Fin 100 Notes
Fin 100 Notes
1.Banks,non-banks,quasi-banks,trust entities, foreign The term "covered persons" shall exclude lawyers and
exchange dealers, pawnshops, money changers, accountants
remittance and transfer companies and other similar These persons must be acting as independent legal
entities and all other persons and their subsidiaries and professionals in relation to information concerning their
affiliates supervised or regulated by the Bangko Sentral clients or where disclosure of information would
ng Pilipinas (BSP): compromise client confidences or the attorney-client
relationship 3[al).
2.Insurance companies, pre-need companies and all
other persons supervised or regulated by the Insurance
Commission (IC); Requisites for exclusion:
1.They must be acting as independent legal professionals;
3.(i) Securities dealers, brokers, salesmen, investment 2.Authorized to practice in the Philippines; and
houses and other similar persons managing securities or 3. Continue to be subject to the provisions of their
rendering services as investment agent, adviser, or respective codes of conduct and/or professional
consultant, responsibility or any of its amendments (lbid).
(a)Mutual funds, close-end investment companies, NOTE: Lawyers and accountants acting as independent
common trust funds, and other similar persons, and legal professionals are not required to report covered and
()Other entities administering or otherwise dealing in suspicious transactions it the relevant information was
currency, commodities or financial derivatives based obtained in circumstances where they are subject to
thereon, valuable objects ,cash substitutes and other professional secrecy or legal professional privilege.
similar monetary instruments or property supervised or
regulated by the Securities and Exchange Commission Obligations of covered institutions
(SEC); Section 9 of RA 9160
1.Customer Identification-Covered institutions shall:
Covered persons, natural or juridical, refer to (RA 10365, a) Establish and record the true identity of its clients
Sec. 1,amending RA 9160,Sec. 3[a]): based on official documents.
b)Maintain a system of verifying the true identity of their 2 Foreign Currency Deposit Act or RA No. 6426,as
clients ;and amended,
c)In case of corporate clients, require a system of 3.General Banking Lovis or RA 8791;and
verifying their legal existence and organizational 4.Other similar laws.
structure, as well as the authority and ldentification of all
persons purporting to act on their behalf. Prohibited communications
Officers and employees of covered institution shall no:
NOTE: The BSP may conduct annual testing solely limited 1.Communicating, directly or indirectly, in any manner or
to the determination of the existence and true ldentity of by an means, to any person, the tact that a covered or
the owners of such accounts. suspicious transaction report was made, the contents
Anonymous accounts, accounts under fictitious thereof, or any other information in relation thereof.
names, and al other similar accounts shall no absolutely
prohibited. Peso and foreign currency non-checking NOTE: It the reporting is done by any person in the
numbered accounts shat be allowed. regular performance of his duties in good administrative,
criminal or civil proceedings shall lo against sold person,
2. Record Keeping-All records of all transactions of whether or not such reporting results in any criminal
covered institutions shall be maintained and stored for prosecution under this Act of any other law (Safe harbor
five (5) years from the date of transactions. provision).
NOTE: With respect to closed accounts, the records shall 2.Communicating,dirocthy or indirectly, in any manner or
be preserved and safety stored for at least five (5) years by any moans, to any person or entity, the mode ,the fact
from the dates when they wore closed. that a covered or suspicious transaction has been
reported or is about to be reported,t he contents of
3. Reporting of Covered and Suspicious Transactions. thereof or any other information in relation thereto.
3.Pubishing or airing in any manner or form by the mass
GR: Covered persons shall report to the AMLC all covered media, electronic similar devices.
transactions and suspicious transactions within five (5) In case of violation of these prohibitions, the concerned
working days from occurrence thereof. officer and employee of the covered person and media
shall be held criminally liable (Sec.7,RA 10365 amending
XPN: The AMLC proscribes a different period not Sec. 9,RA 9160)
exceeding fifteen (15)working days.
