneficial Owner - refers to natural
person(s) who ultimately owns or controls a customer and/or the person
on whose behalf a transaction is being conducted. It also incorporates
those persons who exercise ultimate effective control over a legal
person or arrangement.
(K) Politically Exposed Person or PEP - an
individual who is or has been entrusted with prominent public positions
in the Philippines or in a foreign state, including heads of state or of
government, senior politicians, senior national or local government,
judicial or military officials, senior executives of government or state
owned or controlled corporations and important political party
officials.
(L) Correspondent banking refers to activities
of one bank (the correspondent bank) having direct connection or
friendly service relations with another bank (the respondent bank).
(M) Fund/wire transfer - refers to any
transaction carried out on behalf of an originator (both natural and
juridical) through a financial institution (Originating Institution) by
electronic means with a view to making an amount of money available to a
beneficiary at another financial institution (Beneficiary Institution).
The originator person and the beneficiary person may be the same
person.
(N) Cross border transfer - any wire transfer
where the originating and beneficiary institutions are located in
different countries. It shall also refer to any chain of wire transfers
that has at least one cross-border element.
(O) Domestic Transfer - any wire transfer
where the originating and beneficiary institutions are located in the
same country. It shall refer to any chain of wire transfers that takes
place entirely within the borders of a single country, even though the
system used to effect the fund/wire transfer may be located in another
country.
(P) Originating institution - refers to the
entity utilized by the originator to transfer funds to the beneficiary
and can either be (a) a covered institution as specifically defined by
these Rules and as generally defined by the AMLA, as amended, and its
RIRR, or (b) a financial institution operating outside the Philippines
that is other than covered institutions referred to in (a) but conducts
business operation and activities similar to them
(Q) Beneficiary institution - refers to the
entity that will pay out the money to the beneficiary and can either be
(a) a covered institution as specifically defined by these Rules and as
generally defined by the AMLA, as amended, and its RIRR, or (b) a
financial institution operating outside the Philippines that is other
than covered institutions referred to in (a) but conducts business
operations and activities similar to them.
(R) Intermediary institution - refers to the
entity utilized by the originating and beneficiary institutions where
both have no correspondent banking relationship with the intermediary
institution. It can either be (a) a covered institution as specifically
defined by these Rules and as generally defined by the AMLA, as amended,
and its RIRR, or (b) a financial institution operating outside the
Philippines that is other than covered institution referred to in (a)
but conducts business operations and activities similar to them.
Section X804. Basic Principles and Policies to Combat Money Laundering - in line with the declaration of policy, covered institutions shall apply the following principles:
1. Conduct business in conformity with high ethical
standards in order to protect its safety and soundness as well as the
integrity of the national banking and financial system:
2. Know sufficiently your customer at all times and
ensure that the financially or socially disadvantaged are not denied
access to financial services while at the same time prevent suspicious
individuals or entities from opening or maintaining an account or
transacting with the covered institution by himself or otherwise:
3. Adopt and effectively implement a sound AML and
terrorist financing risk management system that identifies, assesses,
monitors and controls risks associated with money laundering and
terrorist financing;
4. Comply fully with these rules and existing laws
aimed at combating money laundering and terrorist financing by making
sure that officers and employee are aware of their respective
responsibilities and carry them out in accordance with superior and
principled culture of compliance; and
5. Fully cooperate with Anti-Money Laundering Council
(AMLC) for the effective implementation and enforcement of the AMLA, as
amended, and its RIRR.
A. RISK MANAGEMENT
§ X805. Risk Management - All covered
institutions shall develop sound risk management policies and practices
to ensure that risks associated with money-laundering such as
counterparty, reputational, operational, and compliance risks are
identified, assessed, monitored, mitigated and controlled, as well as to
ensure effective implementation of these regulations, to the end that
covered institutions shall not be used as a vehicle to legitimize
proceeds of unlawful activity or to facilitate or finance terrorism.
The four areas of sound risk management practices are
adequate and active Board and Senior Management oversight, acceptable
policies and procedures embodied in a money laundering and terrorist
financing prevention compliance program, appropriate monitoring and
Management Information System and comprehensive internal controls and
audit.
§ X805.1 Board and Senior Management Oversight
- Notwithstanding the provisions specifying the duties and
responsibilities of the Compliance Office and Internal Audit, it shall
be the ultimate responsibility of the Board of Directors to fully comply
with the provisions of these rules, the AMLA, as amended, and its RIRR.
For this reason, it shall ensure that oversight on the institution's
compliance management is adequate.
§ X805.1.a. Compliance office -
Management of the implementation of the covered institution's Money
Laundering and Terrorist Financing Prevention Program (MLPP) shall be a
primary task of the Compliance Office. To ensure the independence of the
Office, it shall have a direct reporting line to the Board of Directors
or any Board-level or approved committee on all matters related to AML
and terrorist financing compliance and their risk management. It shall
be principally responsible for the following functions among other
functions that may be delegated by Senior Management and the Board, to
wit:
1. Ensure compliance by all responsible officers and
employee with these Rules, the AMLA as amended, the RIRR and its own
MLPP. It shall conduct periodic compliance checking which covers, among
others, evaluation of existing processes, policies and procedures
including on-going monitoring of performances by staff and officers
involved in money laundering and terrorist financing prevention,
reporting channels, effectivity of the electronic money laundering
transactions monitoring system and record retention system through
sample testing and review of audit or examination reports. It shall also
report compliance findings to the Board or any Board-level committee;
2. Ensure that infractions, discovered either by
internally initiated audits or by special or regular examination
conducted by the BSP, are immediately corrected;
3. Inform all responsible officers and employee of
all resolutions, circulars and other issuance by the BSP and the AMLC in
relation to matters aimed at preventing money laundering and terrorist
financing;
4. Alert senior management, the board of directors,
or the Board-level or approved committee if it believes that the
institution is falling to sensibly address anti money laundering and
terrorist financing issues; and
5. Organize the timing and content of AML training of
officers and employees including regular refresher trainings as stated
in Section X809.
