Financial Crime World

Here is the rewritten article in Markdown format:

PHILIPPINES: Financial Sanctions Compliance Key to Averting Money Laundering and Terrorist Financing

The Philippines has implemented stringent regulations to combat money laundering (ML) and terrorist financing (TF), with the Anti-Money Laundering Council (AMLC) at the forefront of the fight. The council, established under the Financial Intelligence Unit (FIU), is responsible for implementing two key laws: the Terrorism Financing Prevention and Suppression Act and the Anti-Money Laundering Act.

Compliance Obligations

Regulated entities in the Philippines must comply with various obligations to prevent ML/TF. These include:

  • Conducting an institutional risk assessment to identify, evaluate, and mitigate ML/TF risks
  • Establishing good risk management policies, controls, and procedures to manage and monitor identified risks
  • Developing a comprehensive ML/TF prevention program that includes:
    • Risk assessments
    • Compliance management systems
    • Personnel screening
    • Ongoing education and training
    • Independent auditing activities
    • Information sharing with supervisory authorities

Customer Due Diligence

Regulated entities must conduct customer due diligence in certain circumstances, including:

  • Establishing professional or business relationships
  • Conducting transactions above PHP 100,000 or other thresholds set by regulatory authorities
  • Performing wire transactions occasionally
  • Suspecting ML/TF activities regardless of criteria or exclusions

The due diligence process includes:

  • Identifying and verifying customers
  • Agent identification and verification
  • Verification of beneficial ownership
  • Establishing the relationship’s purpose
  • Ongoing surveillance

Enhanced Due Diligence

Regulated entities must conduct enhanced due diligence in circumstances of higher risk and reduced due diligence in cases of lower risk. This includes:

  • Identifying and verifying Politically Exposed Persons (PEPs) and their families, close friends, and acquaintances
  • Exercising more due diligence

Record-Keeping and Reporting

Regulated entities must retain all client records and transaction documents for at least five years after the date of transaction. They are also required to report suspicious transactions to the FIU, including:

  • Cash transactions above PHP 500,000
  • Cash transactions with jewellers or precious stone merchants above PHP 1,000,000
  • Casino transactions above PHP 5,000,000
  • Real estate transactions above PHP 7,500,000

Suspicious Transactions

Regulated entities must report transactions that meet one or more of the following criteria:

  • Lack of an overarching aim, legal requirement, or economic reason
  • Incorrect client identity
  • Substantial amount involved compared to client’s financial or business capacity
  • Transaction appears to be set up to avoid reporting requirements
  • Transaction is connected to ML/TF or other illegal behavior

Consequences

Failing to comply with AML/CTF regulations can result in severe penalties, including fines and imprisonment. Regulated entities that voluntarily report suspicious transactions will not be subject to legal prosecution.

By understanding the financial sanctions compliance obligations in the Philippines, businesses and individuals can play a crucial role in preventing money laundering and terrorist financing, ultimately contributing to a safer and more stable financial environment.