Dirty money watchdog expands monitoring
FUND managers, jewelry dealers, lawyers and accountants will soon have to register with the Anti-Money Laundering Council (AMLC) and submit client data, as the regulator tightens its watch versus dirty money.
The AMLC issued Regulatory Issuance (B) No. 1 on May 10, requiring Designated NonFinancial Businesses and Professions (DNFBPs) to register with the financial intelligence unit as institutions required to report their transactions.
Covered by the new rules are dealers of jewelry and precious metals and stones; third- party company service providers; as well as lawyers, accountants and persons who manage client money, securities and other assets.
Businesses engaged in buying and selling, as well as those who organize contributions “for the creation, operation or management of companies” are also covered by the new rules.
The guidelines spring from Republic Act No. 10365 enacted six years ago which amended the Anti-Money Laundering Act (AMLA) of 2001 by adding these
entities under the agency’s watch.
“DNFBPs, as covered persons, are to be regulated for anti-money laundering and countering the financing of terrorism (CFT) proportionate to the nature, scale and complexity of the DNFBP’s operations in order to prevent criminals from exploiting them,” read the resolution, as posted on the AMLC website.
These entities are expected to register with the AMLC by submitting documents in order to secure certification, which they need to do within six months from publication of the guidelines.
They must also conform to “high ethical standards” and “know sufficiently” the customers that they serve, in order to check suspicious transactions.
They must also put in place anti-money laundering protocols as part of their operations and assign a compliance officer to oversee risk management.
Companies and practitioners also need to report covered transactions — or any deals worth P500,000 or higher — as well as suspicious transactions to the AMLC within five to 10 working days from occurrence, similar to the requirements imposed on banks, insurance firms and other covered entities.
All transaction records should also be kept for a five-year period, while due diligence needs to be observed in accepting and maintaining clients.
“They shall create a system that will enable them to understand the normal and reasonable account activity of their customers given the customer’s activities, risk profile, and source of funds and to thereby detect unusual or suspicious patterns of activities or behaviors,” the guidelines read.
DNFBPs may report suspicious activity like purchases of high- value jewelry which cannot be justified by the nature of business or reported income, big- ticket transactions that fall outside a client’s usual pattern, or customers creating offshore companies which could be used to stash illicit funds.
The AMLC set a reporting threshold of P750,000 of cash transactions for jewelry purchases.
“It has been observed in our series of engagements with them at the start of 2018 that the DNFBPs have been largely cooperative with the AMLC, recognizing that they could be used as instruments in the commission of money laundering or terrorism financing,” AMLC Secretariat Executive Director Mel Georgie B. Racela was quoted as saying in a statement.
“Certainly, professional secrecy cannot be used as a cloak to commit crime. I see that in the foreseeable future, the Philippines will come to embrace international AML/CFT standards more and more.”
The AMLC is leading an interagency group in crafting a national strategy versus money laundering, as the Philippines undergoes evaluation to check if systems in place are sufficiently compliant with international rules set by the Financial Action Task Force.
National money laundering threat remained “high” from 2015-2016, according to the second national risk assessment report published by the AMLC in December. The US State Department tagged the Philippines as a “major” money laundering site in 2016 due to reported cases of public corruption, human trafficking and drug transit. —