§ X805.2. Money Laundering and Terrorist Financing Prevention Program
- All covered institutions shall adopt a comprehensive and risk-based
MLPP geared toward the promotion of high ethical and professional
standards and the prevention of the bank being used, intentionally or
unintentionally, for money laundering and terrorism financing. The MLPP
shall be consistent with the AMLA as amended, and the provisions set out
in these rules and designed according to the covered institution's
corporate structure and risk profile. It shall be in writing, approved
by the Board of Directors or by the country/regional head or its
equivalent for local branches of foreign banks, and well disseminated to
all officers and staff who are obligated by law and by their program to
implement the same. Where a covered institution has branches,
subsidiaries, affiliates or offices located within and/or outside the
Philippines, it shall adopt an institution-wide MLPP that shall be
implemented on a consolidated basis.
The MLPP shall also be readily available in
user-friendly form, whether in hard or soft copy. The Covered
institution must put up a procedure to ensure an audit trail evidencing
dissemination process for new and amended policies and procedures. The
program shall embody the following at a minimum:
1. Detailed procedures of the covered institution's
compliance and implementation of the following major requirements of the
AMLA, as amended its RIRR, and these Rules, to wit:
a) Customer identification process including acceptance policies and on-going monitoring processes;
b) Record keeping and retention;
c) Covered transaction reporting; and
d) Suspicious transaction reporting including the
adoption of a system, electronic or manual, of flagging, monitoring and
reporting of transactions that qualify as suspicious transactions,
regardless of amount or that will raise a "red flag" for purposes of
conducting further verification or investigation or transactions
involving amounts below the threshold to facilitate the process of
aggregating them for purposes of future reporting of such transactions
to the AMLC when their aggregated amounts breach the threshold. The ST
reporting shall include a reporting chain under which a suspicious
transaction will be processed and the designation of a Board level or
approved Committee who will ultimately decide whether or not the covered
institution should file a report to the AMLC. If the resources of the
covered institution do not permit the designation of a Committee, it
may designated the compliance officer to perform this function instead
provided that the Board of Directors is informed of his decision.
2. An effective and continuous anti-money laundering
and countering of terrorist financing training program for all
directors, and responsible officers and employee, to enable them to
fully comply with their obligations and responsibilities under these
rules, the AMLA, as amended, its RIRR and their internal policies and
procedures as embodied in the MLPP. The training program shall also
include refresher trainings to remind these individuals of their
obligations and responsibilities as well as update them of any changes
in AML laws, rules and internal policies and procedures.
3. An adequate screening and recruitment process to
ensure that only qualified personnel who have no criminal record/s are
employed to assume sensitive banking functions;
4. An internal audit system in accordance with § X805.4;
5. An independent audit program with written scope of
audit that will ensure the completeness and accuracy of the information
and identification documents obtained from clients, the covered and
suspicious transactions reports submitted to the AMLC, and the records
retained in compliance with these rules as well as adequacy and
effectiveness of the training program on the prevention of money
laundering and terrorism financing;
6. A mechanism that ensures all deficiencies noted
during the audit and/or BSP regular or special examination are
immediately corrected and acted upon;
7. Cooperation with the AMLC; and
8. Designation of an AML compliance officer who shall
at least be at senior officer level, as the lead implementor of the
program within an adequately staffed Compliance Office. The AML
compliance officer may also be the liaison between the covered
institution, the BSP and the AMLC in matters relating to the covered
institution's AML compliance. Where resources of the covered institution
do not permit the hiring of an AML compliance officer, the Compliance
Officer shall also assume the responsibility of the former.
§ X805.2.a. Submission of the Revised and Updated MLPP. Approval by the Board of Directors or Country Head
- Within one hundred eighty days (180) days from effectivity of these
Rules, all covered institutions shall prepare and have available for
inspection an updated MLPP embodying the principles and provisions
stated in these rules. The Compliance Officer shall submit to the
Anti-Money Laundering Specialist Group, Supervision and Examination
Sub-sector I of the BSP a sworn certification that the revised MLPP had
been prepared, duly noted and approved by the Board of Directors or the
Country Head or its equivalent for local branches of foreign banks.
Henceforth, each MLPP shall be regularly updated at
least once every two years to incorporate changes in AML policies and
procedures, latest trends in money laundering and terrorist financing
typologies, and latest pertinent BSP issuances. Any revision or update
in the MLPP shall likewise be approved by the Board of Directors or the
country/regional head or its equivalent for local branches of foreign
banks.
§ X805.3. Monitoring and Reporting Tools
- All covered institutions shall adopt an AML and terrorist financing
monitoring system that is appropriate for their risk-profile and
business complexity and in accordance with these Rules. The system
should be capable of generating timely, accurate and complete reports to
lessen the likelihood of any reputational and compliance risks and to
regularly appraise the Board of Directors and Senior Management on
anti-money laundering and terrorist financing compliance.
§ X805.3.a. Electronic monitoring and reporting System for Money Laundering
- Universal Banks (UBs) and Commercial Banks (Kbs) shall adopt an
electronic AML system capable of monitoring risks associated with
money-laundering and terrorist financing as well as generating timely
reports for the guidance and information of its Board of Directors and
Senior Management in addition to the functionalities mentioned in &
X807.2
§ X805.3.b. Manual monitoring - For
covered institutions other than UBs and KBs, it need not have an
electronic system but must ensure that it has the means of complying
with § X805.3.
§ X805.4. Internal Audit - The Internal
Audit function associated with money laundering and terrorist financing
should be conducted by qualified personnel who are independent of the
Board of Directors and Senior Management and have a direct reporting
line to the Board or a Board level Audit Committee.
The Internal Audit shall, in addition to those
specified by these rules be responsible for the periodic and independent
evaluation of the risk management, degree of adherence to internal
control mechanisms related to the customer identification process, such
as the determination of the existence of customers and the completeness
of the minimum information and/or documents establishing the true and
full identity of, and the extent and standard of due diligence applied
to, customers, CT and ST reporting and record keeping and retention, as
well as they adequacy and effectiveness of other existing internal
controls associated with money laundering and terrorist financing.
For Ubs and KBs with electronic money laundering
transaction monitoring system, in addition to the above, the internal
audit shall include determination of the efficiency of the system’s
functionalities as required by § X805.3 and § X807.2.
