Money Laundering Report Procedures in the Philippines

Introduction

Money laundering, the process of concealing the origins of illegally obtained funds to make them appear legitimate, poses a significant threat to the Philippine financial system and economy. To combat this, the Philippines has established robust reporting procedures under the Anti-Money Laundering Act (AMLA) of 2001 (Republic Act No. 9160), as amended by subsequent laws including RA 9194 (2003), RA 10167 (2012), RA 10365 (2013), RA 10927 (2017), and RA 11521 (2021). These procedures mandate covered persons and institutions to report certain transactions to the Anti-Money Laundering Council (AMLC), the central authority tasked with implementing anti-money laundering (AML) measures.

This article provides an exhaustive overview of money laundering report procedures in the Philippine context, covering legal frameworks, covered entities, types of reports, filing processes, compliance requirements, penalties for non-compliance, confidentiality protections, and related mechanisms. It integrates provisions from the AMLA, implementing rules and regulations (IRRs), Bangko Sentral ng Pilipinas (BSP) circulars, and relevant jurisprudence. While the system emphasizes prevention, detection, and prosecution, reporting forms the backbone of enforcement, enabling the AMLC to investigate, freeze assets, and coordinate with law enforcement.

Legal Framework and Evolution

The AMLA establishes the foundation for reporting obligations, defining money laundering as involving proceeds from unlawful activities (e.g., drug trafficking, corruption, terrorism financing under RA 10168, the Terrorism Financing Prevention and Suppression Act). Amendments have expanded coverage to include terrorism financing, casino junkets, and real estate transactions.

Key components:

AMLC Authority: Created under Section 7 of the AMLA, the AMLC comprises the BSP Governor (Chair), SEC Chairperson, and Insurance Commissioner. It receives reports, conducts inquiries, and issues freeze orders.
Implementing Rules and Regulations (IRRs): The 2018 Revised IRR (as amended) details reporting mechanics, thresholds, and formats.
BSP Regulations: Circular No. 706 (as amended by Circular Nos. 950, 1022, etc.) governs financial institutions' AML compliance programs, including reporting.
SEC and IC Guidelines: Similar rules for securities and insurance sectors.
International Alignment: Compliant with Financial Action Task Force (FATF) recommendations, addressing mutual evaluations' findings on reporting effectiveness.

Jurisprudence, such as Republic v. Glasgow Credit and Collection Services (G.R. No. 170281, 2006), underscores that reporting is a preventive tool, not requiring prior conviction for predicate offenses.

Covered Persons and Institutions

Reporting obligations apply to "covered persons" under Section 3(a) of the AMLA, including:

Financial Institutions: Banks, quasi-banks, trust entities, non-bank financial institutions (e.g., pawnshops, money changers, remittance agents) supervised by BSP.
Casinos and Gambling Entities: Including Philippine Amusement and Gaming Corporation (PAGCOR)-licensed casinos, internet-based casinos, and ship-based casinos (expanded by RA 10927).
Designated Non-Financial Businesses and Professions (DNFBPs): Real estate developers/brokers (RA 11521), jewelry dealers (for transactions ≥ PHP 1 million), lawyers/notaries (when managing client funds), accountants, and company service providers.
Other Entities: Insurance companies, securities dealers, investment houses, and foreign exchange dealers.

Exemptions are rare, but certain government transactions (e.g., official development assistance) may be excluded. Covered persons must register with the AMLC and implement AML compliance programs, including customer due diligence (CDD) and record-keeping for at least five years (Section 9, AMLA).

Types of Reports and Thresholds

Two primary report types exist: Covered Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs).

Covered Transaction Reports (CTRs)

Definition: Mandatory reports for single or aggregated transactions exceeding PHP 500,000 in a banking day (Section 3(b), AMLA). For casinos, threshold is PHP 5 million per gaming day (RA 10927).
Scope: Includes cash deposits/withdrawals, fund transfers, casino chip purchases/redemptions, and real estate payments.
Aggregation Rule: Multiple transactions by the same person in one day are aggregated if indicative of structuring to evade reporting.
Exemptions: Transactions with government entities, between banks, or pre-approved by AMLC (e.g., payroll deposits).

Suspicious Transaction Reports (STRs)

Definition: Reports for transactions, regardless of amount, with indicators of money laundering or terrorism financing (Section 3(b-1), AMLA).
Indicators: As per AMLC guidelines, include unusual patterns (e.g., frequent large cash deposits without business justification), links to high-risk jurisdictions, politically exposed persons (PEPs), or mismatches in customer profiles.
No Safe Harbor Threshold: Even transactions below PHP 500,000 must be reported if suspicious.
Terrorism Financing: Expanded under RA 10168 and RA 11479 (Anti-Terrorism Act of 2020) to include funding for designated terrorists.

Both CTRs and STRs must include details like transactor identity, amount, date, nature, and supporting documents.

