WHAT IS THE “SAFE HARBOR PROVISION” IN ANTI-MONEY LAUNDERING ACT?

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• No administrative, criminal or civil proceedings shall lie against any person for having made a covered transaction report or a suspicious transaction report in the regular performance of his duties and in good faith.

• This provision applies whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law.

• When reporting covered or suspicious transactions, the covered institution is deemed not to have violated the Act Prohibiting Disclosure of Deposits, the Foreign Currency Deposits Act, and the General Banking Law.

The Safe Harbor Provision under the Anti-Money Laundering Act intends to shield persons and entities from administrative, criminal or civil liability for making a covered transaction report in the regular performance of duties and in good faith.

 

To better understand the Safe Harbor Provision of the Anti-Money Laundering Act of 2001, it is important to know what covered transactions and suspicious transactions are, as well as what institutions are considered as covered institutions.

 

What is a covered transaction?

 

Covered transactions under the Anti-Money Laundering Act of 2001 include the following:

1. A transaction in cash or other equivalent monetary instrument exceeding PhP500,000.00 within one (1) banking day (Section 3(b), AMLA);
2. Transactions by dealers of jewelry, precious metals, and precious stones in excess of PhP1,000,000.00 (Section 3(a)(4), AMLA); and
3. Real estate transactions involving an amount in excess of PhP500,000.00 within fifteen (15) days from the date of registration of the transaction (Section 7(12), AMLA)

 

What is a suspicious transaction?

 

Under Rule 2, Section 1 of the 2018 IRR of R.A. No. 9160, as amended, a transaction is deemed suspicious, regardless of the amount, where any of the following circumstances exists:

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 all client’s transaction is structured in order to avoid being subject of reporting requirements under the Anti-Money Laundering 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 person;
6. The transaction is any way related to an unlawful activity or any money laundering activity or offense that is about to be committed, is being or has been committed; or
7. Any transaction that is similar, analogous or identical to any of the foregoing.

 

Under Section 3(a) of the Anti-Money Laundering Act of 2001, as amended, the following are covered entities or persons who are obligated to report covered or suspicious transactions:

1. Financial Institutions
   1. Persons supervise and/or regulated by the Bangko Sentral ng Pilipinas, including their subsidiaries and affiliates, which are also covered persons, supervises and/or regulated by the BSP such as:
      1. Banks;
      2. Quasi-banks;
      3. Trust entities;
      4. Pawnshops;
      5. Non-stock savings and loan associations;
      6. Other non-bank financial institutions which under special laws are subject to BSP supervision and/or regulation;
      7. Electronic money issuers; and
      8. Foreign exchange dealers, money changers, and remittance and transfer companies.
   2. Persons supervised and/or regulated by the Securities and Exchange Commission, such as:
      1. Securities dealers, brokers, salesmen, investment houses, and other similar persons managing securities or rendering services, such as investment agents, advisors, or consultants;
      2. Mutual funds or open-end investment companies or issuers, and other similar entities; and
      3. Other entities, administering or otherwise dealing in commodities, or financial derivatives based thereon, valuable objects, cash substitutes, and other similar monetary instruments or properties, supervised or regulated by the SEC.
2. Designated Non-Financial Businesses and Professions:
   1. Jewelry dealers;
   2. Dealers in precious metals, and dealers in precious stones; and
   3. Company service providers, which, as a business, provide any of the following services to third parties:
      1. Acting as a formation agent of juridical persons;
      2. Acting as (or arranging for another person to act as) director or corporate secretary of a company, a partner of a partnership, or a similar position in relation to other juridical persons;
      3. Providing a registered office, business address or accommodation, correspondence or administrative address for a company, partnership or any other juridical person or legal arrangement; and
      4. Acting as (or arranging for another person to act as) a nominee shareholder for another person.
   4. Persons including lawyers, accountants and other professionals, who provide any of the following services:
      1. Managing of client money, securities or other assets;
      2. Management of bank, savings, securities or other assets;
      3. Organization of contributions for the creation, operation or management of companies; and
      4. Creation, operation or management of juridical persons or arrangements, and buying and selling business entities.
   5. Casinos, including internet-based casinos and ship-based casinos, with respect to their cash transactions related to their gaming operations. (2018 Implementing Rules and Regulations of R.A. No. 9160, Rule 4, Section 1)

 

The law says:

 

The Revised Rules and Regulations Implementing Republic Act No. 9160 (the Anti-Money Laundering Act of 2001) provides for the Safe Harbor Provision. To wit:

“Rule 9.c.5. Safe Harbor Provision. – No administrative, criminal or civil proceedings shall lie against any person for having made a covered transaction report or a suspicious transaction report in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law.”

 

It must be noted that when reporting covered or suspicious transactions, covered institutions and its officers and employees are prohibited from communicating to any person or media of such fact and from publishing or airing such report by the mass media, emails, or through other devices. (Section 9(c), AMLA).

In the same vein, when reporting covered or suspicious transactions, the covered institution is deemed not to have violated the Act Prohibiting Disclosure of Deposits (R.A. No. 1405), the Foreign Currency Deposits Act (R.A. No. 6426), and the General Banking Law (R.A. No. 8791).

Covered institutions shall report to the Anti-Money Laundering Council all covered and suspicious transactions within five (5) days from occurrence therefore. This can be extended but not exceeding fifteen (15) working days. (Section 9(c), Anti Money Laundering Act).

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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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