SECRECY OF BANK DEPOSITS

Republic Act No. 1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING INSTITUTION
AND PROVIDING PENALTY THEREFOR.

I. Explain the purpose

 to give encouragement to the people to deposit their money in banking institutions and to
discourage private hoarding so that the same may be properly utilized by banks in
authorized loans to assist in the economic development of the country.
 all deposits, including investments in bonds, issued by the Government of the Philippines are
absolutely confidential nature and may not be examined, inquired or looked into by any
person or government officials.
 EXCEPT, upon written permission of the depositor, involved in criminal complaints or
subject in litigation.

II. Illustrate the Prohibited acts

 it shall be unlawful for any official or employee of a banking institution to disclose to any
person, other than those permitted, any information concerning said deposits or other
financial affairs.
 no one can just go to your bank and ask for your bank balance.

III. Discuss the types of deposits covered

 all deposits including bond investments issued by the Government of the Philippines.
 the bank secrecy law covers only savings, checking and other types of deposits, but not
investments in money markets, trust and mutual funds and the like.

IV. Apply the exceptions

 written consent of the depositor

 in cases of impeachment
 upon order of a competent court in cases of bribery or dereliction of duty or public officials
 in cases where the money deposited or invested is the subject matter of litigation
 upon a subpoena issued by the Ombudsman concerning an investigation it is conducting
 the Anti-Money Laundering Council (AMLC) can examine bank accounts pursuant to a court
order, unless, there is a probable cause that the deposits are related to certain crimes, AMLC
can examine bank accounts without court order.
 BSP can examine bank accounts in compliance with Anti-Money Laundering Law

V. Explain garnishment of deposits including foreign deposits

 another law governs secrecy of foreign currency deposits.

 foreign currency deposits are exempt from court order and administrative process.
 In fact, they are exempt from execution, attachment and garnishment.
 The purpose of RA 6426 is to encourage foreign currency deposits in order to beef up the
country’s international reserves.
 https://www.divinalaw.com/dose-of-law/peso-or-dollar/

Any violation; imprisonment – not more than 5 years; fine – not more than 20,000 pesos, or both, in the
discretion of the court.

The easiest way to wave Secrecy of Bank deposits is through a written waiver, should be made voluntarily with
sufficient awareness of relevant circumstances and consequences.

Approved: SEPTEMBER 9, 1955

TRUTH IN LENDING ACT

Republic Act No. 3765

AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH

EXTENSIONS OF CREDIT.

I. Describe the purpose

 to protect its citizens from a lack of awareness of the true cost of credit to the user
by assuring a full disclosure of such cost with a view of preventing the uninformed
use of credit to the detriment of the national economy.
o detriment - Any loss or harm to a person or property; relinquishment of a legal right, benefit, or
something of value. To incur detriment means to cement a promise by either refraining from
doing something that one has a legal right to do or by doing something that one is not under any
legal obligation to do.

II. Illustrate the obligation of creditors to persons to whom credit is extended

 a clear statement in writing setting forth, to the extent applicable and in accordance
with rules and regulations prescribed by the Board, the following information:
(1) the cash or delivered price of the property or service to be acquired
(2) the amounts, if any, to be credited as down payment and/or trade-in
(3) difference between clauses (1) and (2)
(4) the charges, individually itemized, which are paid or to be paid by such
person in connection with the transaction but which are not incident to the
extension of credit
(5) the total amount to be financed
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be financed
expressed as simple annual rate on the outstanding unpaid balance of the
obligation

III. Compare covered and excluded transaction

 any creditor, who fails to disclose to any person any information in violation of this
Act shall be liable to such person in the amount of P100 or in an amount equal to
twice the finance charged required by such creditor with such transaction,
whichever is greater, except that such liability shall not exceed P2,000 on any credit
transaction.
 action to recover such penalty may be brought by such person within one year from
the date of the occurrence of the violation, in any court of competent jurisdiction.
 the creditor shall be liable for reasonable attorney’s fees and court costs as
determined by the court.
 violation; fined by not less than P1,000 or more than P5,000 or imprisonment for
not less than 6 months, nor more than one year.
 no punishment or penalty provided by this Act shall apply to the Philippine
Government or any agency or any political subdivision thereof.

