Financial Crime World

Philippines Takes Tough Stance on Money Laundering: What You Need to Know

The Philippines has introduced strict regulations for financial institutions to crack down on money laundering and terrorist financing. The Anti-Money Laundering Council (AMLC) emphasizes the importance of reporting suspicious transactions, implementing robust know-your-customer (KYC) procedures, and conducting regular audits.

Who’s Affected?

Financial institutions, including:

  • Banks
  • Offshore banking units
  • Quasi-banks
  • Trust entities
  • Non-stock savings and loan associations
  • Pawnshops
  • Foreign exchange dealers
  • Money changers
  • Money remittance or transfer companies
  • Electronic money issuers

These institutions are required to register with the AMLC and comply with anti-money laundering regulations.

What Are ‘Covered Transactions’?

Under the Anti-Money Laundering Act (AMLA), a covered transaction refers to:

  • Any financial transaction exceeding PHP 500,000 ($8,940) within a single banking day
    • Cash transactions
    • Casino transactions
    • Engagements with dealers in jewelry, precious metals, or stones
    • Electronic funds transfers
    • Investment-related transactions

Regulators

The AMLC serves as the Philippines’ Financial Intelligence Unit (FIU), while the Bangko Sentral ng Pilipinas (BSP) supervises financial institutions to ensure compliance with anti-money laundering regulations.

Penalties

Failure to comply with anti-money laundering regulations can result in:

  • Severe penalties, including imprisonment and fines
  • The crime of money laundering is punishable by 7-14 years’ imprisonment and a fine of not less than PHP 3 million ($53,600) but not more than twice the value of the monetary instrument or property involved

Challenges

The Philippines faces challenges in strengthening its anti-money laundering framework, including:

  • Concerns over terrorism financing prosecution
  • The risk of money laundering from casino junkets
  • Inclusion on the Financial Action Task Force (FATF) “grey list”, which has raised concerns about increased scrutiny from international financial institutions and regulatory bodies

Solutions

To stay compliant with anti-money laundering regulations, financial institutions can:

  • Download the Sumsub compliance guidelines for the Philippines, which provide essential tools, checks, data, and documents required for the country
  • Implement customer identification, verification, and due diligence measures for non-face-to-face business relations

FAQs

Q: Is the Philippines a high-risk country for money laundering? A: Yes, the Philippines has been identified as having certain vulnerabilities to money laundering.

Q: What is the AMLA in the Philippines? A: The Anti-Money Laundering Act (AMLA) of 2001 is the key country’s anti-money laundering regulation.

Q: What are ‘covered transactions’ in the Anti-Money Laundering Act? A: A ‘covered transaction’ under the AMLA is any transaction involving funds exceeding PHP 500,000 ($8,940) within a single banking day.

Q: What is the penalty for money laundering in the Philippines? A: According to the AMLA, the crime of money laundering is punishable by imprisonment ranging from 7-14 years and a fine of not less than PHP 3 million ($53,600) but not more than twice the value of the monetary instrument or property involved.