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Key Prudential Regulations

Anti-Money Laundering

There have been a total of 27 BSP issuances aimed at strengthening anti-money laundering regulations. These issuances are:

Circular No. 251 dated 7 July 2000
Circular No. 253 dated 31 July 2000
Circular Letter dated 31 July 2000
Circular No. 258 dated 6 September 2000
Circular No. 259 dated 29 September 2000
Circular No. 264 dated 27 October 2000
Circular Letter dated 2 January 2001
Circular Letter dated 15 January 2001
Circular No. 279 dated 2 April 2001
Circular No. 302 dated 17 October 2001
Circular No. 308 dated 15 November 2001
Circular No. 333 dated 30 May 2002
Memorandum to All Banks/NBFIs dated 16 September 2002
Memorandum to All Banks/NBFIs dated 25 September 2002
Memorandum to All Banks/NBQBs dated 1 October 2002
Circular Letter dated 11 April 2003
Memorandum to All Banks/NBQBs dated 17 October 2003
Circular Letter dated 20 January 2004
Circular Letter dated 13 April 2004
Circular Letter dated 2 July 2004
Memorandum to All Banks/NBQBs dated 9 September 2004
Circular Letter dated 27 July 2004
Circular Letter dated 8 August 2004
Circular Letter dated 18 August 2004
Circular No. 451 dated 14 September 2004
Circular Letter dated 20 October 2004
Circular Letter dated 4 November 2004
Circular No. 471 dated 24 January 2005

Effectively, the new rules and regulations stress the customer-identification requirements by requiring, among others, the proper identification of the payee of cashier’s or manager’s checks payable to cash or bearer; the maintenance of banks of parallel customer-identification records for numbered foreign currency deposit accounts; and the introduction of a suspicious transaction reporting system.

Banks and NBFIs have been required to submit to BSP a report of transactions when there is information or reasonable basis to suspect that these were entered into for the purpose of laundering proceeds of criminal or other illegal activities. (Circular No. 253 dated 31 July 2000)

Section 77 of Circular No. 1389 dated 13 April 1993 (as amended) which allows authorized banks to adopt a numbered account system was further amended to require banks/NBFIs to take necessary measures to establish and record the true identity of their clients in line with Circular No. 251 dated 7 July 2000. (Circular No. 258 dated 6 September 2000)

Meanwhile, a special committee was created by the MB to effectively monitor and evaluate reports on alleged money-laundering activities.

Tighter reporting requirement on non-bank foreign exchange trading firms was also imposed.

On 21 December 2000, the MB confirmed the inclusion of the Offshore Banking Units (OBUs) in the coverage of all the anti-money laundering rules and regulations. They shall be subject to the same penalties as those to be imposed on UBs/KBs. They were given 30 days from 15 January 2001 within which to comply with all existing requirements. (Circular Letter dated 15 January 2001)

On 17 October 2001, the MB enjoined strict compliance with the rules and regulations implementing Section 9 of R. A. No. 9160. (Circular No. 302 dated 17 October 2001)

Effective 1 January 2002, any person who brings into or out of the Philippines foreign currency in excess of US$10,000 or its equivalent is required to declare the same in writing and to furnish information on the source and purpose of the transport of such currency. (Circular No. 308 dated 15 November 2001)

OBUs, quasi-banks, trust entities, NSSLAs, pawnshops and all other institutions, including their subsidiaries and affiliates supervised and/or regulated by the BSP, otherwise known as “Covered Institutions” were required to comply with the provisions of the Anti-Money Laundering Act (AMLA) of 2001. (Circular No. 333 dated 30 May 2002

In line with the preparation of their Know-Your-Customer (KYC) programs, Banks and NBQBs are required to adopt the standards contained in the Basel Committee on Banking Supervision paper on Customer Due Diligence for Banks which in turn, shall become the basis for assessing the anti-money laundering programs of Banks/NBQBs. (Memorandum to All Banks NBQBs dated 1 October 2002)
Banks were reminded to be vigilant in dealing with customers especially in matters dealing with requisition of unusually large volume of check booklets. Banks, by applying the KYC policy, should be able to determine the legitimacy of business activities of the client and should be able to report those considered suspicious transactions under the AMLA. (Circular Letter dated 11 April 2003)