IV. Describe the consequences of non-compliance with obligation

 violation; fined by not less than P1,000 or more than P5,000 or imprisonment for
not less than 6 months, nor more than one year.

Approved: June 22, 1963

ANTI-MONEY LAUNDERING ACT OF 2001 (AMLA LAW)

Republic Act No. 9160

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING PENALTIES THEREFOR AND
FOR OTHER PURPOSES

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

I. Discuss the purpose, policies and principles

 to protect and preserve the integrity and confidentiality of bank accounts and to
ensure that the Philippines shall not be used as a money laundering site for the
proceeds of any unlawful activity.
 consistent with its foreign policy, the State shall extend cooperation in transnational
investigations and prosecutions of persons involved in money laundering activities
wherever committed.

II. Discuss the definition of terms

 covered institution
(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and
their subsidiaries and affiliates supervised or regulated by the BSP
(2) insurance companies and all other institutions supervised or regulated by
Insurance Commission
(3) securities dealers, mutual funds, foreign exchange corporations, other
entities administering or otherwise dealing in currency, and other similar
entities supervised or regulated by SEC.
 covered transaction – single, series, or combination of transactions involving a total
amount in excess of P4,000,000 or an equivalent amount in foreign currency based
on the prevailing exchange rate within five (5) consecutive banking days
o EXCEPT; those between a covered institution and a person who, at
the time of the transaction was a properly identified client and the
amount is commensurate with the business or financial capacity of
the client; or those with an underlying legal or trade obligation,
purpose, origin or economic justification.
o commensurate - to reduce to a common measure
 monetary instrument – coins or currency of legal tender of the Philippines, or of any
other country.
 offender – any person who commits a money laundering offense
 person – any natural or juridical person
 proceeds – an amount derived or realized from an unlawful activity
 supervising authority – appropriate supervisory or regulatory agency
 transaction – any contractual or legal relationship between the parties thereto

III. Illustrate unlawful activities

 unlawful activities
(1) kidnapping for ransom (Article 267 of Act. No. 3815)
(2) Dangerous Drugs Act of 1972 (Republic Act No. 6425)
(3) Anti –Graft and Corrupt Practices Act (Republic Act No. 3019)
(4) Plunder (Republic Act No. 7080)
(5) robbery and extortion (under RPC)
(6) Jueteng and Masiao (Presidential Decree No. 1602)
(7) Piracy on the high seas (Presidential Decree No. 352)
 (8) qualified theft (Art. 310 of RPC)
(9) swindling (Art. 315 of RPC)
(10) smuggling (Republic Act Nos. 455 and 1937)
(11) Electronic Commerce Act of 2000 (Republic Act No. 8792)
(12) hijacking and other violations (Republic Act No. 6235)
(13) fraudulent practices and other violations (Republic Act No. 8799/Securities
Regulation Code of 2000)
(14) felonies or offense s of a similar nature that are punishable under the penal
laws of other countries

IV. Determine who are covered persons

 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 property.
 any person knowing that any monetary instrument or property involves proceeds of
any unlawful activity, performs or fails to perform any act as a result of which he
facilitates the offense of money laundering referred to in paragraph above.
 any person knowing that any monetary instrument or property is required under
this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC),
fails to do so.

V. Describe money laundering, terrorism and financing and asset forfeiture

 Money laundering is the illegal process of making large amounts of money

generated by a criminal activity, such as drug trafficking or terrorist funding, appear
to have come from a legitimate source. The money from the criminal activity is
considered dirty, and the process "launders" it to make it look clean.
o placement - the money is introduced into the financial system, usually by
breaking it into many different deposits and investments
o layering - the money is shuffled around to create distance between it and the
perpetrators
o integration - the money is then brought back to the perpetrators as
legitimate income, or "clean" money
 Terrorism is the unlawful use of violence and intimidation, especially against
civilians, in the pursuit of political aims.
o international terrorism; domestic terrorism; transnational terrorism
 Asset forfeiture
o civil forfeiture – when there is a covered transaction report made, and the
court has, in a petition filed for the purpose ordered seizure of any monetary
instrument or property, in whole or in part, directly or indirectly, related to
the said report, the Revised Rules of Court on civil forfeiture shall apply.
o claim on forfeiture assets – any person claiming an interest therein may
apply, by verified petition, for a declaration that the same legitimately
belongs to him and for segregation or exclusion of the monetary instrument
or property corresponding thereto.
 shall apply in both civil and criminal forfeiture
 within fifteen (15) days from the date of the order of forfeiture
o payment in lieu of forfeiture – the court may order the convicted offender to
pay an amount equal to the value of said monetary instrument or property.