Reporting Procedures and Timelines

Filing Process

Electronic Submission: Reports are filed via the AMLC's Electronic Reporting System (ERS) or secure portals. Covered persons must obtain AMLC accreditation for access.
Manual Filing: Allowed only in exceptional cases (e.g., system failures), via physical delivery to AMLC offices.
Content Requirements: Per IRR Rule 22, reports include:
- Customer information (name, address, ID details from CDD).
- Transaction specifics (type, amount, currency, involved accounts).
- Narrative for STRs explaining suspicion.
- Attachments (e.g., transaction slips, if requested).
Batch Reporting: Institutions may submit multiple reports in batches, but each must be individually verifiable.

Timelines

CTRs: Filed within five working days from occurrence (IRR Rule 22.1).
STRs: Filed within the next working day after determination of suspicion, but no later than five working days from transaction (to allow internal review).
Delayed Reporting: Justified delays (e.g., for investigation) require AMLC notification; unjustified delays incur penalties.
Follow-Up Reports: If new information emerges, supplementary reports are filed within five days.

Internal Procedures for Covered Persons

Compliance Officer: Designated AML Compliance Officer (AMLCO) oversees reporting, ensuring board-approved policies.
Screening and Flagging: Use automated systems for transaction monitoring; manual review for complex cases.
Tipping-Off Prohibition: Section 9(d) prohibits disclosing report filings to customers, punishable by fines and imprisonment.
Record-Keeping: Maintain records for five years, extendable upon AMLC request.

Confidentiality and Immunities

Confidentiality: Section 9(c) mandates secrecy of reports; unauthorized disclosure is criminalized (fines PHP 500,000-1,000,000, imprisonment 3-8 years).
Safe Harbor: Section 15 provides immunity from civil/criminal liability for good-faith reporting, even if unfounded.
Exceptions: Disclosure allowed in court proceedings, congressional inquiries (with safeguards), or international cooperation under mutual legal assistance treaties (MLATs).

Compliance Monitoring and Enforcement

Supervisory Authorities: BSP conducts AML examinations for banks (Manual of Regulations for Banks, Section 916); SEC for securities; IC for insurance; PAGCOR for casinos.
Risk-Based Approach: Institutions must adopt risk assessments, with higher scrutiny for high-risk customers (e.g., PEPs under BSP Circular No. 1022).
Training Requirements: Annual AML training for staff, documented for audits.
Audits and Sanctions: AMLC may audit records; non-compliance leads to administrative sanctions (e.g., reprimands, suspensions) or criminal charges.

Penalties for Non-Compliance

Violations attract graduated penalties:

Administrative: Fines from PHP 100,000 to 500,000 per violation (AMLC Resolution No. 14, Series of 2019).
Criminal: For willful non-reporting, imprisonment 6 months-4 years and fines PHP 100,000-500,000 (Section 14, AMLA). Corporate officers are personally liable.
Aggravated Cases: Higher penalties for terrorism financing links (up to 14 years imprisonment).
Civil Forfeiture: Unreported laundered funds subject to forfeiture under Section 12.

Jurisprudence like AMLC v. Bank cases emphasizes strict liability for reporting lapses.

International Cooperation and Reporting

Egmont Group Membership: AMLC exchanges information with foreign financial intelligence units (FIUs).
Cross-Border Reporting: For international wire transfers ≥ PHP 500,000, enhanced due diligence and reporting apply (FATF Recommendation 16).
Mutual Assistance: Under RA 10021 (Exchange of Information on Tax Matters Act), AMLC shares reports for tax evasion probes.

Challenges and Emerging Trends

Challenges include underreporting in DNFBPs, technological evasion (e.g., cryptocurrencies under BSP Circular No. 1108), and resource constraints. Emerging trends:

Virtual Assets: RA 11521 includes virtual asset service providers (VASPs) as covered persons, requiring STRs for crypto transactions.
Beneficial Ownership: Enhanced reporting on ultimate beneficial owners (UBOs) to pierce corporate veils.
Pandemic Adaptations: Temporary flexibilities during COVID-19 (AMLC Advisory No. 2020-03) for electronic filings.
Sustainability: Integration with environmental crimes as predicates (e.g., illegal logging).

Reforms aim at FATF gray list removal, focusing on effective reporting.

Conclusion

Money laundering report procedures in the Philippines form a critical defense against financial crimes, mandating timely, accurate submissions from covered persons to the AMLC. Through CTRs and STRs, the system facilitates detection and disruption of illicit flows, supported by stringent compliance and penalties. While robust, ongoing enhancements address evolving threats like digital currencies. Covered entities must prioritize AML programs to avoid sanctions, and individuals suspecting laundering can report anonymously via AMLC hotlines. For specific compliance, consulting legal experts or AMLC guidance is essential, as laws continue to adapt to global standards.