The results of the internal audit shall be timely
communicated to the Board of Directors and shall be open for scrutiny by
BSP examiners in the course of the regular or special examination
without prejudice to the conduct of its own evaluation whenever
necessary. Results of the audit shall likewise be promptly communicated
to the Compliance Office for its appropriate corrective action. The
Compliance Office shall regularly submit reports to the Board to inform
them of management’s action to address deficiencies noted in the audit.
B. CUSTOMER IDENTIFICATION PROCESS
Section X806. A covered institution shall
maintain a system of verifying the true identity of their customers and,
in case of corporate and juridical entities, require a system of
verifying their legal existence and organizational structure as well as
the authority and identification of all persons purporting to act on
their behalf. Along this line, it shall formulate a risk-based and
tiered customer acceptance policy, customer retention policy and
customer identification process that involves reduced Customer Due
Diligence (CDD) for potentially low risk clients and enhanced CDD for
higher risk accounts.
§ X806.1. Customer acceptance policy -
Every covered institution shall develop clear, written and graduated
acceptance policies and procedures that will ensure that the financially
or socially disadvantaged are not denied access to financial services
while at the same time prevent suspicious individuals or entities from
opening an account.
§ X806.1.a. Criteria for type of customers:
low, normal and high risk; Standards for applying reduced, average and
enhanced due diligence - Covered institutions shall specify the criteria
and description of the types of customers that are likely to pose low,
normal or high risk to their operations as well as the standards in
applying reduced, average and enhanced due diligence including a set of
conditions for the denial of account opening.
Enhanced due diligence shall be applied to customers
that are assessed by the covered institution or by these Rules as high
risk for money laundering and terrorist financing.
For customers assessed to be of low risk such as an
individual customer with regular employment or economically productive
activity, small account balance and transactions, and a resident in the
area of the covered institutions may apply reduced due diligence. Some
entities may likewise be considered as low risk clients, these are:
Banking institutions, trust entities and quasi-banks authorized by the
BSP to operate as such, publicly listed companies subject to regulatory
disclosure requirements, government agencies including government owned
and controlled corporations (GOCCs).
In designing a customer acceptance policy, the following factors shall be taken into account:
1. Background and source of funds;
2. Country of origin and residence or operations;
3. Public or high profile position of the customer or
its directors/trustees, stockholders, officers and/or authorized
signatory;
4. Linked accounts;
5. Watch list of individuals and entities engaged in
illegal activities or terrorist related activities as circularized by
BSP, AMLC, and other international entities or organizations such as the
Office of Foreign Assets Control (OFAC) of the U.S. Department of the
Treasury and United Nations Sanctions List;
6. Business activities; and
7. Type of service/products/transactions to be entered with the covered institution.
In all instances, the covered institution shall
document how a specific customer was profiled (low, normal or high) and
what standard of CDD (reduced, average or enhanced) was applied.
§ X806.1.b. Enhanced due Diligence -
Whenever enhanced due diligence is applied as required by these Rules or
by the covered institution’s customer acceptance policy, the covered
institution shall, in addition to profiling of customers and monitoring
of their transactions, do the following:
1. Obtain additional information other than the
minimum information and/or documents required for the conduct of average
due diligence as enumerated under § X806.2.a and § X806.2.b;
(a) In cases of individual customers, obtain a list
of banks where the individual has maintained or is maintaining an
account, list of companies where he is a director, officer or
stockholder, and banking services to be availed of.
(b) For entities assessed as high risk customers,
such as shell companies, covered institutions shall, in addition to the
minimum information and/or documents enumerated above, obtain additional
information including but not limited to prior or existing bank
references, the Name, present address, date and place of birth, nature
of work, nationality and source of funds of each of the primary officers
(President, Treasures and authorized signatory/ies), stockholders
owning at least 2% of the voting stock, and directors/trustees/partners
as well as their respective identification documents.
2. Conduct validation procedures on any or all of the information provided in accordance with § X806.1.c.
3. Obtain senior management approval for establishing business relationship.
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 covered institution shall
deny banking relationship with the individual or entity without
prejudice to the reporting of a suspicious transaction to the AMLC when
circumstances warrant.
§ X806.1.c. Minimum validation procedures - Validation procedures for individual customers shall include but is not limited to the following:
1. Confirming the date of birth from a duly authenticated official document;
2. Verifying the permanent address through evaluation
of utility bills, bank or credit card statement or other documents
showing permanent address or through on-site visitation;
3. Contacting the customer by phone, email or letter (such as sending of "thank you letters"); and
4. 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.
For corporate or juridical entities, validation procedures shall include but is not limited to be the following:
1. Requiring the submission of audited financial statements conducted by a reputable accounting/auditing firm;
2. Inquiring from the supervising authority the status of the entity;
3. Obtaining bank references;
4. On-site visitation of the company; and
5. Contacting the entity by phone, email or letter (such as "thank you letters").
§ X806.1.d. Reduced due diligence.
Whenever reduced due diligence is applied in accordance with the covered
institution’s customer acceptance policy, the following rules shall
apply:
a. For individual customers, a covered institution
may open an account under the true and full name of the account owner or
owners and defer acceptance of the minimum information. Deferred
acceptance of the minimum information shall mean obtaining information
numbers 1 to 7 of § X806.2.a at the time of account opening while the
rest, numbers 8 to 11, may be obtained within a reasonable time but not
exceeding ninety (90) days from account opening.
b. For corporate, partnership, and sole
proprietorship entities, and other entities such as banking
institutions, trust entities and quasi-banks authorized by the BSP to
operate as such, publicly listed companies subject to regulatory
disclosure requirements, government agencies including GOCCs, a covered
institution may open an account under the official name of these
entities with only no. 4 of those required under § X806.2.b (Board
Resolution duly certified by the Corporate Secretary authorizing the
signatory to sign on behalf of the entity) - obtained at the time of
account opening.