VI. Apply the illustrate preventive measures and obligations of covered persons

 the following financial institutions

 (1) persons supervised and/or regulated by BSP, including their subsidiaries
and affiliates, which are also covered persons, supervised and/or regulated
by the BSP such as; banks, quasi-banks, trust entities, etc.
(2) persons supervised or regulated by IC, such as; insurance companies, pre-
need companies, insurance agents, etc.
(3) persons supervised or regulated by SEC, such as; securities dealers, mutual
funds, foreign exchange corporations, other entities administering or
otherwise dealing in currency, and other similar entities.
 the following Designated Non-Financial Businesses and Professions (DNFBPs) such
as jewelry dealers, acting as a formation agent of juridical persons, providing a
registered office, etc.
 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
(4) creation, operation or management of juridical persons or arrangements,
and buying and selling business entities
 casinos, including internet-based casinos and ship-based casinos, with respect to
their casino cash transactions related to their gaming operations.

VI (A) Prohibited accounts

 Anonymous Accounts and Accounts under Fictitious Names.

(1) Covered persons shall maintain customers’ account only in the true and full
name of the account owner or holder.
(2) Anonymous accounts, accounts under fictitious names, and all other similar
accounts shall be absolutely prohibited.
 Numbered Accounts.
(1) Numbered accounts, except non-checking numbered accounts, shall not be
allowed.
(2) Cash Transaction Reports (CTRs) and Suspicious Transaction Reports
(STRs) involving non-checking numbered accounts shall contain the true
name of the account holder.
 Annual Testing to Determine True Identity of Accounts - The SAs may conduct
annual testing for the sole purpose of determining the existence and true identity of
the foregoing accounts, if any.

VI (B) Customer due diligence

 Purpose and Applicability of CDD

o Purpose of CDD
(1) To identify the customer, and its agents and beneficial owners
(2) To determine the risk posed by each customer
(3) To establish, maintain, close or terminate the account or business
relationship
(4) To assess the level of monitoring to be applied
o When is CDD Required
(1) establishing business or professional relationship
(2) carrying out occasional transactions above (Php 100,000.00) or any
other threshold as may be determined by the relevant SAs, with
notice to the Council, including situations where the transaction is
 carried out in a single operation or in several operations that appear
to be linked
(3) carrying out occasional wire transfers in the circumstances under
Rule 19, Section 6 hereof
(4) there is a suspicion of ML/TF, regardless of any exemptions or
thresholds that are referred to elsewhere under this IRR; or
(5) the covered person has doubts about the veracity or adequacy of
previously obtained identification information and/or data.
o Existing Customers - covered persons shall apply CDD requirements to
existing customers on the basis of materiality and risk, and to conduct due
diligence on existing relationships at appropriate times, taking into account
whether and when CDD measures have previously been undertaken and the
adequacy of information and document obtained.
 Customer Due Diligence Measures
o Covered persons shall conduct the appropriate CDD measures, which
include the following procedures:
(1) Customer Identification Process;
(2) Customer Verification Process;
(3) Identification and Verification of Agents;
(4) Beneficial Ownership Verification;
(5) Determination of the Purpose of Relationship; and
(6) Ongoing Monitoring Process
o Timing of CDD Measures - the foregoing CDD measures may be conducted
simultaneously, consecutively, or at such timing and frequency as the
covered person may determine to be appropriate, depending on the risks
involved, unless otherwise provided in this IRR.
o Average Due Diligence - the requirements set forth in this IRR are for
Average Due Diligence (ADD), unless otherwise stated or allowed to be RDD
or EDD.
o Customer Acceptance Policies - covered persons shall have clear, written
and graduated customer acceptance policies and procedures that will seek
to prevent suspicious individuals or entities from transacting with, or
establishing or maintaining business relationship with them. Covered
persons shall develop guidelines to assist their responsible officers in
assessing whether a customer’s profile warrants acceptance or refusal of
service to protect the security and integrity of the business.

