AMLA

1. Protect and preserve the integrity and confidentiality of bank accounts, to ensure he the Philippines
shall not be used as a site for unlawful money laundering activities; and
2. Pursue State's foreign policy to extend cooperation in tansnational investigations and prosecutions on
money laundering activities.
Covered transactions:
1. Treshold transactions
2. Suspicious transactions
1. No underlying legal or trade obligation, purpose oreconomic justification;
2. Client is not properly identified;
3. Amount involved not commensurate with client's business or financial capacity;
4. Based on all known circumstances, it may be perceived that client's transaction is structured in order
to avoid being subject of reporting requirements;
5. Any circumstance relating to transaction obseved to deviate from client's profile and/or client's
profile past transactions wih covered institutions;
6. Transactions is in any way related toan unlawful activity or offense under the act that is about to be,
is being, or has been committed;
7. Similaror analogous transactions.
Covered institutions:
1. Banks and other entities, their subsidiaries and affiliates, supervised/ regulated by BSP;
2. Insurance companies and other entities, supervised/regulated by insurance commisioner;
3. SEC supervised/ regulated entities.
Money laundering crime - is committed when the proceeds of an "unlawful activity" are transacted to
make them appear to have originated from legitimate sources, by the following acts:
1. Transacting or attempting to transact, with monetary instrument or property knowing it
represent/involves/relates to proceeds of any unlawful activity;
2. Facilitating money laundering referred to in item (a) above, by knowingly performing or failing to
perform an act;
3. Failing to disclose and file report with AMLC of any monetary instrument or property as required
under the law.
Unlawful activities:
1. Kidnapping for ransom
2. Drug trafficking
3. Graft and corrupt practices
4. Plunder
5. Robbery and extortion
6. Jueteng and masiao
7. Piracy on the high seas
8. Qualified theft
9. Swindling
10. Smuggling
11. Violations of E-Commerce Act of 2000
12. Hijacking, destructivearson and murder including acts of terrorism against non-combatant and persons
and similar targets
13. Fraudulent practices under the Securities Regulation Code of 2000

14. Felonies or offenses of similar nature punishable under the penal laws of the countries.
Jurisdiction:
*RTC: all cases of money laundering
*SANDIGANBAYAN: public officers and other private persons in conspiracy with such public officers.
Note: No money laundering case can be filed, nor can here be a freeze of account, against any candidate
for public office during an election campaign.
Penalties and other consequences:
1. Fines and imprisonment for conviction of money laundering offenses;
2. Civil and criminal forfeiture of monetary instrument or property for any money laundering offense;
3. Convicted offender to pay an amount equal to value of monetary instrument or property ordered
forfeited when order of forfeiture cannot be affeted.
Freezing of account:
The CA may issue a freeze order only 1.) Upon ex parte application of AMLC 2.) After the
determination that probable cause exists that any monetary instrument or property is in any way realted to
an "unlawful activit," which shall beeffective immediately, and for a period of 20 days unless extended by
court.
AMLC:
1.may seek court order to inquire into or examine a particular deposit or investment with a banking or
non-banking financial institution;
2. On its own, no court order required, in cases involving kidnapping, drug trafficking or terrorism.
*Upon probable cause that the deposits or inveztments are in any way related to any unlawful activity
or monel laundering offense.
Power of BSP: to ensure compliance of this act, BSP may inquire into or examine any deposit or
investment with any banking institution on non-bank financial institution when he examination is made in
the course of periodic or special examination.
Composition of AMLC:
*BSP Governor, as AMLC Chairman
*Insurance Commision Chairman
*SEC Chairman

NEW CENTRAL BANK ACT

It is the State's Central Monetary Authority mandated in the 1987 Constitution, which shall
function and operate as an independent and accountable body corporate in the discharge of its mandated
responsibilities concerning money, banking and credit.
Primary Objectives of BSP:
1. To maintain price stabiliy conducive to a balanced and sustainable growth of the economy;
2. To promoteand maintain the monetary stability and convertibility of the peso; and
3. To provide policy directions in areas of money, banking and credit, with supervision over operations of
banks, and with regulatory powers over operations of finance companies, and non-bank financial
institutions performing quasi-banking functions.