§ X806.1.e. Face-to-face contact - No
new accounts shall be opened and created without face-to-face contact
and personal interview between the covered institution’s duly authorized
personnel and the potential customer except under the following
arrangements:
§ X806.1.e.1. Account opened through a trustee, agent, nominee, or intermediary
- Where the account is opened through a trustee, agent, nominee or
intermediary, the covered institution shall establish and record the
true and full identity and existence of both the (a) trustee, nominee,
agent or intermediary and (b) trustor, principal, beneficial owner, or
person on whose behalf the account is being opened. The covered
institution shall determine the true nature of the parties’ capacities
and duties by obtaining a copy of the written document evidencing their
relationship and apply the same criteria for assessing the risk profile
and determining the standard of due diligence to be applied to both.
In case of several trustors, principals, beneficial
owners, or persons on whose behalf the account are being opened where
the trustee, nominee, agent or intermediary opens a single account but
keeps therein sub-accounts that may be attributable to each trustor,
principal, beneficial owner, or person on whose behalf the account is
being opened, the covered institution shall, at the minimum, obtain the
true and full name, place and date of birth or date or registration, as
the case may be, present address, nature of work or business, and source
of funds as if the account was opened by them separately. Where the
covered institution is required to report a CT or circumstances warrant
the filing of an ST, it shall obtain such other information on every
trustor, principal, beneficial owner, or person on whose behalf the
account is being opened in order that a complete and accurate report may
be filed with AMLC.
In case a covered institution entertains doubts that
the trustee, nominee, agent or intermediary is being used as a dummy in
circumvention of existing laws, it shall apply enhanced due diligence in
accordance with § X806.1.b.
§ X806.1.e.2. Outsourcing arrangement -
Subject to existing rules on outsourcing of specified banking
activities, a covered institution, without prior Monetary Board
approval, may outsource to a counter-party the conduct of the requisite
face-to-face contact provided that such arrangement is formally
documented and provided further that the conditions under § X806.2.d.
are met.
If the counter party is an entity other than a
covered institution as herein defined, covered institutions shall ensure
that the employees or representatives of the counter-party conducting
the face-to-face contact undergo equivalent training program as that of
its front-liners undertaking a similar activity. Covered institutions
shall likewise monitor and review annually the performance of the
counter-party to assist it in determining whether or not to continue
with the arrangement.
§ X806.1.e.3. Third party reliance -
Where a third party as defined under § X806.2.e.1. has already conducted
the requisite face-to-face contact on its own customer who has referred
to a covered institution, the latter may rely on the representation of
the third party that it has already conducted face-to-face contact
provided that the pertinent requirements in § X806.2.e.1 are also met.
§ X806.2. Customer identification -
Covered institutions shall establish and record the true identity of its
customers based on valid identification document/s specified in §
X806.2.c.
§ X806.2.a. New individual customers -
Covered institutions shall develop a systematic procedure for
establishing the true and full identity of new individual customers and
shall open and maintain the account only in the true and full name of
the account owner or owners.
Unless otherwise stated in these Rules, average due
diligence requires that the covered institution obtain at the time of
account opening all the following minimum information and confirming
these information with the valid identification documents stated in §
X806.2.c. from individual customers and authorized signatory/ies of
corporate and juridical entities:
2. Present address;
3. Date and place of birth;
4. Nature of work, name of employer or nature of self-employment/business;
5. Contact details;
6. Specimen signature;
7. Source of funds;
8. Permanent address;
9. Nationality;
10. Tax identification number, Social Security System number or Government Service Insurance Number, if any; and
11. Name, present address, date and place of birth,
nature of work and source of funds of beneficial owner or beneficiary,
whenever applicable.
§ X806.2.b. New Corporate and Juridical Entities
- Covered institutions shall develop a systematic procedure for
identifying corporate, partnership and sole proprietorship entities as
well as the stockholders/partners/owners, directors, officers and
authorized signatory of these entities. It shall open and maintain
accounts only in the true and full name of the entity and shall have
primary responsibility to ensure that the entity has not been, or is not
in the process of being, dissolved, struck-off, wound-up, terminated,
or otherwise placed under receivership or liquidation.
Unless otherwise stated in these Rules, average due
diligence requires that the covered institution obtain the following
minimum information and/or documents before establishing business
relationships:
1. Certificates of Registration issued by the
Department of Trade and Industry for single proprietors, or by the
Securities and Exchange Commission, for corporations and partnerships,
and by the BSP, for money chargers/foreign exchange dealers and
remittance agents;
2. Articles of Incorporation or Association and By-Laws;
3. Principal business address;
4. Board or Partners’ Resolution duly certified by
the Corporate/Partners’ Secretary authorizing the signatory to sign on
behalf of the entity;
5. Latest General Information Sheet which lists the
names of directors/trustees/partners, principal stockholders owning at
least twenty percent (20%) of the outstanding capital stock and primary
officers such as the President and Treasurer;
6. Contact numbers of the entity and authorized signatory/ies;
7. Source of funds and nature of business;
8. Name, present address, date and place of birth,
nature of work and source of funds of beneficial owner or beneficiary,
if applicable; and
9. For entities registered outside the Philippines,
similar documents and/or information shall be obtained duly
authenticated by the Philippine Consulate where said entities are
registered.
§ X806.2.c. Valid identification documents
- 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 Filipino to services offered by formal financial
institutions, particularly those residing in the remote areas, as well
as to encourage and facilitate remittances of OFWs through the banking
system:
(1) Customers and the authorized signatory/ies of a
corporate or juridical entity who engage in a financial transaction with
covered institutions for the first time shall be required to present
the original and submit a clear copy of at least one (1) valid
photo-bearing ID document issued by an official authority.
For this purpose, the term official authority shall refer to any of the following:
a. Government of the Republic of the Philippines;
b. Its political subdivisions and instrumentalities;
c. GOCCs; and
d. Private entities or institutions registered with or supervised or regulated either by the BSP, SEC or IC.
Valid Ids include the following:
1. Passport including those issued by foreign governments
2. Driver’s license
3. PRC ID
4. NBI clearance
5. Police clearance
6. Postal ID
7. Voter’s ID
8. Tax Identification Number
9. Barangay certification
10. GSIS e-Card
11. SSS card
12. Senior Citizen card
13. OWWA ID
14. OFW ID
15. Seaman’s book
16. Alien Certification of Registration/Immigrant Certificate of Registration
17. Government office and GOCC ID (e.g., AFP, HDMF IDs)
18. Certification from the NCWDP
19. DSWD certification
20. IBP ID; and
21. Company IDs issued by private entities or
institutions registered with or supervised or regulated either by the
BSP, SEC or IC.
