Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

bus fin > Ch4: anti-money laundering > Flashcards

Ch4: anti-money laundering Flashcards

1
Q

has been described by many as the lifeblood of
crime and is a major threat to the economic and
social well-being of societies.

A

Money Laundering

because:
- it funds criminal groups
- it is a serious threat to the financial system of our country

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Money laundering is an act or series or combination of acts whereby proceeds of an unlawful activity, whether in ______, ____________ or ________________, are _____________, ____________ or _________________ to make them appear to have originated from legitimate sources.

A
  • cash
  • property
  • other assets
  • converted
  • concealed
  • disguised
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

WHY MONEY LAUNDERING A SERIOUS PROBLEM? -

A

Money laundering is a serious threat. It has

*devastating consequences for the financial system and for national security,
*provides funds for:
- terrorists,
- drug traffickers,
- arms dealers, and
- criminal group

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Anti-money laundering is a?

A

foreign policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Understanding Anti-Money Laundering (AML) - Anti-money laundering initiatives rose to global prominence in? ,

A

1989
- when a group of countries and organizations around the world formed the Financial Action Task Force (FATF).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Its mission is to devise international standards to prevent money laundering and promote their implementation.

A

Understanding Anti-Money Laundering (AML)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

when? FATF expanded its mandate to include combating terrorist financing.

A

In October 2001, following the 9/11 terrorist attacks,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

refers to the laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.

A

According to Investopedia - Anti-money laundering (AML)

(laws, regulation, and procedures)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

One way of laundering money is through?

A

the financial system.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Otherwise known as the Anti-Money Laundering Act of 2001 (AMLA),

A

REPUBLIC ACT 9160

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

as amended, defined money laundering as a scheme whereby proceeds of an unlawful activity are transacted or attempted to be transacted, thereby making them appear to have originated from legitimate sources.

A

REPUBLIC ACT 9160

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What has the Philippine government done to curb money laundering?

A
  • The government enacted Republic Act (R.A.) No. 9160 (The Anti-Money Laundering Act of 2001), which took effect on 17 October 2001.
  • Certain provisions of AMLA were amended by R.A. No. 9194(An Act Amending R.A. 9160) effective 23 March 2003.
  • It has also issued the Revised Implementing Rules and Regulations (RIRR) implementing R.A. No. 9160, as amended.

[1. Oct 17, 2001 - R.A. 9160 enacted]
[2. March 23, 2003 - R.A. 9194 certain provisions amended]
[3. RIRR - implementing R.A. 9160 as amended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Can Money Laundering be Stopped?

A
  • cannot be completely stopped
  • reduced through constant vigilance.
  • Financial institutions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

can monitor customer deposits and other transactions to ensure they aren’t part of a money-laundering scheme. The institutions must verify the origin of large sums, monitor suspicious activities, and report cash transactions

A

Financial institutions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are considered unlawful activities under the AMLA, as amended?

A

34:
1. Kidnapping for ransom
2. Drug offenses
3. Graft and corrupt practices
4. Plunder
5. Robbery and extortion
6. Jueteng and masiao
7. Piracy on the high seas
8. Qualified theft
9. Swindling
10. Smuggling
11. Electronic Commerce crimes
12. Hijacking, destructive arson and murder, including those perpetrated against noncombatant persons (terrorist acts)
13. Terrorism and conspiracy to commit terrorism;
14. Financing of Terrorism (FT) including the attempt and conspiracy to commit FT (RA No. 10168)
15. Bribery and Corruption of Public Officials under the Revised Penal Code.
16. Frauds and other illegal transactions under Articles 213,214,215 and 216 of the Revised Penal Code)
17. Malversation of Public Funds and Property
18. Foregries and Counterfeiting
19. Violations of RA 9208 (Anti Trafficking in Persons Act of 2003)
20. Violations under PD No. 705 (Revised Forestry Code of the Philippines
21. Violations under RA 8559 (Philippine Fisheries Code of 1998)
22. Violations under RA 7942 (Philippine Mining Act)
23. Violations under RA 9147 (Wildlife Resources Conservation and Protection Act)
24. Violations of RA 9072 (National Caves and Cave Resources Management Protection Act)
25. Violation under RA 6539 (Anti-Carnapping Act of 2002)
26. “Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or Explosives”;
27. Anti Fencing Law (pagbili ng mga nakaw na bagay)
28. Violation of Section 6 of Republic Act No. 8042, otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995, as amended”; (Illegal recruitment)
29. Violation of Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the Philippines, as amended”;
30. Violation of Section 4 of Republic Act No. 9995, otherwise known as the “Anti-Photo and Video Voyeurism Act of 2009”;
31. Violation of Section 4 of Republic Act No. 9775, otherwise known as the “Anti-Child Pornography Act of 2009”;
32. Violations of Sections 5, 7, 8, 9, 10 (c), (d) and (e), 11, 12, and 14 of Republic Act No. 7610, otherwise known as the “Special Protection of Children Against Abuse, Exploitation and Discrimination”;
33. Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the “Securities Regulation Code”
34. Felonies or offenses of a nature similar to the aforementioned unlawful activities that are punishable under the penal laws of other countries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

pag-bili ng mga nakaw na bagay

A

anti fencing law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Violation of Section 6 of Republic Act No. 8042, otherwise known as the “Migrant Workers and Overseas Filipinos Act of 1995, as amended”;

A

(Illegal recruitment)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How is money laundered through the financial system? 3 Stages of Money Laundering

A
  1. Placement
  2. Layering
  3. Integration
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

involves initial placement or introduction of the illegal money.

