Keeping up with the times

To ensure that the Philippines stays out of the Financial Action Task Force (FATF)’s so-called “gray list,” several changes to the current Anti-Money Laundering Act (AMLA) are needed.

In February of last year, the FATF removed the country from its list of jurisdictions under increased monitoring for “dirty money.” The next assessment is slated for 2027, when the task force will verify whether our anti-money laundering measures are being maintained and are still in place.

One of the proposed changes is to include virtual asset service providers (VASPs) among the covered persons under AMLA and to require them to report both covered and suspicious transactions to the Anti-Money Laundering Council (AMLC).

The FATF earlier recommended that countries ensure that VASPs are regulated for anti-money laundering and countering the financing of terrorism (CFT) purposes. It said that without proper regulation, virtual assets also risk becoming a safe haven for the financial transactions of criminals and terrorists.

Virtual assets, also called crypto assets, are digital representations of value that can be traded, transferred or used for payment.

Meanwhile, VASPs are entities that facilitate cryptocurrency activities like trading, transferring and safekeeping of these virtual assets.

According to the FATF, virtual assets use innovative technology to swiftly transfer value worldwide and offer many potential benefits, including faster, cheaper payments. But the anonymity associated with them also attracts criminals, who have used virtual assets to launder proceeds from a range of offenses, such as the drugs trade, illegal arms smuggling, fraud, tax evasion, cyberattacks, sanctions evasion, child exploitation and human trafficking.

Under AMLA, money laundering is a crime in which the proceeds of unlawful activity are transacted, thereby making them appear to have originated from legitimate sources.

At present, covered institutions which are required to report to the AMLC covered transactions (up to a certain amount regardless of the presence of suspicious circumstances) as well as suspicious transactions (regardless of the amount if there are circumstances that make the transaction suspicious) include banks and other institutions supervised or regulated by the Bangko Sentral ng Pilipinas; insurance companies and other institutions supervised or regulated by the Insurance Commission; those supervised or regulated by the Securities and Exchange Commission including securities dealers and investment houses; designated non-financial business and professions such as jewelry dealers, and company services providers which provide certain services as a business to third persons including acting as a director or corporate secretary of a company or acting as a formation agent of juridical persons, casino operators, real estate developers/brokers.

House Bill 8002 filed by Bulacan Rep. Agay Cruz in February, seeks to amend Republic Act 9160 or the Anti-Money Laundering Act of 2001.

First, it proposes to include in the declaration of policy a statement that mandates the state to maintain an operationally independent central anti-money laundering and counter-terrorism financing authority that shall function and operate as the financial intelligence unit, specialized money laundering and terrorism financing investigation agency and anti-money laundering and counter-terrorism financing regulator and supervisor of the Philippines and to give the AMLC expanded authority, capability and resources.

Next, it seeks to amend RA 9160 by including as covered persons trust and company service providers who, as a business, act as trustee of an express trust or perform similar functions for another form of legal arrangement and virtual asset service providers.

The bill wants to include other predicate offenses to money-laundering, such as access device fraud which is punished under the Access Devices Regulation Act, cybercrime offenses punishable under the Cybercrime Prevention Act, violations of the Anti-Dummy Act including allowing unqualified persons or firms to exercise rights or privileges exclusively granted by the Constitution or the laws only to Philippine nationals, violations of the Anti-Agricultural Economic Sabotage Act including smuggling of agricultural and fishery products in excess of P10 million and profiteering, falsification of documents, violations of the Financial Products and Services Consumer Protection Act in particular investment fraud, among others.

As one of the changes sought by the AMLC to the present AMLA, the bill also gives the AMLC the power to issue ex parte and upon its own initiative a transaction suspension order upon reasonable suspicion that a transaction or fund is unusual, without a clear economic purpose, from an unknown or illegal source, or in any way related to an unlawful activity or money laundering offense. The said order shall be effective for 15 working days from receipt thereof unless the AMLC prescribes another period not exceeding 30 working days, provided that if there is no administrative freeze order issued by the council or a petition for the issuance of a freeze order filed before the CA, then the said transaction suspension order shall be deemed ipso facto revoked.

It further gives the AMLC the authority to inquire into or examine any bank deposit or investment without the need for a bank inquiry order issued by the Court of Appeals if there is probable cause that such deposit or investment may be related to the commission, proceeds, or instrumentalities of any of the unlawful activities enumerated under the AMLA.

Money laundering is being committed in more ways than previously imagined and the law has to be dynamic and flexible enough to keep up.

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