(2) 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.
(3) 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.
(4) A covered institution 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.
(5) A covered institution 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.
(6) Whenever it deems necessary, a covered
institution may accept other IDs not enumerated above provided that it
shall not be the sole means of identification.
(7) 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.
§ X806.2.d. Outsourcing of the gathering of minimum information and/or documents
- Except for deposit taking, which is an inherent banking function that
cannot be outsourced and subject to existing rules on outsourcing of
specified banking activities, a covered institution may, without prior
Monetary Board approval, outsource to a counter-party, which may or may
not be a covered institution as herein defined, the gathering of the
minimum information and/or documents required to be obtained by these
Rules provided that the ultimate responsibility for knowing the customer
and for keeping the identification documents shall lie with the covered
institution and compliance with the following conditions:
For covered institution counter-party:
1. There is a written service level agreement approved by the board of directors of both covered institutions;
2. The counter-party has a reliable and acceptable customer identification system and training program in place; and
3. In line with requirement no. 1, all identification
information and/or documents shall be turned over within a period not
exceeding ninety days (90) calendar days to the covered institution,
which shall carefully review the documents and conduct the necessary
risk assessment of the customer.
For non-covered institution counter-party:
1. All conditions required for covered institution counter-party;
2. The covered institution outsourcing the activity
shall likewise ensure that the employees or representatives of the
counter-party establishing the true and full identity of the customer
undergo equivalent training program as that of the covered institution’s
own employees undertaking a similar activity.
3. Annual monitoring and review by the covered
institution of the performance of the counter-party to assist it in
determining whether or not to continue with the arrangement.
§ X806.2.e. Trustee, nominee, agent or intermediary account
- Where any transaction is conducted by a trustee, nominee, agent or
intermediary, either as an individual or through a fiduciary
relationship, a corporate vehicle or partnership, on behalf of a
trustor, principal, beneficial owner or person on whose behalf a
transaction is being conducted, covered institutions shall establish and
record the true and full identity and existence of both the (1)
trustee, nominee, agent or intermediary and the (2) trustor, principal,
beneficial owner or person on whose behalf the transaction is being
conducted. The covered institution shall determine the true nature of
the parties’ capacities and duties by obtaining a copy of the written
document evidencing their relationship and apply the same standards for
assessing the risk profile and determining the standard of due diligence
to be applied to both.
In case it entertains doubts as to whether the
trustee, nominee, agent, or intermediary is being used as a dummy in
circumvention of existing laws, it shall apply enhanced due diligence in
accordance with § X806.1.b.
§ X806.2.e.1. Where the Customer Transacts
Through a Trustee, Nominee, Agent or Intermediary which is a third party
as herein defined (Third Party Reliance) - A covered institution
may rely on the customer identification process undertaken by a third
party. For purposes of this Subsection, the "third party" shall refer to
a (1) covered institution as herein specifically defined and as
generally defined by AMLA, as amended, and its RIRR, or (2) a financial
institution operating outside the Philippines that is covered by
equivalent customer identification requirements. A BSP-accredited
custodian may likewise rely in accordance with these Rules on the
face-to-face contact and gathering of minimum information to establish
the existence and full identity of the customer conducted by the seller
or issuer of securities or by the global custodian provided the latter
has an equivalent customer identification requirements.
§ X806.2.e.1.a. Third Party is covered
institution specifically defined by these Rules and as generally defined
by AMLA, as amended, and its RIRR - A covered institution may rely
on the identification process conducted by this third party provided
that the covered institution shall obtain from the third party a written
sworn certification containing the following:
1. The Third Party has conducted the requisite
customer identification requirements in accordance with these Rules and
its own MLPP including the face-to-face contract requirement to
establish the existence of the ultimate customer and has in its custody
all the minimum information and/or documents required to be obtained
from the customer; and
2. The relying covered institution shall have the
ability to obtain identification documents from the Third Party upon
request without delay.
§ X806.2.e.1.b. Third Party is a financial
institution operating outside the Philippines that is other than covered
institutions referred to in § X806.2.e.1.a. but conducts business
operations and activities similar to them - All the contents
required in the sworn certification mentioned in § X806.2.e.1.a. shall
apply with the additional requirement that the laws of the country where
the third party is operating has equal or more stringent customer
identification process requirement and that it has not been cited in
violation thereof. It shall, in addition to performing normal due
diligence measures, do the following:
(a) Gather sufficient information about the third
party and the group to which it belongs to understand fully the nature
of its business and to determine from publicly available information the
reputation of the institution and the quality of supervision, including
whether it has been subject to money laundering or terrorist financing
investigation or regulatory action;
(b) Document the respective responsibilities of each institution; and
(c) Obtain approval from senior management at inception of relationship before relying on the third party.
§ X806.2.f. Private banking/ Wealth management operations
- These services, which by their nature involve high measure of client
confidentiality, are more open to the elements of reputational risk
especially if the customer identification process is not diligently
followed. Covered institutions therefore shall endeavor to establish and
record the true and full identity of these customers and establish a
policy on what standard of due diligence will apply to them. They shall
also require approval by a senior officer other than the private
banking/wealth management/ similar activity relationship officer or the
like for acceptance of customers of private banking, wealth management
and similar activities.
§ X806.2.g. Politically Exposed Person -
A covered institution shall endeavor to establish and record the true
and full identity of PEPs as well as their immediate family members and
the entities related to them and establish a policy on what standard of
due diligence will apply to them taking into consideration their
position and the risks attendant thereto.