A
  1. Placement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

involves a series of financial transactions during which the dirty money is passed through a series of procedures, putting layer upon layer of persons and financial activities into the laundering process. Ex. wire transfers, use of shell corporations, etc.

A
  1. Layering
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

the money is once again made available to the criminal with the occupational and geographic origin obscured or concealed.

A
  1. Integration
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

done through the purchase of
properties, businesses, and other investments.

A
  1. Integration

-integraion back into the legitimate economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Why is Money Laundering a problem?

A
  • Money laundering allows criminals to preserve
    and enjoy the proceeds of their crimes, thus
    providing them with the incentives and the
    means to continue their illegal activities.
  • At the same time, it provides them the
    opportunity to appear in public like legitimate
    entrepreneurs.
  • Organized crime, through money laundering, is
    known to have the capacity to destabilize
    governments and undermine their financial
    systems. It is thus a threat to national security.
24
Q

money laundering council

A
  1. Governor
  2. Commissioner
  3. Chairman
25
Q
  1. Governor
  2. Commissioner
  3. Chairman
A
  1. Governor of the Bangko Sentral ng Pilipinas
    (BSP) as Chairman
  2. Commissioner of the Insurance Commission
    (IC) as member ,and
  3. Chairman of the Securities and Exchange
    Commission (SEC) as member
26
Q

What are the salient features of the law?

A
  • It criminalizes money laundering, meaning it makes money laundering a crime, and provides penalties for its commission, including hefty fines and imprisonment.
  • It states clearly the determination of the government to prevent the Philippines from becoming a haven for money laundering, while ensuring to preserve the integrity and confidentiality of good bank accounts.
  • It creates an Anti-Money Laundering Council (AMLC) that is tasked to oversee the implementation of the law and to act as a financial intelligence unit to receive and analyze covered and suspicious transaction reports.
  • It establishes the rules and the administration process for the prevention, detection and prosecution of money laundering activities.
  • It relaxes the bank deposit secrecy laws authorizing the AMLC and the Bangko Sentral ng Pilipinas access to deposit and investment accounts in specific circumstances.
  • It requires covered institutions to report covered and suspicious transactions and to cooperate with the government in prosecuting offenders. It also requires them to know their customers and to safely keep all records of their transactions.
27
Q

Executive Director AMLC SECRETARIAT

A

Atty. Mel Georgie B. Racela,CPA

28
Q

The AMLC is authorized to

A
  • Require and receive covered or suspicious transaction reports from covered institutions.
  • Issue orders to determine the true identity of the owner of any monetary instrument or property that is the subject of a covered or suspicious transaction report, and to request the assistance of a foreign country if the Council believes it is necessary.
  • Investigate suspicious transactions, covered transactions deemed suspicious, money laundering activities and other violations of the AMLA.
  • Secure the order of the Court of Appeals to freeze any monetary instrument or property alleged to be the proceeds of unlawful activity.
  • Implement such measures as may be necessary and justified to counteract money laundering.
  • Receive and take action on any request from foreign countries for assistance in their own antimoney laundering operations.
  • Develop educational programs to make the public aware of the pernicious effects of money laundering and how they can participate in bringing the offenders to the fold of the law.
29
Q

What are the covered institutions?

A
  • Banks, offshore banking units, quasi-banks, trust
    entities, non-stock savings and loan associations,
    pawnshops, and all other institutions, including
    their subsidiaries and affiliates supervised and/or
    regulated by the Bangko Sentral ng Pilipinas (BSP)
30
Q

Insurance companies, pre-need companies and
all other persons supervised or regulated by the

A

Insurance commission

31
Q

Securities dealers, brokers, investment houses,
trading advisers, as well as other entities
supervised or regulated by the

A

Securities and Exchange Commission (SEC)

32
Q

the government has expanded anti-money laundering laws to cover casinos, including internet and ship-based casinos.

A

Philippine Gaming Corporations

33
Q

KYC RULE

A
  • Know
  • Your
  • Client
34
Q

What are the Customer
Identification Requirements – KYC
(Know Your Customer Rule)?

