REVISED CORPORATION CODE SALIENT POINTS

1. Perpetual term
2. One-person corporation
3. No minimum capital stock
4. Participation via remote communications, in absentia
5. Emergency board
6. Electronic filing and monitoring system

Anti-Money Laundering Act of 2001

The AMLA declares it a policy of the State 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 and
conduit for the proceeds of any unlawful activity.

The Anti-Money Laundering Act is meant to stop not only the practice of money laundering in all its
stages but more importantly the crimes that generated the proceeds that are being laundered.

3 Stages of Money Laundering

1. Placement stage – the proceeds of the crime, often cash, are deposited in a financial institution
2. Layering stage – the proceeds are moved, usually through a series of transactions, which may
involve different entities, different assets and different jurisdictions, so as to sever any audit trail
to make the tracing of the source harder.
3. Integration stage – the criminal resumes control of the proceeds, free from any link to the
criminal source.

The Anti-Money laundering laws are designed to facilitate early detection, especially at the “Placement
stage”

The Offense – acts that constitute the crime of “Money Laundering”

Money Laundering is committed by any person who, knowing that any monetary instrument or property
represents, involves, or relates to the proceeds of any unlawful activity:

1. Transacts said monetary instrument or property;

2. Converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or
property;
3. Conceals or disguises the true nature, source, location, disposition, movement or ownership of
or rights with respect to said monetary instrument or property;
4. Attempts or conspires to commit money laundering offenses referred to in 1, 2, 3;
5. Aids, abets, assists in or counsels the commission of the money laundering offenses referred to
in 1, 2, 3; and
6. Performs or fails to perform any act as a result of which he facilitates the offense of money
laundering referred to in 1, 2, 3.
“Covered persons” – maybe natural or juridical persons

Excluded persons – lawyers and accountants acting as independent legal professionals in relation to
information concerning their clients or where disclosure of information would compromise client
confidences or the attorney-client relationship.

Covered Persons

1. Persons supervised or regulated by BSP, such as: (banks, non-banks, quasi-banks, trust entities,
pawnshops, etc.);
2. Persons supervised or regulated by the Insurance Code;
3. Persons supervised or regulated by SEC
4. Designated Non-Financial Businesses and Professions (DNFBPs) – (jewelry dealers, dealers in
precious metals, and dealers in precious stones)
a.
b.
c. Persons, including lawyers and accountants, who provide any of the following services:
i. Managing of client money, securities or other assets;
ii. Management of bank, securities or other assets;
iii. Organization of contributions for the creation, operation or management of
companies; and
iv. Creation, operation or management of juridical persons or arrangements, and
buying and selling business entities.

Notwithstanding the foregoing, lawyers and accountants who are:

1. Authorized to practice their profession in the Philippines; and

2. Engaged as independent legal or accounting professionals, in relation to information concerning
their clients, or where disclosure of information would compromise client confidences or the
attorney-client relationship ---- are NOT COVERED PERSONS.

Jurisdiction

Regional Trial Court – shall have jurisdiction to try money laundering cases committed by private
individuals, and public officers not covered by the jurisdiction of the Sandiganbayan.

Sandiganbayan – shall have jurisdiction to try money laundering cases committed by public officers
under its jurisdiction, and private persons who are in conspiracy with such public officers.

Covered and Suspicious Transactions

Covered Transaction – is a transaction in cash or other equivalent monetary instrument involving a

total amount in excess of Five hundred thousand pesos (>P500,000) within one (1) banking day;

Suspicious transactions – are transactions with covered institutions, REGARDLESS of the amounts
involved, where any of the following circumstances exist:

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

2. The client is not properly identified;
3. The amount involved is not commensurate with the business or financial capacity of the client;
 4. Taking into account all known circumstances, it may be perceived that the clients’ transaction is
structured in order to avoid being the subject of reporting requirements under the Act;
5. Any circumstances relating to the transaction which is observed to deviate from the profile of
the client and/or the client’s past transactions with the covered institution;
6. Any transaction that is similar or analogous to any of the foregoing.

Unlawful Activity – refers to any act or omission or series or combination thereof involving or having
direct relation to the following:

1. Kidnapping for ransom;

2. RA No. 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002;
3. RA No. 3019 otherwise known as the Anti-Graft and Corrupt Practices Act;
4. Plunder
5. Robbery and extortion

Prevention of Money Laundering; Customer Identification Requirements and Record Keeping

Customer Identification – covered institution shall maintain a system of verifying the true identity of
their clients; ANONYMOUS ACCOUNTS, ACCOUNTS UNDER FICTITIOUS NAMES, and all other similar
accounts shall be ABSOLUTELY PROHIBITED.