§ X806.2.h. Correspondent banking -
Because of the risk associated with dealing with correspondent accounts
where it may unknowingly facilitate the transmission, or holding and
management of proceeds of unlawful activities or funds intended to
finance terrorist activities, covered institutions shall adopt policies
and procedures for correspondent banking activities and designate an
officer responsible in ensuring compliance with these policies and
procedures. A covered institution may rely on the customer
identification process undertaken by the respondent bank. In such case,
it shall apply the rules on Third Party reliance under § X806.2.e.1.,
treating the respondent bank as the Third Party as defined therein. In
addition, the correspondent bank shall:
(a) Gather sufficient information about the
respondent institution to understand fully the nature of the
respondent’s business and to determine from publicly available
information the reputation of the institution and the quality of
supervision, including whether it has been subject to money laundering
or terrorist financing investigation or regulatory action.
(b) Assess the respondent institution’s anti-money laundering and terrorist financing controls.
(c) Obtain approval from senior management before establishing correspondent relationships.
(d) Document the respective responsibilities of each institution.
(e) With respect to "payable-through accounts", be
satisfied that the respondent bank has verified the identity of, and
performed on-going due diligence on, the customers having direct access
accounts of the correspondent and that it is able to provide relevant
customer identification data upon request by the correspondent bank.
Correspondent banking customers presenting greater risk, including shell companies, shall be subject to enhanced due diligence.
§ X806.2.i. Fund/Wire transfer -
Because of the risk associated with dealing with fund/wire transfers,
where a covered institution may unknowingly transmit proceeds of
unlawful activities or funds intended to finance terrorist activities,
it shall establish policies and procedures designed to prevent it from
being utilized for that purpose which shall include, but not limited to,
the following:
(a) The beneficiary institution shall not accept
instructions to pay-out fund transfers to non-customer beneficiary,
unless it has conducted the necessary customer due diligence to
establish the true and full identity and existence of said beneficiary.
Should the originator and beneficiary be the same person, the
beneficiary institution may rely on the customer due diligence conducted
by the originating institution provided the rules on Third Party
reliance under § X806.2.e.1. are met, treating the originating
institution as Third Party as therein defined;
(b) The originating institution shall not accept
instructions to fund/wire transfer from a non-customer originator,
unless it has conducted the necessary customer due diligence to
establish the true and full identity and existence of said originator;
(c) In cross border transfers, if the originator is a
high risk customer as herein described, the beneficiary institution
shall conduct enhanced due diligence on the beneficiary and the
originator. 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 beneficiary institution shall
refuse to effect the fund/wire transfer or the pay-out of funds without
prejudice to the reporting of a suspicious transaction to the AMLC when
circumstances warrant;
(d) Whenever possible, manually initiated fund
transfer (MIFT) instructions should not be the primary delivery method.
Every effort shall be made to provide client with an electronic banking
solution. However, where MIFT is utilized, the existing rules on
validation procedures as prescribed by Circular No. 436 dated 18 June
2004 shall apply;
(e) Cross border and domestic fund/wire transfers and
related message amounting to P50, 000 or more or its equivalent shall
include accurate and meaningful originator information. The following
are the originator information that shall remain with the transfer or
related message through the payment chain:
1. Name of the originator;
2. Address or in its absence the national identity number or date and place of birth of the originator; and
3. Account number of the originator or in its absence, a unique reference number must be included.
(f) Should any wire transfer amounting to P50, 000 or
more or its equivalent be unaccompanied by the required originator
information, the beneficiary institution shall exert all efforts to
establish the true and full identity and existence of the originator by
requiring additional information from the originating institution or
intermediary institution. It shall likewise apply enhanced due diligence
to establish the true and full identity and existence of the
beneficiary. 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 beneficiary institution shall
refuse to effect the fund/wire transfer or the pay-out of funds without
prejudice to the reporting of a suspicious transaction to the AMLC when
circumstances warrant.
§ X806.2.j. Buyers of cashier’s, manager’s or certified Checks
- A covered institution may sell Cashier’s, Manager’s or Certified
Checks only to its existing customers and shall maintain a register of
said checks indicating the following information:
2. Account number;
3. Date of issuance and the number of the check;
4. Name of the payee;
5. Amount; and
6. Purpose of such transaction.
§ X806.2.j.1. Buyers of cashier’s, manager’s or certified checks other than its existing Customer
- Where an individual or any entity other than an existing customer
applies for the issuance of Cashier’s, Manager’s or Certified Checks,
the covered institution shall, in addition to the information required
in § X806.2.j., obtain all the identification documents and minimum
information required by these rules to establish the true and full
identity and existence of the applicant. In no case shall reduced due
diligence be applied to the applicant and, where circumstances warrant,
enhanced due diligence should be applied.
§ X806.2.j.2. Buyers of cashier’s, manager’s or certified checks in blank or payable to cash, bearer or numbered account
- A covered institution may issue cashier’s, manager’s or certified
checks or other similar instruments in blank or payable to cash, bearer
or numbered account subject to the following conditions:
1. The amount of each check shall not exceed P10, 000;
2. The buyer of the check is properly identified in
accordance with its customer acceptance and identification policies and
as required under § X806.2.j. and § X806.2.j.1. of these Rules;
3. A register of said checks indicating all the information required under § X806.2.j.
4. A covered institution which issues as well as
those which accepts as deposits, said cashier’s, manager’s or certified
checks or other similar instruments issued in blank or payable to cash,
bearer or numbered account shall take such measure(s) as may be
necessary to ensure that said instruments are not being used/resorted to
by the buyer or depositor in furtherance of a money laundering
activity;
5. The deposit of said instruments shall be subject to the same requirements of scrutiny applicable to cash deposits; and
6. Transactions involving said instruments should be
accordingly reported to the AMLC if there is reasonable ground to
suspect that said transactions are being used to launder funds of
illegitimate origin.
§ X806. 2.k. Second-endorsed Checks - A
covered institution shall enforce stricter guidelines in the acceptance
of second-endorsed checks including the application of enhanced due
diligence to ensure that they are not being used as instruments for
money laundering or other illegal activities.
For this purpose, a covered institution shall limit
the acceptance of second-endorsed checks from properly identified
customers and only after establishing that the nature of the business of
said customer justifies, or at least makes practical, the deposit of
second-endorsed check. In case of isolated transactions involving
deposits of second-endorsed checks by customer who are not engaged in
trade or business, the true and full identity of the first endorser
shall be established and the record of the identification shall also be
kept for five (5) years.