The guidelines on Customer Due Diligence issued under Memorandum to All Banks and NBQBs dated 1 October 2002 were revised to effect the following: (a) Item 1 on Customer acceptance policy so as to identify high risk customers as individuals holding important/prominent positions, public or private; (b) to reflect said revision in Item 2.2.3 on Potentate risk under the sub-heading Reputational risk as well as on Item 3 on On-going monitoring of high risk accounts and in footnote 7; (c) Paragraph 2 of Item 2 on Customer identification so as to identify the best documents for verifying the identity of customers such as passport, driver’s license or alien certificate of registration; and d) to delete Item 2.2.4 on Non-face-to-face customers. (Memorandum to All Banks and NBQBs dated 17 October 2003)

Banks and NBFIs were requested to participate actively in public awareness campaign on unscrupulous business proposals involving large amount of money from suspicious individuals abroad. (Circular-Letter dated 20 January 2004)

The MB, in its Resolution No. 807 dated 3 June 2004, approved the Minimum Guidelines for Fund Transfers and Minimum Guidelines for Correspondent Banking Account Opening and Customer Identification to be made part of the bank’s standard operating procedures manual and wider anti-money laundering program. (Circular No. 436 dated 18 June 2004)

Banks and NBFIs were reminded that all their transactions whether conducted by its regular banking unit, trust department, Foreign Currency Deposit Unit (FCDU) or any other unit are covered by reporting requirements as provided for under Sections 1 and 9 of the Anti-Money Laundering Act of 2001. (Circular Letter dated 2 July 2004)

Dissemination to all concerned financial institutions of clarification/ information on the definition of “Suspicious Transactions” under the AMLA and its Revised Implementing Rules and Regulations in connection with their obligation to file Suspicious Transaction Reports (STR). (Memorandum to all Banks/NBQBs dated 9 September 2004)
The MB, in its Resolution No. 1238 dated 2 September 2004, approved the following revisions in the Manual of Regulation for Banks (MORB) and Manual of Regulations for Non-Bank Financial Institutions (MORNBFI): (a) Incorporation of the Revised Implementing Rules and Regulations (IRRs) of R.A. No. 9160 (The Anti-Money Laundering Act of 2001) as amended by R.A. No. 9194 in the 2003 updates of the MORB and MORNBF; (b) Adoption and inclusion of the Anti-Money Laundering Council Resolution Nos. 292 and 317 dated 24 October 2003 and 30 December 2003, respectively, on covered transactions reports, and; (c) Deletion of “suspension of rediscounting privileges” as a sanction on quasi-banks for violation of prescribed FX position limits. (Circular No. 451 dated 14 September 2004)

Banks and NBFIs were requested to disseminate to the public, especially to their clients copy of Anti-Money Laundering Council (AMLC) Resolution No. 425 dated 11 October 2004 requesting the republication of a warning regarding text scams. (Circular Letter dated 4 November 2004)

All foreign exchange dealers, money changers and remittance agents are subject to the provisions of R.A. No. 7653 (The New Central Bank Act) and R.A. No. 9160 (Anti-Money Laundering Act of 2001), as amended by R.A. No. 9194 and its implementing rules and regulations, particularly on customer identification, record keeping and reporting of covered transactions and suspicious transactions. (Circular No. 471 dated 24 January 2005)

On 11 February 2005 the Cook Islands, Indonesia and the Philippines have been removed from the list of Non-Cooperative Countries and Territories (NCCTs). Recent FATF visits to these countries confirmed that they are effectively implementing anti-money laundering (AML) measures to remedy deficiencies that were identified by the FATF. The Cook Islands, Indonesia, and the Philippines have AML systems that include strict customer identification, suspicious transaction reporting, bank examinations, and legal capacities to investigate and prosecute money laundering. All three countries have developed financial intelligence units (FIUs)-specialized units that analyze financial data, coordinate national efforts, and facilitate international co-operation. The FATF will now monitor the implementation of these measures in the three countries to ensure that they sustain their recent commitments and progress. The current NCCT list includes Myanmar, Nauru, and Nigeria.