Note: BSP has authority to request from government offices and instrumentalities, GOCCs, data it
requires for the proper discharge of its functions and responsibilities, with the power to issue subpoena for
the production of books and records.
Roles of BSP:
1. Banker of the government
2. Represents the government with the IMF
3. Represents the government with oher financial institutions
4. Maintains the fiscal operations of the government
BSP Privileges and Prohibitions
1. Tax exempted
2. Exempted from Custom Duties
3. BSP cannot engage in development banking and financing
4. BSP shall phase out all fiscal agency functions, and transfer same to the DOF
5. BSP shall within 5 years phase out its regulatory powers over finance companies without quasi-banking
functions, and other institutions performing similar functions, the same to be assumed by the SEC.
MONETARY BOARD
BSP powers and functions are exercised by Monetary Board, composed of 7 members appointed by
the President of the Philippines for a term of 6 years:
1. Governor, as chairman
2. A member of the Cabinet designated by he President of the Philippines
3. 5 members who shall come from the private sector, all of whom shall serve full-time;
* No member of the Board may be reappointed more than once.
* In case of emergencies where time is insufficient to call a meeting of the Monetary Board, the
Governor with the concurrence of 2 other members of the Board, may decide any matter, or take an action
within he authority of the Board.
* The Governor shall thereafter submit a report to the President and Congress within 72 hours after
the action has been taken. At the soonest possible time, the Governor shall call a meeting of the Monetary
Board to submit his for ratification.
Qualifications of the members of the Monetary Board:
1. Must be a natural-born Filipino Citizens;
2. Atleast 35 years of age, with the exception of the Governor, who should atleast be 40 years of age;
3. Of good moral character, of unquestionable integrity, of known probity and patriotism; and
4. With recognized competence in social and economic disciplines.
Powers and functions of the Governor:
1. He shall be the head of a department, and his appointment shall be subject to the confirmation by he
Commision on Appointments;
2. He shall be BSP Chief Executive Officer;
3. He shall be the principal representative of the Monetary Board and of BSP.
Disqualification/inhibition on Governor and Board members:
1. Disqualified from being director, officer, employee, consultant, lawyer, agent or stockholder of any
bank, quasi-bank or any other institution which is subject to BSP supervision, in which case, such
membershall resign from, and divest himself of any and all interest in such institution before assumption
of office;

2. Those coming from private sectors shall not hold any other public office or public employment during
their tenure;
3. Cannot be connected directly with any multilateral banking or financial institution, or has a substantial
interest in any private bank in the Philipines, within 1 year prior to his appointment;
4. Cannot be employed in any such institution within 2 years aftsr expiration of his term, except when he
serves as an official representative of the Government in such institution;
5. Governor or full-time members shall limit their professional activities to those pertaining directly to
their position with BSP, and may not accept those any other employment, whether public or private,
renumerated or ad honorem, with the exception of positions in eleemosynary, civic, cultral or religious
organizationsor whenever, by designation of the president, the Governor of full-time memeber is tasked to
represent the interest of the Government;
6. When any member with personal or pecuniary interes in any matter in Monetary Board agenda, he shall
disclose his interest and shall retire from meeting when the matter is taken up.
Removal of Governor and Board Memebers:
President may remove any member of the Board fod any of the following reasons:
1. Subsequent disqualification;
2. Physical or mental incapacity that he cannot properly discharge his duties and responsibilities and such
incapacity has lasted for more than 6 months;
3. Guily acts or operations, which are fraudulent or illegal character, or which are manifestly opposed to
the aims and interest of a BSP; or
4. No longer possessing qualifications specified in he act.
Responsibilities/ liabilities of BSP Officers and Employees:
1. Those who willfully violate the act , or whose guilty of negligence, abuses of malfeasence or
misfeasance, or fail to exercise extraordinary diligence in the performance of their duties, shall be held
liable for any loss or injury suffered by BSP, or other banking institution as a result hereof.
2. Similar responsibility shall apply to members, officers and employees of BSP for:
1. Disclosure of any confidential information, or any information on Monetary Board discussions or
resolutions, or about confidential operations of BSP, unless the disclosure is in connection with the
performance of official BSP functions, or is with prior authorization of Monetary Board or Governor;
2. Use of such information for personal gain, or to the detriment of the Government, BSP or third
parties.
*BSP shall have supervision over, and conduct periodic or special examinations of, banking institutions
and quasi-banks, including their subsidiaries and affiliates engaged in allied activities.
*No restraining order or injunction shall be issued by the courts enjoining BSP from examining any
institution subject to its supervision or examination unless it is plainly arbitrary and made in bad faith.
*The sanction of closure would be imposed upon a bank by BSP even without notice and hearing -"close
now, hear later" scheme
*The refusal of any officer owner, agent, manager, director or officer-in-charge of any institution subjet to
the supervision or examination by BSP to make reports or permit examination is criminally punishable
under the act.
Prohibition on Bank Officers, Directors, Lawyers, Agents: BSP personnel are prohibited from:
1. Being an officer, director, lawyer or agent, employee, consultantnor stockholder, directly on indirectly,
of any institution, subject to BSP supervision or examination EXCEPT non-stock savings and loan
associations and provident funds organized exclusively for the employees of BSP;
2. Directly on indirectly requesting, or receiving any gift, present or pecuniary or material benefit for

himself or another, from any institution subject to BSP supervision or examination;