VII. Explain and apply beneficial ownership

“Beneficial owners” refers to those individuals or natural persons who ultimately own or control
the customer, or those for whom another person conducts a transaction. Money launderers and
terrorists routinely use the cloak of anonymity to prevent the AMLC and law enforcement agencies
(LEAs) to track them down.

 General Requirement for BOV. Covered persons shall identify the beneficial
owner and take reasonable measures to verify the identity of the beneficial owner,
using the relevant information or data obtained from a reliable sources, such that
the covered person is satisfied that it knows who the beneficial owner is.
 Document Evidencing Relationship. Covered persons shall determine the true
nature of the beneficial owner’s capacities and duties vis-à-vis his agent by
obtaining a copy of the written document evidencing their relationship and apply
the same standards for assessing the risk profile and determining the standard of
CDD to be applied to both.
  Timing of BOV. Covered persons shall verify the identity of the beneficial owner
before or during the course of establishing a business or professional relationship,
or conducting transactions for occasional customers in excess of the threshold. They
may complete the BOV after the establishment of the business or professional
relationship; Provided, that:
(1) this occurs as soon as reasonably practicable;
(2) this is essential not to interrupt the normal conduct of business; and
(3) the ML/TF risks are effectively managed.
 BOV for Juridical Persons. For customers that are juridical persons, the covered
persons shall identify and take reasonable measures to verify the identity of
beneficial owners through the following information:
(1) the identity of the natural persons, if any, who ultimately have
controlling ownership interest in a juridical person;
(2) to the extent that there is a doubt under item above, as to whether
the persons with the controlling ownership interest are the
beneficial owners or where no natural person exerts control through
ownership interests, the identity of the natural persons, if any,
exercising control over the juridical person through other means;
and
(3) where no natural person is identified under items (1)and (2) above,
the identity of the relevant natural persons who hold senior
management positions.
 BOV for Legal Arrangements. For customers that are legal arrangements, the
covered person shall identify and take reasonable measures to verify the identity of
beneficial owners through the following information:
(a) For trust agreements: the identity of the trustors/grantors/settlors,
the trustees, the beneficiaries or class of beneficiaries, the protector,
if any, and any other natural person exercising ultimate effective
control over the trust agreement.
(b) For beneficiaries of trust agreements that are designated by
characteristics or by class: sufficient information concerning the
beneficiary to satisfy the covered person that it will be able to
establish the identity of the beneficiary at the time of the payout or
when the beneficiary intends to exercise vested rights.
(c) For other types of legal arrangements: the identity of persons in
equivalent or similar positions.
 Guidelines on Beneficial Ownership. The AMLC shall formulate guidelines on the
detailed implementation of the requirements on BOV.

VIII. Identify the record keeping requirements

 Record-Keeping. Covered persons shall maintain and safely store for five (5) years
from the dates of transactions all customer records and transaction documents.
 Closed Accounts and Terminated Relationships. Covered persons shall keep all
records obtained through CDD, account files and business correspondence, and the
results of any analysis undertaken, for, at least, five (5) years following the closure
of account, termination of the business or professional relationship or after the date
of the occasional transaction.
 Retention of Records Where there is a Case. If a case has been filed in court
involving the account, records must be retained and safely kept beyond the five (5)-
year period, until it is officially confirmed by the AMLC Secretariat that the case has
been resolved, decided or terminated with finality.
 Form of Records.
 o Complimented by the requirements under the 2018 Guidelines on
Digitization of Customer Records, covered persons shall retain all
transaction records either in:
(1) their original forms; or

(2) such other forms sufficient to permit reconstruction of

individual transactions so as to provide admissible evidence
in court.

o Covered persons shall keep the electronic copies of all CTRs and STRs for, at
least, five (5) years from the dates of submission to the AMLC.
o For low risk customers, covered persons shall maintain and store, in
whatever form, a record of information data and transactions, sufficient to
permit reconstruction of individual transactions so as to provide, if
necessary, evidence for prosecution of criminal activity.
 Availability of Records.

