ON COVERED INSTITUTIONS UNDER ANTI-MONEY LAUNDERING ACT

From ANTI-MONEY LAUNDERING ACT to What you need to know about the Bank Secrecy Law

• Banks, insurance companies, brokers, and salesmen are covered institutions

• Covered institutions are required to establish and record the true identity of its clients based on official documents

• Covered institutions shall report all covered transactions within five (5) working days from occurrence

Money laundering is a crime whereby the proceeds of an unlawful activity as defined under Anti-Money Laundering Act are transacted, thereby making them appear to have originated from legitimate sources.

To protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines will not be used as a money laundering site for the proceeds of any unlawful activity, Republic Act No. 9160 or otherwise known as the “Anti-Money Laundering Act of 2001” was enacted

As a prevention of the crime of Money Laundering, covered institutions shall establish and record the true identity of its clients based on official documents. What are covered institutions?

The law says:

Covered institutions refer to:

1. banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);
2. insurance companies and all other institutions supervised or regulated by the Insurance Commission; and
3. (i) securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant,

(ii) mutual funds, close and investment companies, common trust funds, pre-need companies and other similar entities,

(iii) foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities, and

(iv) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by Securities and Exchange Commission.

However, almost twelve (12) years after, the Anti-Money Laundering Act of 2001 was amended by Republic Act No. 10365 to include the following as covered institutions or covered persons:

4. jewelry dealers in precious metals, who, as a business, trade in precious metals, for transactions in excess of One Million Pesos (Php 1,000,000.00);
5. jewelry dealers in precious stones, who, as a business, trade in precious stones, for transactions in excess of One Million Pesos (Php 1,000,000.00)
6. company service providers which, as a business, provide any of the following services to third parties: (i) acting as a formation agent of juridical persons; (ii) acting as (or arranging for another person to act as) a director or corporate secretary of a company, a partner of a partnership, or a similar position in relation to other juridical persons; (iii) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement; and (iv) acting as (or arranging for another person to act as) a nominee shareholder for another person; and
7. persons who provide any of the following services:

(i)      managing of client money, securities or other assets;

(ii)     management of bank, savings, or securities accounts;

(iii)    organization of contributions for the creation, operation or

management of companies; and

(iv)    creation, operation or management of juridical persons or

arrangements, and buying and selling business entities.

Are lawyers and accountants included in the term “covered persons”?

The law says:

No.

The term “covered persons” exclude lawyers and accountants acting as independent legal professionals in relation to information concerning their clients or where disclosure of information would compromise client confidences or the attorney-client relationship. This is on the condition that said lawyers and accountants are authorized to practice in the Philippines and shall continue to be subject to the provisions of their respective codes of conduct and/or professional responsibility or any of its amendments.

The above-enumerated covered institutions or covered persons shall establish and record the true identity of its clients based on official documents. They shall maintain a system of verifying the true identity of their clients and, in case of corporate clients, 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. This is called Customer Identification.

Also, all records of all transactions of covered institutions shall be maintained and safely stored for five (5) years from the date of transactions. With respect to closed accounts, the records on customer identification, account files and business correspondence, shall be preserved and safety stored for at least five (5) years from the dates when they were closed.

Furthermore, covered institutions are mandated to report to the Anti-Money Laundering Council (AMLC) all covered transactions within five (5) working days from the occurrence thereof, unless the Supervising Authority concerned prescribes a longer period not exceeding fifteen (15) working days.

What are covered transactions? A related article will be posted in a few days.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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