3. Revealing in any manner, except undef orders of the court, the Congress, or any Government offive or
agency authorized by law, information relating to the condition or business of any such institution;
4. Borrowing from any such institution unless 1.) adequately secured, and 2.) fully disclosed to Monetary
Board.
Appointment of CONSERVATOR
Whenever a bank or a quasi-bank is in:
1.) A state of continuing inability; or
2.) Unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of
depositors and creditors.
The Monetary Board may:
1.) Appoint a conservator to take charge, for a period not exceeding 1 year, of the assets, liabilities, and
the management thereof;
2. Reorganize the management;
3. Collect monies and debts due said bank; and
4. Exercise all powers necessary to restore its viability, with power to overrule or rebuke he actions of the
previous management board of directors of the bank or quasi bank.
When is Conservatoship terminated?
1. When the Monetray Board is satisfied that the institution can continue to operate on its own and the
conservatorship is no longer necessary;
2. Should the Monetary Board determine that the continuance in business of the institutionn would
involve probable loss to its depositors or creditors, in which case proceedings for receivership and
liquadation shall be pursued.
Proceedings in Receivership
Whenever the Monetary Board find tbat a bank or quasi bank :
1. Is unable to pay its liabilities as they become due in the ordinary course of business but shall not
include inability to pay caused by extraordinary demands induced by financial panic in the banking
community;
2. Has sufficient realizable assets to meet its liabilities;
3. Cannot continue in business wihout involving probable losses to its depositors or creditors; or
4. Has willfully violated a cease and desist order that has become final, involving acts or transactions
which amount to fraud, or a dissipation of the assets of the institution;
the Monetary Board may summarily and without need for prior hearing, forbid he institution
from doing business in the Philippines, and designated by PDIC as receiver of fhe banking institution.
Functions and obligations of the receiver:
1. Immediately gather and take charge of all assets and liabilities of the institution, administer the same
for the benefit of its creditors;
2. Exercise the general powers of a receiver;
3. Determine as soon as possible, but not later than 90 days from takeover, whether the institution may be
rehabilitated or otherwise place in such a condition so that it maybe permited to resume business wih
safety to its depositors and creditors and the genral public.
*Any determination of resumption of business shall be subject to the proir approval of the
Monetary Hoard.
Liquidation - if the receiver determines that the institution cannot be rahabilitated or permitted to resume

business, the Monetary Board shall notify in writing the Board of Directors of its findings, and direct the
receiver to proceed with the liquadation of the institution.
GENERAL BANKING LAW
State recognizes the vital role of the banks in providing an environment conducive to the sustained
development of the national economy; and Fiduciary nature of banks that requires high standards of
integrity and performance The State shall promote and maintain a stable and efficient banking and
financial system that is globally competitive, dynamic and responsive to the demands of a dveloping
economy. BANKING BUSINESS IS IMPRESSED WITH PUBLIC INTEREST.
Banks refer to entities engaged in the lending of funds obtained in the form of deposits, and classified as
follows:
1. Universal Banks;
2. Commercial Banks;
3. Thrift Banks:
a. Savings and mortgage banks
b. Stock savings and loan associations;
c. Private development banks;
4. Rural Banks
5. Cooperative Banks
6. Islamic Banks
*No person or entity shall engage in nbanking operations or quasi banking operations wihout aufhority
from the BSP. HOWEVER, an entity auhorized by BSP to perform universal or commercial banking
functions shall likewise have the authority to engage in quasi banking functions.
Authority and powers of the BSP:
1. Issuance of rules of conduct or standards of operation for uniform application to all institutions or
funxtions covered;
2. Conduct of examination to determine compliance with laws and regulations;
3. Overseeing compliance with laws and regulations;
4. Regular investigation to determine whether an institution is conducting its business on safe or sound
basis;
5. Inquiring into solvency and liquidity of the institution;
6. Enforcing prompt corrective action.
Quasi bank- are entities engaged in borrowing of funds through issuance, endorsement or assignment
with resource or acceptance of deposit substitutes for purposes of re-lending or purchasing of receivables
and other obligations.
Organization of Banks: Monetary Board may authorize organization of a bank or quasi banks subject to
the followig conditions:
1. Entity is a stock corporation;
2. Funds are obtained from the public, which shall mean 20 or more persons; and
3. Minimum capital requirements prescribed byMonetary Board for each category of banks ard satisfied.
* SEC shall not register articles of incorporation and/ or by-laws of any bank or any amendment thereto
unless accompanied by a certificate of authority issued by he Monetary Board.
*No bank shall purchase or acquire shares of its capital stock or accept its own shares as a security for a

