ANTI MONEY LAUNDERING ACT OF 2001

RA 9160 as amended by RA 9194

Purposes:
1. To protect and preserve the integrity and confidentiality of bank
accounts
2. To ensure that the Philippines shall not be issued a site for unlawful
money laundering activities
3. To pursue state’s foregin policy to extend cooperation in transnational
investigations and prosecutions of persons involved in money laundering
activities wherever committed.

Covered entities
1. Banks
2. Non banks
3. Quasi- banks
4. Trust entities and
5. All other institutions their subsidiaries and affiliates supervised or
regulated by the BSP
6. Insurance companies and institutions regulated by the insurance
commission
7. Foreign exchange corporations, money changer, money payment,
remittance and transfer companies and other similar entittes
8. Other entities administering or otherwise dealing in currency,
commodities or financial derivates, etc.

Covered Transaction
Transactions in cash or other equivalent monetary instrument involving a
total amount in excess of P500,000 within one banking day

These transactions are required to be reported to the Anti-Money

Laundering Council

Suspicious transactions
-transactions with covered institutions regardless of the amounts involved
where any of the following circumstances exists:

1. There is no underlying legal or trade obligation purpose or economic

justification,
2. Client is not properly identified
3. Any circumstances relating to the transaction which is observed to
deviate fro the profile and/or the client’s past transactions with the
covered institution.
4. Amount involved is not commensurate with the business or financial
capacity of the client
5. Taking into account all known circumstances, it amy be perceived that
the client’s transaction is structured in order to avoid being the subject of
reporting requirements under the Act
6. 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
7. Analogous transactions to any of the foregoing

Exceptions
Safe Harbor Provision
No case shall lie against any person for having made a covered
transaction report in the regular performance of his duties and in good
faith, whether or not such reporting results in any criminal prosecution
under the AMLA or any other Philippine Law.

Money Laundering
A crime whereby the proceeds of an unlawful activity are transacted,
thereby making them appear to have originated from legitimate sources

It is committed by the following:

1. Any person knowing that any monetary instrument or property

represents, involves or relates to the proceeds of any unlawful activity,
transacts or attempts to transact said monetary instrument or property

2. Any person knowing that any monetary instrument or property

involves the proceeds of any unlawfuly activity performs or fails to
perform any act as a result of which he facilitates the offense referred to
in number 1.

3. Any person knowing that any monetary instrument or property is

required under this act to be disclosed and filed with the AMLC, fails to
do so.

POWER TO FREEZE ACCOUNTS

The power of the AMLC to freeze acounts has now been deleted under
RA 9194.
The Court of Appeals may issue a freeze order, which shall be effective
immediately and for a period of 20 days unless extended by the Court.

Money laundering is the process of concealing the origins of money

obtained illegally by passing it through a complex sequence of banking
transfers or commercial transactions.
One problem of criminal activities is accounting for the proceeds without
raising the suspicion of law enforcement agencies. Considerable time and
effort may be put into strategies which enable the safe use of those
proceeds without raising unwanted suspicion. Implementing such
strategies is generally called money laundering. After money has been
laundered, it can be used for legitimate purposes.

The conversion or transfer of property, the concealment or disguising of

the nature of the proceeds, the acquisition, possession or use of property,
knowing that these are derived from criminal activity and participate or
assist the movement of funds to make the proceeds appear legitimate, is
money laundering.
Money obtained from certain crimes, such as extortion, insider
trading, drug trafficking, and illegal gambling is "dirty" and needs to be
"cleaned" to appear to have been derived from legal activities, so that
banks and other financial institutions will deal with it without suspicion.
Money can be laundered by many methods which vary in complexity and
sophistication.
Money laundering involves three steps: The first involves introducing
cash into the financial system by some means ("placement"); the second
involves carrying out complex financial transactions to camouflage the
illegal source of the cash ("layering"); and finally, acquiring wealth
generated from the transactions of the illicit funds ("integration"). Some
of these steps may be omitted, depending upon the circumstances.
Money laundering can take several forms, although most methods can be
categorized into one of a few types. These include "bank methods,
smurfing [also known as structuring], currency exchanges, and
double-invoicing".

 Structuring: Often known as smurfing, is a method of placement

whereby cash is broken into smaller deposits of money, used to defeat
suspicion of money laundering and to avoid anti-money laundering
reporting requirements. A sub-component of this is to use smaller
amounts of cash to purchase bearer instruments, such as money orders,
and then ultimately deposit those, again in small amounts.
 Bulk cash smuggling: This involves physically smuggling cash to
another jurisdiction and depositing it in a financial institution, such as
an offshore bank, with greater bank secrecy or less rigorous money
laundering enforcement.
 Cash-intensive businesses: In this method, a business typically
expected to receive a large proportion of its revenue as cash uses its
accounts to deposit criminally derived cash. Such enterprises often
operate openly and in doing so generate cash revenue from incidental
legitimate business in addition to the illicit cash. In such cases the
business will usually claim all cash received as legitimate earnings.
Service businesses are best suited to this method, as such enterprises
have little or no variable costs and/or a large ratio between revenue
and variable costs, which makes it difficult to detect discrepancies
between revenues and costs. Examples are parking structures, strip
clubs, tanning salons, car washes, arcades, bars, restaurants, and
casinos.
 Trade-based laundering: This involves under- or
over-valuing invoicesto disguise the movement of money. For
example, the art market has been accused of being an ideal vehicle for
money laundering due to several unique aspects of art such as the
subjective value of art works as well as the secrecy of auction houses
about the identity of the buyer and seller.
 Shell companies and trusts: Trusts and shell companies disguise the
true owners of money. Trusts and corporate vehicles, depending on the
jurisdiction, need not disclose their true owner. Sometimes referred to
by the slang term rathole, though that term usually refers to a person
acting as the fictitious owner rather than the business entity.
 Round-tripping: Here, money is deposited in a controlled foreign
corporation offshore, preferably in a tax haven where minimal records
 are kept, and then shipped back as a foreign direct investment, exempt
from taxation. A variant on this is to transfer money to a law firm or
similar organization as funds on account of fees, then to cancel the
retainer and, when the money is remitted, represent the sums received
from the lawyers as a legacy under a will or proceeds of litigation.
 Bank capture: In this case, money launderers or criminals buy a
controlling interest in a bank, preferably in a jurisdiction with weak
money laundering controls, and then move money through the bank
without scrutiny.
 Casinos: In this method, an individual walks into a casino and buys
chips with illicit cash. The individual will then play for a relatively
short time. When the person cashes in the chips, they will expect to
take payment in a check, or at least get a receipt so they can claim the
proceeds as gambling winnings.
 Other gambling: Money is spent on gambling, preferably on high
odds games. One way to minimize risk with this method is to bet on
every possible outcome of some event that has many possible
outcomes, so no outcome(s) have short odds, and the bettor will lose
only the vigorishand will have one or more winning bets that can be
shown as the source of money. The losing bets will remain hidden.