SEC steps up anti-money laundering effort

MANILA, Philippines — The Securities and Exchange Commission (SEC)  is stepping up efforts to combat money laundering by requiring more transparency in the identity of shareholders in corporations.

The SEC is putting in place a number of measures that will prevent corporations from concealing the identity of their owners.

These measures will make it difficult for money launderers to use corporations to legitimize dirty money, the SEC said.

“Arrangements that allow shareholders or members to hide their identity expose corporations to the risk of being misused for illicit activities such as money laundering and terrorist financing,” SEC chairperson Emilio Aquino said.

Newly introduced measures include a prohibition on the issuance of bearer shares and a requirement for the mandatory disclosure of the identity of the beneficial owners or persons who ultimately own or effectively control corporations.

No corporation or entity shall issue, sell, or offer for sale or distribution bearer shares, as well as bearer share warrants where the name of owners are neither reflected on the physical stock certificate nor recorded in the stock and transfer book of the issuing corporation.

Furthermore, as part of the new measures, the SEC said corporations  must also disclose and record in their stock and transfer book the alienation,  sale, or transfer of shares of stocks.

“No dividends shall be paid to any person or entity unless his/her/its name appears in the records of the corporation as the owner of the concerned shares of stock, except for dividend payments made by publicly listed companies to the PCD nominee or any similar entity authorized to act as depository and custodian of shares for purposes of trading in the stock exchange and operating under the same rules,” the SEC said.

The guidelines likewise require newly registered corporations to disclose the identity of the persons on whose behalf they were registered and the nominator, principals of nominee incorporators, first directors, trustees and shareholders within 30 days from receipt of their certificates of registration.

These measures are aimed at further promoting transparency in the ownership of corporations to combat money laundering and terrorist financing in the Philippines and keep the country off the gray list of the Paris-based Financial Action Task Force (FATF).

“The newly issued guidelines will provide the commission with adequate, accurate, and timely information to combat such unlawful activities while cementing our commitment to international standards and best practices against money laundering and terrorist financing,” the SEC said.

The anti-money global watchdog urged the Philippines to introduce measures to  ensure that bearer share warrants, nominee directors and nominee  shareholders are not misused for money laundering and terrorist financing.

The FATF also urged the Philippines to ensure that mechanisms operate to ensure that information on the beneficial ownership of a company can be determined in a timely manner.