Record Keeping – all records of all transactions of covered transactions shall be maintained and safely
stored for 5 years from the dates of transactions.

Reporting of Covered and Suspicious Transactions – covered persons shall report to the AMLC all
covered transactions and suspicious transactions within five (5) working days from occurrence thereof,
unless the AMLC prescribes a different period not exceeding fifteen (15) working days.

Lawyers and accountants acting as independent legal professionals are not required to report covered
and suspicious transactions if the relevant information was obtained in circumstances where they are
subject to professional secrecy or legal professional privilege.

Should a transaction be determined to be BOTH a COVERED TRANSACTION and a SUSPICIOUS

TRANSACTION – the covered institution shall be required to report the same as a suspicious transaction.

Customer Due Diligence – covered persons are required to establish and record the true identity of their
clients based on official documents.

In case of CORPORATE CLIENTS, covered persons are required to maintain a system of verifying their
legal existence and organizational structure, as well as the authority and identification of all persons
purporting to act on their behalf.
SPECIAL CUSTOMERS AND ACTIVITIES

AMLC likewise adopted special rules that provide for preventive measures for specific customers and
activities such as:

1. Politically Exposed Persons (PEPs)

2. Correspondent Banking

Correspondent banking refers to the provision of banking services by one bank (the
correspondent bank) to another bank (the respondent bank) whose relationship can be
domestic or foreign.

The term correspondent bank refers to a financial institution that provides services to another
one—usually in another country. It acts as an intermediary or agent, facilitating wire transfers,
conducting business transactions, accepting deposits, and gathering documents on behalf of
another bank.

3. Shell Company/Bank and Bearer Share Entities

4. Wire/Fund Transfer
5. Customer From High Risk Jurisdiction – a customer from a foreign jurisdiction that is recognized
as having inadequate internationally accepted anti-money laundering standards, or presents
greater risk for money laundering or its associated unlawful activities, shall be subject to
enhanced customer due diligence.
6. Foreign Branches and Subsidiaries

Report of Suspicious Transactions – the period within which to submit a report for suspicious
transactions is from the “occurrence thereof.”

“Occurrence” – refers to the “date of determination of the suspicious nature of the transaction, which
determination should not be made not exceeding ten (10) calendar days from the date of transaction.

However, if the transaction is in any way related to, or the person transacting is involved in or connected
to, an unlawful activity or money laundering offense, the ten (10)-day period for determination shall be
reckoned from the date the covered person knew or should have known the suspicious transaction
indicator.

Money laundering happens when the cash proceeds of an “unlawful activity” are transacted or
attempted to be transacted to make them appear to have come from legitimate sources.

More simply, the “dirty cash” derived from certain “predicate crimes” are made to appear to be “clean
money,” thereby concealing their true nature as the proceeds of the said “predicate crimes.” Once
deposited in banks, the laundered money could be used to pay for land, buildings, shares of stock, or
worse, to fund illegal drug dealings or terrorist activities.

Example: Kidnapping is a crime under our Penal Code. Depositing in a bank the ransom or cash received
by the kidnappers is another crime under the AMLA. Kidnapping is the predicate crime, and laundering
the ransom by depositing it in a bank is another crime punishable under AMLA.

The kidnappers are prosecuted and penalized separately from the money launderers. Moreover,
additional malefactors could be prosecuted for money laundering only, like the bank officials who may
not have participated in the kidnapping but who knew, or could have known, that the funds deposited
were the ransom.

Not all laundering is illegal. It is illegal only when the proceeds come from the predicate crimes
identified in the AMLA. These are: kidnapping for ransom, drug trafficking and related offenses, graft
and corruption, plunder, bribery, malversation, carnapping, robbery and extortion, jueteng and masiao,
piracy, qualified theft, swindling, smuggling, violations of the Electronic Commerce Act of 2000,
hijacking, destructive arson, violations of the Securities Regulation Code, terrorism as defined under RA
9372, terrorism financing plus other crimes defined under the Terrorism Financing Act of 2012, and
other crimes under special laws.

Is depositing funds derived from tax evasion money laundering? No, because tax evasion is not among
the “unlawful activities” or predicate crimes under the AMLA. Of course, tax evasion can be prosecuted
as a separate offense under other laws.

Read more: https://opinion.inquirer.net/128028/laundering-dirty-money#ixzz7reRpV0lG

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ANTI-MONEY LAUNDERING COUNCIL (AMLC) – primary concern is the prevention of money laundering.