(1) Covered persons shall ensure that all CDD information and
transaction records are available swiftly to domestic competent
authorities in the exercise of their official functions or upon order by
a competent authority.

(2) Covered persons shall take measures to ensure that customer

records are submitted in the manner, quality and period as would
assist the AMLC in its prompt financial investigations and institution
of legal actions. For this purpose, covered persons shall implement
the guidelines on the digitization of customer records issued by the
AMLC.

IX. Discuss safe harbor

 No administrative, criminal or civil proceedings shall lie against any person for
having made a CTR or an STR 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.

SEC. 5. Jurisdiction of Money Laundering Cases – The regional trial courts shall have jurisdiction to try
all cases on money laundering. Those committed by public officers and private persons who are in
conspiracy with such public officers shall be under the jurisdiction of the Sandiganbayan.

Anti-Money Laundering Council (AMLC) – Governor or BSP as chairman, the Commissioner of the
Insurance Commission and the Chairman of the SEC as members.

Secretariat – headed by an Executive Director for a term of five (5) years. He must be a member of a
Philippine Bar, at least thirty-five (35) years of age and of good moral character, unquestionable
integrity and known probity. All members of the Secretariat must have served at least five (5) years
either in the Insurance Commission, the SEC, or BSP and shall hold full-time permanent positions
within the BSP.

Section 10. Authority to Freeze. Upon determination that probable cause exists that any deposit or
similar account is in any way related to unlawful activity, the AMLC may issue a freeze order, which
shall be effective immediately, on the account for a period not exceeding fifteen (15) days. Notice to
the depositor that his account has been frozen shall be issued simultaneously with the issuance of the
freeze order. The depositor shall have seventy-two (72) hours upon receipt of the notice to explain why
the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of the depositor’s
explanation. If it fails to act within seventy-two (72) hours from receipt of the depositor’s explanation,
the freeze order shall be automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may
be extended upon order of the court, provided that the fifteen (15)-day period shall be tolled pending
the court’s decision to extend the period. No court shall issue a temporary restraining order or writ of
injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme
Court.

Penalties for the Crime of Money Laundering;

(Sec. 4a) imprisonment ranging from seven (7) to fourteen (14) years; fine of not less
than three million pesos (P3,000,000) but not more than twice the value of the
monetary instrument or property involved in the offense.

(Sec. 4b) imprisonment from four (4) to seven (7) years; fine not less than one million
five hundred thousand pesos (P1,500,000) but not more than three million
pesos (P3,000,000).

(Sec. 4c) imprisonment from six (6) months to four (4) years; fine of not less than one
hundred thousand pesos (P100,000) but not more than five hundred thousand
pesos (P500,000)

Penalties for Failure to Keep Records; imprisonment from six (6) months to one (1) year; fine of not
less than one hundred thousand pesos (P100,000) but not more than five hundred thousand pesos
(P500,000), or both. (Sec. 9b)

Malicious Reporting; six (6) months to four (4) years imprisonment; fine of not less than one hundred
thousand pesos (P100,000) but not more than five hundred thousand pesos (P500,000). The offender is
not entitled to avail the benefits of the Probation Law.

Corporation – responsible officers; Juridical person – suspend or revoke its license; alien –
deported; Public official or employee – perpetual or temporary absolute disqualification from
office.

Breach of Confidentiality; imprisonment ranging from three (3) to eight (8) years; fine of not less than
five hundred thousand pesos (P500,000) but not more than one million pesos (P1,000,000). (Sec. 9c)

SEC. 19. Implementing Rules and Regulations. Within thirty (30) days from the effectivity of this Act,
the BSP, IC, and SEC shall promulgate the rules and regulations to implement effectively the provisions
of this Act. Said rules and regulations shall be submitted to the Congressional Oversight Committee for
approval.

Congressional Oversight Committee – seven (7) members from the Senate (shall be appointed by the
Senate President) and seven (7) members form the House of Representatives (shall be appointed by the
Speaker).

The provisions of this Act shall not apply to deposits and investments made prior to its effectvity.

Approved: September 29, 2001 | Gloria Macapagal - Arroyo