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AMLC PROPOSES AMLA AND HSA AMENDMENTS

BSP Press Release: Following the release of the results of the country’s Mutual Evaluation. The Mutual Evaluation assesses a country’s levels of technical compliance with international anti-money laundering/counter-terrorism financing (AML/CTF) standards; and effectiveness of the country’s existing AML/CTF mechanisms. (ME) through the adoption of the ME Report (MER) in 22 August 2019, the Philippines’ financial intelligence unit, the Anti-Money Laundering Council (AMLC), proposes amendments to the Anti-Money Laundering Act of 2001 (AMLA), as amended, and the Human Security Act of 2007 (HSA) to address deficiencies identified in the MER, thus raising the Philippines’ level of technical compliance with the Financial Action Task Force (FATF) standards. The passage of both laws and their implementation must be accomplished by October 2020.
       
Salient provisions of the AMLC’s proposed amendments to the AMLA or Republic Act (RA) No. 9160, as amended, are as follows:

·        Inclusion, as covered persons, of real estate developers, brokers, and sales agents to perform obligations of customer due diligence, recordkeeping, and suspicious transaction reporting;
·        Inclusion of additional predicate offenses to money laundering, such as certain tax crimes; and proliferation financing by managing the trade in strategic or dual-use goods, which are materials that may be utilized in manufacturing nuclear weapons;  

·        Expansion of investigative powers of the AMLC;

·        Inclusion of the authority to implement targeted financial sanctions related to terrorism, terrorism financing, proliferation, or proliferation financing on designated persons and entities identified in the resolutions of the United Nations Security Council;

·        Prohibition of the issuance of injunctive relief against AMLC actions; and

·        Such other provisions that will ensure the operational independence of the AMLC and its Secretariat.

Relative to Senate Bill No. 1083, or An Act Amending Certain Provisions of RA No. 9372, otherwise known as An Act to Secure the State and Protect our People from Terrorism or the HSA, AMLC’s proposed additions are as follows:

·        Designation of individuals as terrorists;

·        Criminalization of the financing of travel for purposes of committing terrorist acts;

·        Criminalization of foreign terrorist fighters;

·        Inclusion of the definition of “proliferation of weapons of mass destruction” as this will lay down the framework for the implementation of targeted financial sanctions related to proliferation financing;

·        Strengthen the powers of intelligence and law enforcement agencies to prevent, detect, and combat terrorism; and

·        Expedition of the legal process for obtaining data related to terrorism and terrorism financing.

In the last quarter of 2020, the Asia Pacific Group on Money Laundering (APG) – Joint Group will review if the Philippines has moved toward implementing the MER’s recommended actions (RAs), most of which are encapsulated within the AMLC’s proposed amendments to the AMLA and the HSA.

Failure to implement key RAs will result to the Philippines automatic referral to the International Co-operation Review Group (ICRG) or to “gray-listing.” The FATF requires all countries to notify their financial institutions of “gray-listed” countries and to consider measures to effectively manage the risks of transactions with individuals and entities from those listed countries.

The European Union (EU), in particular, requires its members to apply enhance due diligence on individuals and entities from listed countries. This includes additional inquiries before opening accounts or engaging in transactions, thus creating a mandatory barrier and increasing the cost of doing business in Europe for said individuals and entities. Often, listing results in de-banking or refused transactions. It is the APG’s experience that the FATF listing has a significant financial impact on countries as a result of the EU requirements.

Through a reinforced AMLC and closer collaboration among government agencies concerned, however, AMLC Chairman Benjamin E. Diokno takes an optimistic stance in successfully addressing the country’s shortcomings in its AML/CTF system.

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