Examination by AMLC

Authority to Inquire into Bank Deposits – the AMLC may inquire into or examine any particular deposit
or investment, including related accounts with any banking institution or non-bank financial institution
upon order of ANY COMPETENT COURT based on an EX PARTE APPLICATION in cases of violations of
this Act, when it has been established that there is a PROBABLE CAUSE that the deposits or investments,
including related accounts involved, are related to an unlawful activity.

The Court of Appeals shall act on the application to inquire into or examine any deposit or investment
with any banking institution or non-bank financial institution within twenty-four (24) hours from filing of
the application.

A court order EX PARTE must first be obtained before the AMLC can inquire into these related accounts:
provided, that the procedure for the ex parte application of the ex parte court order for the principal
account shall be the same with that of the related accounts.

TWO TYPES OF EXAMINATION

1. Examination with prior Court of Appeals Order; and

2. Examination without prior CA Order
With Court Order – the AMLC may inquire into or examine any particular deposit or investment,
including related accounts, with ANY banking institution or non-bank financial institution UPON ORDER
OF ANY COMPETENT COURT based on an ex parte application in cases of violations of AMLA – when it
has been established that there is PROBABLE CAUSE that the deposits or investments, including related
accounts involved, are RELATED TO AN UNLAWFUL ACTIVITY as defined in Section 3(i) hereof or a
money laundering offense under Section 4 of AMLA.
Without Court Order – AMLC may inquire or examine any particular deposit WITHOUT COURT ORDER in
cases involving (1) activities defined in Section 3(i)(1),(2), and (12) (Unlawful activity – Kidnapping for
ransom, Comprehensive Dangerous Drugs Act, Hijacking); (2) felonies or offenses of a nature similar to
those mentioned in Section 3(i)(1), (2); and (12), which are punishable under the penal laws of other
countries; and (3) terrorism and conspiracy to commit terrorism as defined and penalized under R.A. No.
9372.
Constitutionality – there is no violation of the right of the depositor to due process.
Succinctly, Section 11 of the AMLA providing for ex-parte application and inquiry by the AMLC into
certain bank deposits and investments does not violate substantive due process, there being no physical
seizure of property involved at that stage. In fact, Eugenio delineates a bank inquiry order under Section
11 from a freeze order under Section 10 on both remedies' effect on the direct objects, i.e. the bank
deposits and investments:
On the other hand, a bank inquiry order under Section 11 does not necessitate any form of physical
seizure of property of the account holder. What the bank inquiry order authorizes is the examination of
the particular deposits or investments in banking institutions or non-bank financial institutions. The
monetary instruments or property deposited with such banks or financial institutions are not seized in a
physical sense, but are examined on particular details such as the account holder's record of deposits
and transactions. Unlike the assets subject of the freeze order, the records to be inspected under a bank
inquiry order cannot be physically seized or hidden by the account holder. Said records are in the
possession of the bank and therefore cannot be destroyed at the instance of the account holder alone
as that would require the extraordinary cooperation and devotion of the bank. (Subido Pagente Certeza
Mendoza and Binay Law Offices vs. Court of Appeals, et al.)
Right to Privacy
We thus subjected Section 11 of the AMLA to heightened scrutiny and found nothing arbitrary in the
allowance and authorization to AMLC to undertake an inquiry into certain bank accounts or deposits.
Instead, we found that it provides safeguards before a bank inquiry order is issued, ensuring adherence
to the general state policy of preserving the absolutely confidential nature of Philippine bank accounts:
1. The AMLC is required to establish probable cause as basis for its ex-parte application for bank
inquiry order;
2. The CA, independent of the AMLC's demonstration of probable cause, itself makes a finding of
probable cause that the deposits or investments are related to an unlawful activity under
Section 3(i) or a money laundering offense under Section 4 of the AMLA;
3. A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court
order ex-parte for the principal account which court order ex-parte for related accounts is
separately based on probable cause that such related account is materially linked to the
principal account inquired into; and
4. The authority to inquire into or examine the main or principal account and the related accounts
shall comply with the requirements of Article III, Sections 2 and 3 of the Constitution. The
foregoing demonstrates that the inquiry and examination into the bank account are not
undertaken whimsically and solely based on the investigative discretion of the AMLC. In
particular, the requirement of demonstration by the AMLC, and determination by the CA, of
probable cause emphasizes the limits of such governmental action. We will revert to these
safeguards under Section 11 as we specifically discuss the CA' s denial of SPCMB' s letter request
 for information concerning the purported issuance of a bank inquiry order involving its
accounts.
Nature of Investigation – the inquiry that is made by AMLC under Section 11 is NOT an exercise of quasi-
judicial functions but is merely the performance of its task as an investigative body. There is no
adjudication but there is merely investigation of facts and making findings in respect thereto.
There are three (3) stages of determination:
1. The AMLC investigates possible money laundering offenses and initially determines whether
there is probable cause to charge any person with a money laundering offense under Section 4
of the AMLA, resulting in the filing of a complaint with the DOJ or the Office of the Ombudsman.
2. The DOJ or the Ombudsman conducts the preliminary investigation proceeding and if after due
notice and hearing finds probable cause for money laundering, shall file the necessary
information before the RTC or the Sandiganbayan.
3. The RTCs or the Sandiganbayan shall try all cases on money laundering, as may be applicable.
The investigation is not in the nature of a search warrant or a warrant of arrest. The bank inquiry order
that is issued under Section 11 is a provisional remedy to aid the AMLC in the enforcement of the law.
Since only an investigation is involved, there is no need for a prior filing of a court case before the
inquiry is made. There is no need to implead the depositor in an anti-money laundering case.

