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Covered Persons under the Anti-Money Laundering Act

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Covered Persons under the Anti-Money Laundering Act

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This article was originally published on June 1, 2022 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

AT A GLANCE:

Covered Institutions (now referred to as “covered persons”) are required under the Anti-Money Laundering Act to identify clients, keep records, and report transactions to prevent the laundering of illicit funds.

What is Money Laundering?

Republic Act No. 9160, as amended, otherwise known as the Anti-Money Laundering Act of 2001, declares under Section 2 that it is the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity.

Section 4 defines money laundering as a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following by the acts specified under Section 4.

Who are Covered Institutions (Covered Persons)?

In order to prevent the crime of money laundering, covered institutions are tasked under the law to establish and record the true identity of its clients based on official documents. They shall maintain a system of verifying the true identity of their clients and, in case of corporate clients, require a system of verifying their legal existence and organizational structure, as well as the authority and identification of all persons purporting to act on their behalf. (Section 9, Republic Act No. 9160)

Previously referred to as “covered institutions” under Section 3(a) of Republic Act No. 9160, the term was amended by Republic Act No. 10365 to “covered persons,” thereby expanding its scope to include the following:

 

  1. banks, non-banks, quasi-banks, trust entities, foreign exchange dealers, pawnshops, money changers, remittance and transfer companies and other similar entities and all other persons and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);
  2. insurance companies, pre-need companies and all other persons supervised or regulated by the Insurance Commission (IC);
  3. securities dealers, brokers, salesmen, investment houses and other similar persons managing securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close-end investment companies, common trust funds, and other similar persons, and (iii) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by the Securities and Exchange Commission (SEC);
  4. jewelry dealers in precious metals, who, as a business, trade in precious metals, for transactions in excess of One million pesos (P1,000,000.00);
  5. jewelry dealers in precious stones, who, as a business, trade in precious stones, for transactions in excess of One million pesos (P1,000,000.00);
  6. company service providers which, as a business, provide any of the following services to third parties: (i) acting as a formation agent of juridical persons; (ii) acting as (or arranging for another person to act as) a director or corporate secretary of a company, a partner of a partnership, or a similar position in relation to other juridical persons; (iii) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement; and (iv) acting as (or arranging for another person to act as) a nominee shareholder for another person; and
  7. persons who provide any of the following services:
    1. managing of client money, securities or other assets;
    2. management of bank, savings or securities accounts;
    3. organization of contributions for the creation, operation or management of companies; and
    4. creation, operation or management of juridical persons or arrangements, and buying and selling business entities.

Are lawyers and accountants included in the term “covered persons”?

No. The term “covered persons” excludes lawyers and accountants acting as independent legal professionals in relation to information concerning their clients or where disclosure of information would compromise client confidences or the attorney-client relationship: Provided, That these lawyers and accountants are authorized to practice in the Philippines and shall continue to be subject to the provisions of their respective codes of conduct and/or professional responsibility or any of its amendments. (Section 3(a), Republic Act No. 9160, as amended by Republic Act No. 10365)

Record-Keeping Requirement

All records of all transactions of covered institutions shall be maintained and safely stored for five (5) years from the dates of transactions. With respect to closed accounts, the records on customer identification, account files and business correspondence, shall be preserved and safely stored for at least five (5) years from the dates when they were closed. (Section 9(b), Republic Act No. 9160)

Reporting of Covered Transactions

Covered persons shall report to the AMLC all covered transactions and suspicious transactions within five (5) working days from occurrence thereof, unless the AMLC prescribes a different period not exceeding fifteen (15) working days. 

Lawyers and accountants acting as independent legal professionals are not required to report covered and suspicious transactions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.(Section 9(c), Republic Act No. 9160, as amended by Republic Act No. 10365)

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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