Covered Transaction
NOTE: Should a transaction be determined to be both a
covered transaction and a suspicious transaction, the A transaction in cash or other equivalent monetary
covered Institution shall be required to report the same instrument involving a total amount in excess of 500,000
as a suspicious transaction. within ! banking day (RA 9160, Sec 3)
6. The transactions is in a way related to an unlawful The AMLC shall act unanimously in the discharge of its
activity or offense under this Act that is about to be, is functions as defined hereunder.
being or has been committed;or
1.To require and received covered or suspicious
7.Any transactions that is simitar or analogous to any of transaction reports from covered institutions;
the foregoing (RA 9160 as amended by RA 9194, Sec.3(b- 2.To issue orders addressed to the appropriate
1D. Supervising Authority or the covered institutions to
determine the true Identity of the owner of any
How money laundering is committed? monetary instrument or property subject of a covered
transaction or suspicious transaction report or request
Money laundering is committed by any person who, for assistance from a foreign State, or believed by the
knowing that any monetary instrument or property Council, on the basis for substantial evidence, to be ,in
represents, involves, or relates to the proceeds of any whole or in part, wherever located, representing,
unlawful activity: involving, or related to directly or indirectly, in any
manner or by any means, the proceeds of an unlawful
a. Transacts sold monetary instrument or property: activity.
b. Converts, transfers, disposes of. moves, acquires, 3. To institute civil forfeiture proceedings and all other
possesses or uses sold monetary instrument or property: remedial proceedings through the Office of the Solicitor
c. Conceals or disguises the true nature, source ,location, General;
disposition, movement or ownership of or rights with 4. To cause the of complaints with the Department of
respect to said monetary instrument or property: Justice or the Ombudsman for the prosecution of money
d. Attempts or conspires to commit money laundering laundering offenses;
offenses referred to in paragraphs (a). (b) or (c); 5.To investigate suspicious transactions and covered
c. Aids, abouts, assists in or counsels the commission of transactions deemed suspicious after an investigation by
the money laundering offenses referred to in paragraphs AMLC. money laundering activities and other violations
(a). (b) or (c) above; and of this Act:
f. Performs or falls to perform any act as a result of which 6.To apply before the Court of Appeals, ex parte ,for the
he the offense of money laundering referred to in freezing of any monetary instrument or property alleged
paragraphs (a), (b) or (c) above. to be laundered, proceeds from, or Instrumental used in
Money laundering is also committed by any covered or intended for use in any unlawful activity as detained
person who, knowing that a covered or suspicious in Section 30) hereof;
transaction is required under this Act to be reported to 7.To implement such measures as may be necessary and
justice under this Act to counteract money laundering:
8.To receive and take action in respect of, any request laundering activities (Republic v.Cabrini Green & Ramos,
from foreign states for assistance in their own anti- G.R. No. 154522, May 5, 2006).
money laundering operations provided in this Act;
The AMLC shall act unanimously in the discharge of iss Probable cause under AMLA
functions as defined hereunder:
9. To develop educational programs on the pernicious It includes such facts and circumstances which would
effects of money laundering ,the methods and lead a reasonably discreet, prudent or cautious man to
techniques used in the money laundering, the viable believe that an unlawful activity and/or a money
means of preventing money laundering and the effective laundering offense is about to be, is being or has been
ways of prosecuting and punishing offenders; committed and that the account or any monetary
10. To enlist the assistance of any branch, department, instrument or property subject thereof sought to be
bureau, office ,agency .or instrumentality of the frozen is in any way related to sold
government including government-owned and- unlawful activity and/or money laundering offense (R.A.
controlled corporations, in undertaking any and all anti- 9194, as amended, Rule 10.2).
money laundering operations, which may include the use
of is personnel, facilities and resources for the more Freezing of monetary instrument or property
resolute prevention, detection, and investigation of
money laundering offenses and prosecution of offenders; Remedy of the person whose account has been frozen
11.To impose administrative sanctions for the violation of A person whose account has been frozen may file a
laws, rules, regulations, and orders and resolutions motion to lt the freeze order and the court must resolve
issued pursuant thereof this motion before the expiration of the freeze order.
12. To require the Land Registration Authority and all its
Registries of Deeds to submit to the AMLC, reports on all NOTE: No court shall lssue a temporary restraining order
real estate transactions involving an amount in excess of or a writ of injunction against any freeze order, except the
Five hundred thousand pesos (P500,000.00)within Supreme Court(Sea,8,RA 10365,amonding RA 9160)
fifteen (15) days from the date of registration of the
transaction, in a form to be prescribed by the AMLC. The Nature of a Freeze Order
AMLC may also require the Land Registration Authority A freeze order is an extraordinary and interim relief
and all its Registries of Deeds to submit copies of relevant issued by the Court of Appeals to prevent the dissipation,
documents of all real estate transactions.(Sec.6,RA 10355 removal, or disposal of properties that are suspected to
amending Sec.7,RA 9160). be the proceeds of, or related to unlawful activities as
defined in Sec.30) of R.A. 9160,as amended. The primary
Freezing of monetary instrument or property objective of a freeze order is to temporarily preserve
monetary instruments or property that are in any way
When may freeze order be issued. related to an unlawful activity or money laundering, by
1. The AMLC ,thru the OSG, shall file a verified ex parte preventing the owner from utilizing them during the
(one party) petition before the Court of Appeals. duration of the freeze order.(Ligot v.Republic 692 SCRA
2.The CA should determine if probable cause codsts that 509)
any monetary instrument or property is in any way
related to an unlawful activity as defined in Section 3() Freezing of monetary instrument or property
hereof.