§ X806.2.l. Foreign exchange dealers/ Money changers/ Remittance agents
- A covered institution shall require their customers who are foreign
exchange dealers, money changers and remittance agents to submit a copy
of the certificate of registration issued to them by the BSP as part of
their customer identification document. The certificate of registration
shall be for each head office, branch, agent, sub-agent, extension
office or business outlet of foreign exchange dealers, money changers
and remittance agents.
Foreign exchange dealers, money changers and
remittance agents customers presenting greater risk, such as shell
companies shall be subject to enhanced due diligence.
§ X806.2.m. High risk customer - A
customer from a country that is recognized as having inadequate
internationally accepted anti-money laundering standards, or does not
sufficiently apply regulatory supervision or the Financial Action Task
Force (FATF) recommendations, or presents greater risk for crime,
corruption or terrorist financing is considered a high risk customer.
Information relative to these are available from publicly available
information such as the websites of FATF, FATF Style Regional Bodies
(FSRB) like the Asia Pacific Group on Money Laundering and the Egmont
Group, national authorities like the OFAC of the U.S. Department of the
Treasury, or other reliable third parties such as regulators or
exchanges, which shall be a component of a covered institution’s
customer identification process.
When dealing with high risk customers, a covered
institution should take extreme caution and vigilance. In no case shall
reduced diligence be applied to high risk customers. On the other hand,
in case the covered institution determines, based on its standards, that
dealing with the high risk customer calls for, or these rules require,
the application of enhanced due diligence, it shall apply the minimum
requirements for enhanced due diligence in accordance with § X806.1.b.
In all instances of acceptance of a high risk customer, approval of the
covered institution’s senior officer shall be necessary.
§ X806.2.n. Shell company/ Shell bank -
A covered institution shall undertake banking relationship with a shell
company with extreme caution and always apply enhanced due diligence on
both the entity and its beneficial owner/s.
Because of the dubious nature of shell banks, no
shell bank shall be allowed to operate or be established in the
Philippines. A covered institution shall refuse to enter into, or
continue, correspondent banking relationship with them. It shall
likewise guard against establishing relations with foreign financial
institutions that permit their accounts to be used by shell banks.
§ X806.2.o. Numbered accounts - No peso
and foreign currency non-checking numbered accounts shall be allowed
without establishing the true and full identity and existence of
customers and applying enhanced due diligence in accordance with §
X806.1.b.
Peso and foreign currency non-checking numbered
accounts existing prior to 17 October 2001 shall continue to exist but
the covered institution shall establish the true and full identity and
existence of the beneficial owners of such accounts and applying
enhanced due diligence in accordance with § X806.1.b.
§ X806.2.p. Prohibited accounts - A
covered institution shall maintain accounts only in the true and full
name of the account owner. The provisions of existing law to the
contrary notwithstanding, anonymous accounts, accounts under fictitious
names, numbered checking accounts and all other similar accounts shall
be absolutely prohibited.
§ X806.3. On-going monitoring of customers, accounts and transactions
- Covered institutions shall ensure that they have established the true
and full identity of their customers and shall update all
identification information and documents required to be obtained by the
AMLA, as amended, its RIRR and these Rules of existing customers on the
basis of materiality and risk.
With a respect to monitoring of transactions, in
order that a covered institution may be able to control and reduce risk
associated with money laundering and terrorist financing, it is
necessary that it has a system that it will enable it to understand the
normal and reasonable account activity of customers and detect unusual
or suspicious patterns of account activity. Thus, a
risk-and-materiality-based on-going monitoring of customer’s accounts
and transactions should be part of a covered institution’s customer due
diligence.
§ X806.3.a. Enhanced due diligence -
Covered institutions shall apply enhanced due diligence on its customer
in accordance with § X806.1.b. if it acquires information in the course
of its customer account or transaction monitoring that:
1. Raises doubt as to the accuracy of any information or document provided or the ownership of the entity;
2. Justifies re-classification of the customer from
low or normal risk to high-risk pursuant to these Rules or by its own
criteria; or
3. Any of the circumstance for the filing of a suspicious transaction exists such as but not limited to the following:
a. Transacting without any underlying legal or trade obligation, 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 of 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 as herein defined.
Where additional information cannot be obtained, or
nay information or document provided is false or falsified, or result of
the institution shall immediately close the account and refrain from
further conducting business relationship with the customer without
prejudice to the reporting of a suspicious transaction to the AMLC when
circumstances warrant.
C. COVERED AND SUSPICIOUS TRANSACTION REPORTING
Section X807. Covered and Suspicious Transaction Reporting
- Covered institutions shall report to the AMLC all covered and
suspicious transactions within ten (10) working days from occurrence
thereof.
Should a transaction be determined to be both a
covered and suspicious transaction, the covered institution shall be
required to report the same as a suspicious transaction.
§ X807.1 Deferred reporting of certain covered transactions
- Pursuant to AMLC resolution No. 58 dated 25 June 2005 as amended by
AMLC Resolution No. 24 dated 18 March 2009, the following are considered
as "non-cash, no/low risk covered transactions" the reporting of which
to the AMLC are deferred:
1. Transactions between banks and the BSP;
2. Transactions between banks operating in the Philippines;
3. Internal operating expenses of banks;
4. Transactions involving transfer of funds from one
deposit account to another deposit account of the same person within the
same bank;
5. Roll-overs of placement of time deposit; and
6. Loan/Interest principal payment debited against borrower’s deposit account maintained with the lending bank.
In addition, pursuant to AMLC Resolution No. 292
dated 24 October 2003, covered institutions, other than banks, shall
file covered transaction reports (CTRs) on transactions in cash or
foreign currency or other monetary instruments (other than checks) or
properties. Due to the nature of the transactions in the stock exchange,
only the brokers-dealers shall be required to file CTRs and Suspicious
Transaction Reports (STRs). The Philippine Stock Exchange, Philippine
Central Depository (PCD), Securities Clearing Corporation of the
Philippines (SCCP) and transfer agents are exempt from filing CTRs. They
are however required to file STRs when the transaction that pass
through them are deemed suspicious.
The BSP may consider other transactions as "no/low
risk covered transactions" and propose to the AMLC that they be likewise
subject to deferred reporting by covered institutions.
