On 30 January 2021, Republic Act (“RA”) No. 11521, which further amended RA No. 9160 or the Anti-Money Laundering Act of the Philippines (“AMLA”), took effect. These amendments to the AMLA were essentially a response to calls from the international watchdog, Financial Action Task Force (“FATF”), to strengthen our laws against “dirty money” to avoid falling under the FATF’s gray list.[1]

In light of these recent amendments, there are legal and practical points to consider, in order to ensure compliance with the law and its implementing rules and regulations.

Real Estate Brokers/Developers and Offshore Gaming Operators/Service Providers – Now Covered Persons

Under the amendments to the AMLA, “Covered Persons” have been expanded and now also refer to real estate developers and brokers and regulated offshore gaming operators and service providers.[2] This continues the trend of widening the scope of the law to prevent money laundering and terrorist financing activities across different sectors. Previously in 2017, casinos were already added to the list of Covered Persons.[3]

With the recent amendments, these persons engaged in the business of real estate and offshore gaming are now mandated to: (i) register and (ii) report all covered and suspicious transactions[4] to the Anti-Money Laundering Council (“AMLC”). Registration of Covered Persons with the AMLC is required under the 2018 AMLA Implementing Rules and Regulations (“IRR”), as amended.[5] Registration is a prerequisite to reporting, the latter required by the AMLA itself.[6]

To register, a Covered Person or its compliance officer shall access AMLC’s online registration portal. The compliance officer shall first ensure that documents or certificates showing his/her designation/appointment are in order. Then, the compliance officer must follow AMLC’s transaction security protocols by creating a key ID. The compliance officer can then proceed with the online registration and input all the required information. Thereafter, the AMLC Secretariat will issue a Certificate of Registration[7] to the Covered Persons.

As mentioned prior, once Covered Persons are registered, they must now report all covered and suspicious transactions generally within five (5) working days from the transaction/s in question.[8] For real estate developers and brokers, a covered transaction refers to a single cash transaction involving an amount in excess of Php7,500,000.00.[9] For offshore gaming operators/service providers however, the general threshold amount of more than Php500,000.00 applies.[10]

Reporting these transactions is done through the submission of covered transaction reports (“CTRs”) and/or suspicious transaction reports (“STRs”), which is likewise done through AMLC’s online portal.[11]

The importance of submitting CTRs and STRs cannot be overemphasized. Under the 2019 AMLA Rules of Procedure on Administrative Cases, non-registration of a Covered Person subjects itself to fines and administrative sanctions, the amount of which will depend on the size of the entity.[12] Meanwhile, failure to comply with the reporting requirement is already tantamount to money laundering under the AMLA.[13]

[Author’s Note: As of date, the AMLC is in the process of setting a new registration deadline which was initially set on 16 March 2021. The period of 05 April 2021 to 14 May 2021 is likewise considered workday suspensions for purposes of computing the period to submit CTRs and STRs.][14]

Expansion of List of Predicate Crimes/Unlawful Activities

The recent amendments to the AMLA also added to the list of unlawful activities or predicate crimes with corresponding criminal penalties. Now, the (i) violation of the Strategic Trade Management Act[15] relating to the proliferation of weapons of mass destruction and proliferation financing and (ii) tax evasion, where the deficiency tax in the final assessment in excess of Php25,000,000.00 per taxable year for each tax type covered and there being previous finding of probable cause by a competent authority, are considered to be unlawful activities under the AMLA.[16]

Thus, when any person, knowing that any monetary instrument or property relates to proceeds of these unlawful activities, transacts said monetary instrument or property, then that person is considered to have committed money laundering.[17]

For proliferation of weapons of mass destruction and proliferation financing, the AMLC may issue Targeted Financial Sanctions (“TFS”), which refer to asset freezing and prohibition to prevent funds or other assets from being made available to entities designated pursuant to United Nations Security Council resolutions.[18]

For tax evasion, it is important to note that the AMLC may not institute forfeiture proceedings to recover money or property relating to such tax crime, if the same has already been recovered by the BIR in a separate proceeding.[19]

Additional Functions for the AMLC

The amendments to the AMLA also expanded the functions of the AMLC. Now, the AMLC, in the conduct of investigations, has the power to apply for the issuance of search and seizure orders with any competent court.[20] In like manner, the AMLC may also apply for the issuance of subpoena duces tecum and/or subpoena ad testificandum.[21] As mentioned, the AMLC also has the power to implement TFS.[22] Lastly, the AMLC, through an Asset Management Unit, is now tasked with preserving, managing, or disposing assets pursuant to a freeze order, asset preservation order, or judgment of forfeiture.[23]

Final Note

We encourage persons engaged in real estate and offshore gaming to carefully review the recent amendments to the AMLA and ensure faithful compliance thereto. Emphasis must be placed on registration and reportorial requirements for Covered Persons, especially considering potential, not to mention hefty, liabilities.

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[1] This list refers to jurisdictions which have strategic deficiencies in their regimes to counter money laundering and are thus placed under FATF’s increased monitoring.

[2] The Anti-Money Laundering Act (“AMLA”), as amended by RA Nos. 9194, 10167, 10365, 10927, and 11521, Section 3(a)(9) and (10).

[3] Id., Section 3(a)(8)

[4] Under Section 3(b-1) of the AMLA, a suspicious transaction refers to those made with covered persons, regardless of amount, where: 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 Act; 5. any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the client’s past transactions with the covered institution; 6. the transaction is in any way related to an unlawful activity or offense under this Act 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.

[5] 2018 AMLA IRR, Rule 22, Section 4; Rule 4, Section 3.2.

[6] AMLA, Section 9(c).

[7] For more information, visit: http://www.amlc.gov.ph/2015-12-09-07-34-10/amlc-registration

[8] AMLA, Section 9(c).

[9] AMLA, Section 3(b).

[10] Id.

[11] 2018 AMLA IRR, Rule 22.

[12] 2019 AMLA Rules of Procedure on Administrative Cases, Rule IV.

[13] AMLA, Section 4(c).

[14] http://www.amlc.gov.ph/news-and-announcements

[15] RA No. 10697, Section 19(a)(3).

[16] AMLA, Section 3(i)(34) and (35).

[17] Id., Section 4.

[18] Id., Section 3(o).

[19] Id., Section 3(i)(35).

[20] Id., Section 7(13).

[21] Id., Section 7(14).

[22] Id., Section 7(15).

[23] Id., Section 7(16).