NOTE: It is solely the CA which has the authority to issue Effectivity of Freeze Order
a freeze order. It also has the exclusive jurisdiction to As a rule, the effectivity of a freeze order may be
extend existing freeze orders previously issued by the extended by the Court of Appeals for a period not
AMLC vis-a-vis accounts and deposits related to money- excluding 6
months. However, should it become completely
necessary for the Republic to further extend the
The New Central Bank
duration of the freeze order, it should file the necessary
motion before the expiration of the six month period and At brief
explain the reason or reasons for its failure to file an Bangko Sentral ng Pilipinas (BSP)
appropriate case and justify the period of extension It is the State's central monetary authority. It is the
sought. government agency charged with the responsibility of
While Sec. 10 of AMLA uses specific language to administering the monetary, banking and credit system
authorize an ex parte application for the provisional relief of the country and is granted the power of supervision
for a freeze and examination over bank and non-bank financial
order, nothing in Soo.11 similarly authorizes an ex parte institutions performing quasi-banking functions,
application for the issuance of an order to examine bank including savings and loan associations (Busuego v. CA,
accounts. Consequently, courts revolving the application G.R. No. L-48955, June 30, 1987).
for inquiry order cannot simply take AMLC's word that Bangko Sentral ng Pilipinas as an institution
probable cause exists that the deposits or investments The BSP is a government-owned corporation which
are related to an unlawful activity. enjoys fiscal and administrative autonomy.
The AMLC may inquire into or examine any particular Policy of the state with respect to the creation of the
deposit or investment ,including related accounts, with Bangko Sentral ng Pilipinas.
any banking institution or non-bank financial institution The State shall maintain a central monetary authority
provided: that shall function and operate as an independent and
1. It is upon order of any competent court; accountable body corporate in the discharge of its
2.Based on an ex parte application; and mandated responsibilities concerning money, banking
3.In cases of violations of this Act, when it has been and credit (NCBA, Sec 2).
estabished that there is probable cause that the deposits While it is a government owned corporation it enjoys
or investments, including related accounts involved, are fiscal and administrative autonomy.
related to an unlawful activity as defined in Section 3( Fiscal - relating to treasury as in the monetary board.
hereof or a money laundering offense under Section 4 Administrative - being the regulatory agency in
hereof. accordance with its policy directions
NOTE: The inquiry conducted by the AMLC is not violated Salient considerations on the creation of Bangko
of The Law on Secrecy of Bank Deposits or Ra 1405, 8s Sentral no Pilipinas
amended ;Foreign Currency Deposit Act or RA No. 6426, 1. It is established as an independent central
as amended; General Banking Laws or RA 8791;and other monetary authority.
similar laws. 2. Its capital shall be P50,000,000,000,
P200,000,000,000 to be fully subscribed by the Philippine
The Court of Appeals shall act on the application to Government.
inquire into or examine any deposit or investment with 3. The increase in capitalization shall be funded
any banking institution or non-bank financial institution solely from the declared dividends of the Bangko Sentral
within twenty-four (24) hours from fling of the in favor of the National Government.
application. 4. Any declared dividends of the Bangko Sentral in
favor of the National Government shall be deposited in a
special account in the General Fund, and earmarked for
the payment of Bangko Sentral's increase in Constitution, the President may contract or guarantee
capitalization. foreign loans but with the prior concurrence of the
Such payment shall be released and disbursed Monetary Board.
immediately and shall continue until the increase in 1. Government agent (NCBA, Secs. 117-122)
capitalization is fully paid.