§ X807.2. Electronic Monitoring Systems for Money Laundering
- UBs and KBs are required to adopt an electronic money laundering
transaction monitoring system which at the minimum shall detect and
raise to the bank’s attention, transactions and / or accounts that
qualify either as CTs or Sts as herein defined.
The system must have at least the following automated functionalities:
1. Covered and suspicious transaction monitoring -
performs statistical analysis, profiling and able to detect unusual
patterns of account activity;
2. Watch list monitoring - checks transfer parties
(originator, beneficiary, and narrative fields) and the existing
customer database for any listed undesirable individual or corporation;
3. Investigation - checks for given names throughout the history of payment stored in the system;
4. Can generate all the CTRs of the covered
institutions accurately and completely with all the mandatory field
properly filled up;
5. Must provide a complete audit trail;
6. Capable of aggregating activities of a customer
with multiple accounts on a consolidated basis for monitoring and
reporting purposes; and
7. Has the capability to record all STs and support
the investigation of alerts generated by the system and brought to the
attention of Senior Management whether or not a report was filed with
the AMLC.
UBs and KBs with existing electronic system of
flagging and monitoring transactions already in place shall ensure that
their existing system is updated to be fully compliant with
functionalities as those required herein. For this purpose, they shall
be given ninety (90) days from effectivity of this Circular within which
to make their system fully operational and automated with all the
functionalities stated above.
§ X807.3. Manual monitoring - For
covered institutions other than UBs and KBs. It need not have an
electronic system of flagging and monitoring transactions but shall
ensure that it has the means of flagging and monitoring the transactions
mentioned in § X807.2. It shall maintain a register of all Sts that
have been brought to the attention of Senior Management whether or not
the same was reported to the AMLC.
§ X807.4. Electronic Submission of reports
- The CTR and STR shall be submitted to the AMLC in a secured manner,
in electronic form and in accordance with the reporting procedures
prescribed by the AMLC. The covered institutions shall provide complete
and accurate information of all the mandatory fields required in the
report. In order to provide accurate information, the covered
institution shall regularly update customer identification information
at least once every three (3) years.
For the purpose or reporting in a secured manner, all
covered institutions shall register with the AMLC within ninety (90)
days from effectivity of this Circular by directly coordinating with
that office for the proper assignment of their institution code and
facilitation of the reporting process. All covered institutions that
have previously registered need not re-register.
§ X807.5. Exemption from Bank Secrecy Laws
- When reporting covered or suspicious transactions to the AMLC,
covered institutions and their officers and employees shall not be
deemed to have violated Republic Act No. 8791 and other similar laws,
but are prohibited from communicating, directly or indirectly, in any
manner or by any means to any person, the fact that a covered or
suspicious transactions report was made, the contents thereof, or any
other information in relation thereto. In case of violation thereof, the
concerned officer and employee of the covered institution shall be
criminally liable in accordance with the provisions of the AMLA, as
amended.
§ X807.6. Confidentiality Provision -
When reporting CTs and Sts to the AMLC, covered institutions, their
directors, officers and employees are prohibited from communicating
directly or indirectly, in any manner or by any means, to any person or
entity, the media, the fact that a covered or suspicious transaction
report was made, the contents thereof, or any other information in
relation thereto. Neither may such reporting be published or aired in
any manner or form by the mass media, electronic mail, or other similar
devices. In case of violation thereof, the concerned officer and
employee of the covered institution and media shall be held criminally
liable.
§ X807.7. Safe Harbor Provision - No
administrative, criminal or civil proceedings, shall lie against any
person for having made a CTR or an STR in the regular performance of his
duties in good faith, whether or not such reporting results in any
criminal prosecution under the AMLA, as amended, its RIRR or any other
law.
D. RECORD KEEPING AND RETENTION
Section X808. Record Keeping - All
customer identification records of covered institutions shall be
maintained and safely stored as long as the account exists. All
transaction records, including all unusual or suspicious patterns of
account activity whether or not an STR was filed with the AMLC, of
covered institutions shall be maintained and safely stored for five (5)
years from the date of transaction.
Said records and files shall contain the full and
true identity of the owners or holders of the accounts involved in the
transactions such as the ID card and photo of individual customers and
the documents mentioned in Section X806.2.b. for entities, customer
information file, signature card of authorized signatory/ies, and all
other pertinent customer identification documents as well as all factual
circumstances and records involved in the transaction. Covered
institutions shall undertake the necessary adequate security measures to
ensure the confidentiality of such file. Covered institutions shall
prepare and maintain documentation, in accordance with the
aforementioned client identification requirements, on their customer
accounts, relationships and transactions such that any account,
relationship or transaction can be reconstructed as to enable the AMLC,
and / or the courts to establish an audit trail for money laundering.
Whenever a bank engaged in micro-finance operations
has tagged a micro-finance client, as defined under BSP regulations, as
low risk in accordance with § X806.1.a. the customer’s identification
and transaction records shall be retained for five (5) years except that
said retention period may be reduced to three years provided that
sufficient documents duly support the low risk profile of said customer
and the covered institutions keep a record of the names of these low
risk customers after the lapse of three (3) years. This Provision is
subject to § X808.2. when a money laundering case is filed in court.
§ X808.1. Closed Accounts - With
respect to closed accounts, the records on customer identification,
account files and business correspondences, shall be preserved and
safely stored for at least five (5) years from the date of closure.
§ X807.2. Retention of Records in Case a Money Laundering Case has been filed in Court
- If a money laundering case based on any report kept by the covered
institution concerned has been filed in court, said file must be
retained beyond the five (5) year retention period and until it is
confirmed that the case has been finally resolved or terminated by the
court.
§ X808.3. Safekeeping of records and documents
- The covered institution 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,
its RIRR and these Rules. They shall have the obligation to make these
documents and records readily available without delay during BSP regular
or special examinations.
§ X808.4. Form of Records - Records
shall be retained as originals or copies in such forms as are admissible
in court pursuant to existing laws, such as the e-commerce act and its
implementing rules and regulations, and the applicable rules promulgated
by the Supreme Court.
No comments:
Post a Comment