loan except when authorized by Monetary Boar PROVIDED every case stock so purchase or acquired
shall wihin 6months from time of its purchase or acquisition, sold or disposed of at a public or private
sale.
*Foreign individual and non-bank corporations may own or control up to 40% of voting stock of
domestic bank. Rule shall apply to Filipinos and domestic non-bank corporations. Percentage of foreignowned voting stocks in a bank shall be determined by citizenship of indibidual stockholders in that bank.
Citizenship of corporation which iss a stockholder in a bank shall follow the citizenship of controlling
stockholders of the corporation, irrespectiveof placeof corporation.
BOARD OF DIRECTORS
Threre shall be atleast 5, and a maximum of 15 members of Board of directors of a bank, 2 of whom
shall be independent directors.
*In case of bank merger or consolidation, number of diretors shall not exceed 21.
*Non-Filipino citizens may become members of Board of Directors to extent of foreign equity
participation.
*Meetings of Board of Directors may be conducted through, but not limited to, teleconferencing and
video conferencing.
Fit and proper rule - To maintain the quality of bank management and affirdna better protection to
depositors and the public in gsneral, he Monetary board shall prescribe, oass uoon and review the
qualifications and disqualification of individuals elected or appointed bank directors or offeicers and
disqualify those found unfit.
In determining whether individual is fit and proper to hold position of a director or
officer, regard shall be given to his integrity, experience, education, training and competence.
*After due notice to the board of directors of the bank, Monetary Board may disqualify, suspend or
remove any bank director or officer who commits or omits an act which render him unfit nfor the position
*Prohibition on public officials - Except as provided in Rural BanksAct, no appointive or elective public
official, whether full time or part-time shall at the same time serve as an officer of a private bank, save in
cases where such incident to financial assistance provided by the government or a government-owned or
controlled corporation to the bank or unless otherwise provided undre existing laws.
*Universal or commercial banks may open branches or other offices within or outside the aphilippines
upon prior approval of BS.P. A BANK AND ITS BRANCHES AND OFFICES SHALL BE TREATED
AS 1 UNIT.
* Unless otherwise authorized by BSP in the interest of the banking public, all banks including their
branches and offices shall transact business on all working days, Monday to Friday, for 6 hours a day. In
addition, banks or any of their branches or offices may open for business on Saturdays, Sundays or
Holidays for atleast 3 hours a day. However, banks which opt to open on days other than working days
shall report to BSP the additional days which they or their branches or offices shall transact business.
*Any strike or lockouts involving banks, if unsettled nin 7 calendar days shall be reported by BSP to
DOLE Secretary who assume jurisdiction over dispute or decide it or certify the same to NLRC for
compulsory arbitration .HOWEVER, the President may intevene, at any time, and assume jurisdiction
over such dispute in order to settle or terminate the same.
Types of deposit:

1. Time deposit
2. Savings Deposit
3. Demand deposits or current accounts.
*Single Borrowe'rs limit: Except as Monetary Board may otherwise prescribe fro reasons of national
interest, total amount of loans, credit accomodations and guarantees that may be extended by a bank to
any person, partnership, association,mcorporation or other entity shall at no time exceed 20% of the net
worth of such bank. Unless Monetary Board prescribes oherwise, SBL may be increasedbyan additional
10% net worth, provided additional amount is supported adequately by trust receipts, shipping
documents, warehouse feceipts or other similar documents.
*No dire3ctor of officer shall directly or indirectly, for himself or as representative or agent of others:
1. Borrow from such bank; nor
2. Shall become an guarantor , indorser or surety formloans from such bank to others; nor
3. In manner be an obligor or incur any contractual liability to the bank.
EXCEPT: With a written approval of majority of all Directors of the bank, excluding director concerened.