2. Source of credit (NCBA, Secs. 61-63, 81-89, 109)
Responsibility and primary objective of the BSP 3. Issuer of Currency (NCBA, Sec. 49-60)
1. To provide policy directions in the areas of 4. Clearing channel or House; especially where the
money, banking, and credit. PCHC does not operate (NCBA, Sec. 102)
2. To supervise bank operations. 5. Supervisor of the Banking system (NCBA, Sec. 25)
3. To exercise regulatory and examination powers shall include the power to:
over quasi-banking operations of non-bank financial Cont'd
institutions, money service businesses, credit granting a. Examine, which power extends to enterprises wholly
businesses and payment system operators. or majority-owned or controlled by the bank (GBL, Sec.
7); this power may not be restrained by a writ of
Primary obiectives. of BSP injunction unless there is convincing proof that the action
1. To maintain price stability conducive to a of the BSP is plainly arbitrary (NCBA, Sec. 25)
balanced and sustainable growth of the economy; and b. Place a bank under receivership or liquidation (NCBA,
2. To promote and maintain monetary stability and Sec. 30)
the convertibility of the peso (NCBA, Sec. 3). c. Initiate criminal prosecution of erring officers of banks
9. Extends discounts, loans and advances to banking
Responsibilities of BSP (P.S-R) institutions in order to influence the volume of credit
1. To provide policy directions in the areas of consistent with objective of price stability.
money, banking, and credit. Note: When availing of the loan facilities of the BSP,
2. To supervise bank operations. private banks assign to BS their receivables including the
3. To exercise regulatory and examination powers collaterals
over quasi-banking operations of non-bank financial
institutions, money service businesses, credit granting Monetary Board (MB)
businesses and payment system operators. It is the body through which the powers and functions of
the BSP are exercised (NCBA, Sec 6).
Primary objectives of BSP
1. To maintain price stability conducive to a Powers and functions of the Monetary Board (RASBI)
balanced and sustainable growth of the economy; and 1. Issue Rules and regulations it considers
2. To promote and maintain monetary stability and necessary for the effective discharge of the
the convertibility of the peso (NCBA, Sec. 3). responsibilities and exercise of its powers.
2. Direct the management, operations, and
Functions of the BSP Administration of the BS, reorganize its personnel, and
issue such rules and regulations as it may deem
Eunctions of BSP (BRAGS-CHOBE. necessary or convenient for this purpose.
1. Banker of the government - the BSP shall be the 3. Establish a human resource management
official depository of the Government and shall represent System.
it in all monetary fund dealings (NCBA, Secs. 110- 116). 4. Adopt an annual Budget for and authorize such
2. Custodian of Reserves (NCBA, Secs. 64-66, 94, expenditures by the BS as are in the interest of the
103) effective administration and operations of the BSP in
3. Financial Advisor of the government (NCBA, Secs. accordance with applicable laws and regulations.
123-124) - Under Article VII, Sec. 20 of the 1987
5. Indemnity its members and other officials of the other officers subject to such rules and regulations as the
BS, including personnel of the departments performing Monetary Board may prescribe;
supervision and examination functions against all costs 4. appoint and fix the remunerations and other
and expenses reasonably incurred by such persons in emoluments of personnel below the rank of a
connection with any civil or criminal action (NCBA, Sec department head, as well as to impose disciplinary
15). measures upon personnel of the Bangko Sentral.
5. render opinions, decisions, or rulings, which shall
be final and executory until reversed or modified by the
Composition of the Monetary Board Monetary Board, on matters regarding application or
The MB shall be composed of 7 members appointed by enforcement of pertinent banking laws.
the President with a 6-year term.No member of the MB 6. exercise such other powers as may be vested in
may be reappointed more than once(NCBA, Sec. 6). him by the Monetary Board.
b. Supposing that Gigi is charged with unlawfully NOTE: Despite such pronouncement that trust funds are
acquiring wealth under R.A. 1379 and that the fiscal considered deposits, trust funds remain not covered by
issued a subpoena duces tecum for the records of the PDIC.
bank account of Gigi. May Gigi validly oppose the said
issuance on the ground that the same violated the law on Confidentiality granted by RA 1405 does NOT extend to
secrecy of bank deposits? Explain your answer. Letters of Credit and Trust Receipts
Arms-length cule.
It provides that any dealings of a bank with any of its
DOSRI shall be upon terms not less favorable to the bank
than those offered to others (GBL, Sec. 36 (2]).
If the bank finds that the borrower has not employed the
funds borrowed for the purpose agreed upon between
the bank and the borrower, the bank may terminate the
loan and demand immediate payment (Banco de Oro v.
Bayuga, G.R. No. L-49568, Oct.
17, 1979).