SECRECY OF BANK DEPOSITS

Freezing of Monetary Instrument Property – a freeze order may be issued by the Court of Appeals upon
the filing of verified ex parte petition by the AMLC.
Procedure
1. A verified ex parte petition to freeze monetary instrument or property shall be filed by the AMLC
before the Court of Appeals.
2. The Court of Appeals shall determine if probable cause exists that any monetary instrument or
property is in any way related to an unlawful activity.
3. If there is a PROBABLE CAUSE, the Court of Appeals may issue a freeze order which shall be
effective immediately, for a period of twenty (20) days – the Court should act on the petition to
freeze within 24 hours
4. Within the twenty (20)-day period, the Court of Appeals shall conduct a summary hearing, with
notice to the parties, to determine whether or not to modify or lift the freeze order, or extend
its effectivity.
5. If there is no case filed against a person whose account has been frozen within the period
determined by the Court of Appeals, not exceeding six (6) months, the freeze order shall be
deemed ipso facto lifted – however, this rule shall not apply to pending cases in the courts.
Freeze Order – temporary in nature. However, the period of six months may be extended in certain
cases.
Thus, as a rule, the effectivity of a freeze order may be extended by the CA for a period not exceeding six
months. Before or upon the lapse of this period, ideally, the Republic should have already filed a case for
civil forfeiture against the property owner with the proper courts and accordingly secure an asset
preservation order or it should have filed the necessary information.
Otherwise, the property owner should already be able to fully enjoy his property without any legal
process affecting it.
PROBABLE CAUSE – AMLC defines probable cause required for the issuance of a freeze order as “such
facts and circumstances which would lead a reasonably discreet, prudent or cautious man to believe
that an unlawful activity and/or money laundering offense is about to be, is being or has been
committed and that the account or any monetary instrument or property subject thereof sought to be
frozen is in any way related to said unlawful activity and/or money laundering offense.”
Forfeiture Provisions
Civil Forfeiture – upon determination by the AMLC that PROBABLE CAUSE exists that any monetary
instrument or property is in any way related to an unlawful activity or a money laundering offense, the
AMLC shall file with the appropriate court (RTC) through the Office of the Solicitor General, a verified ex
parte petition for forfeiture.
Equal Value Assets – the petition for civil forfeiture shall include other monetary instrument or property
of equal value in cases where the monetary instrument or property that should be subject of forfeiture:
1. Cannot be located despite due diligence;
2. Has been substantially altered, destroyed, diminished in value or otherwise rendered worthless
by any act or omission;
3. Has been concealed, removed, converted, or otherwise transferred;
4. Is located outside the Philippines or has been placed or brought outside the jurisdiction of the
court; or
5. Has been commingled with other monetary instrument or property belonging to either the
offender himself or a third person or entity, thereby rendering the same difficult to identify or
be segregated for purposes of forfeiture.

When there is conviction for money laundering, the court shall issue a judgment of forfeiture in favor of
the Government of the Philippines with respect to the monetary instrument or property found to be
proceeds of an unlawful activity.
Claim on Forfeited Assets – the offender or any other person claiming 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.
Criminal Case not necessary – a finding of guilt for an unlawful activity is not an essential element of civil
forfeiture. Thus, regardless of the absence, pendency or outcome of a criminal prosecution for the
unlawful activity or for money laundering, an action for civil forfeiture may be separately and
independently prosecuted and resolved.
Prohibitions against political harassment – “no case for money laundering may be filed against and no
assets shall be frozen, attached or forfeited to the prejudice of a candidate for an electoral office during
an election period.”
Sequestration – the deposits are seized, sequestered, and frozen in order to prevent their use, transfer,
or conveyance for purposes that are inimical to the safety and security of the people or injurious to the
interest of the State. Under the New Civil Code, sequestration or judicial deposit takes place when an
attachment or seizure of property in litigation is ordered.