A

Covered institutions shall:
- Establish and record the true identity of their clients based on official documents.
- In case of individual clients, maintain a system of verifying the true identity of their clients.
- In case of corporate clients, require a system verifying their legal existence and organizational structure, as well as the authority and identification of all persons purporting to act in their behalf.
- Establish appropriate systems and methods based on internationally compliant standards and adequate internal controls for verifying and
recording the true and full identify of their customers.

35
Q

Rule
- Know Your Customer (KYC) procedures are a
critical function to assess customer risk and a
legal requirement to comply with Anti-Money
Laundering (AML) laws.
- Effective KYC involves knowing a customers
identity, their financial activities and the risk
they pose.
 Customer Identification Program
 Customer Due Diligence
- Do you know your customer? At any rate, you
ought to. If you’re a financial institution (FI), you
could face possible fines, sanctions, and
reputational damage, if you do business with a
money launderer or terrorist.
- More importantly, KYC is a fundamental practice
to protect your organization from fraud and
losses resulting from illegal funds and
transactions.
- “KYC” refers to the steps taken by a financial
institution (or business) to:
- Establish customer identity.
- Understand the nature of the customer’s
activities (primary goal is to satisfy that the
source of the customer’s funds is legitimate).
- Assess money laundering risks associated with
that customer for purposes of monitoring the
customer’s activities
Customer Identific.

A

Customer Identification

36
Q

While gathering this information during account
opening is sufficient, the institution must verify
the identity of the account holder “within a
reasonable time.”

Procedures for identity verification include
documents, non-documentary methods (these
may include comparing the information provided
by the customer with consumer reporting
agencies, public databases, among other due
diligence measures), or a combination of both.

A
37
Q
  • For any financial institution, one of the first
    analysis made is to determine if you can trust a
    potential client. You need to make sure a
    potential customer is trustworthy; customer due
    diligence (CDD) is a critical element of effectively
    managing your risks and protecting yourself
    against criminals, terrorists, and Politically
    Exposed Persons (PEPs) who might present a risk.
A

Customer Due Diligence

38
Q
  • The privacy of individual client data will be respected in accordance with the laws and regulations of individual jurisdictions.
  • Such data will only be used for the purposes specified at the time the information is collected or as permitted by law, unless otherwise agreed with the client.
  • In the area of client data protection and privacy, many of the well-known laws have already laid the foundations of confidentiality of client data and privacy policies for client information.
  • With the recent advent of IT enabled services and increased use of IT in banking and financial services, the Central Bank of Philippines (BSP) has also taken proactive measures to incorporate data protection laws within the banking framework.
A

Data Privacy

39
Q

Maintain and safely store all records of existing and new accounts and of new transactions for //5 years from October 17, 2001// or from the dates
of the accounts or transactions, whichever is later;

A

Record-Keeping Requirements

40
Q
  • Retain records as originals in such forms as are admissible in court.
A

record-keeping requirements

41
Q

Transaction in cash or other equivalent monetary instruments involving a total amount in excess of P500,000.00 within one business
day

A

covered transactions

42
Q

What are suspicious transactions? -

A

*Transactions, regardless of the amount involved, where the following circumstances exists
- there is no underlying legal or trade obligation, purpose or economic justification;
- the client is not properly identified; the amount involved is not commensurate with the business or financial capacity of the client;
- the transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being or has been committed

43
Q

What are the reporting requirements?

A
  • Covered institutions shall report to the AMLC //all covered transactions and suspicious transactions within five (5) working days from occurrence thereof,// unless the Supervision
    Authority (the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, or the Insurance Commission) prescribes a longer
    period not exceeding ten working days.
  • Should a transaction be determined to be both
    a covered transaction and a suspicious
    transaction, it shall be reported as suspicious
    transaction.
44
Q

Are there sanctions for failure to report covered or suspicious transactions and non-compliance with R.A. 9160, as amended?

A
  • Sanctions/penalties shall be imposed on covered
    institutions that will fail to comply with the
    provisions of R.A. 9160, as amended.
45
Q

What are the sanctions for failure to report covered or suspicious transactions?

A
  • Any person, required to report covered and
    suspicious transactions failed to do so will be
    subjected to penalty of 6 months to 4 years
    imprisonment or a fine of not less than
    P100,000.00 but not more than P500,000.00, or
    both.
46
Q

Are there confidentiality restrictions on the reporting of covered transaction and/or suspicious transaction?

A
  • When reporting covered transactions or suspicious transactions to the AMLC, covered institutions and their officers and employees, //are prohibited from communicating, directly or
    indirectly, in any manner or by any means, to any person, entity, the media, the fact that a covered
    or suspicious transaction report was made,//     the contents thereof, or any other information in relation thereto.
  • Neither may such reporting be published or aired in any manner or form by the mass media, electronic mail, or other similar devices.
  • In case of violation thereof, the concerned officer, and employee, of the covered institution, or media shall be held criminally liable.
47
Q

What are the other offenses punishable under the AMLA, as amended?

A

a. Failure to keep records
b. Malicious reporting
c. Breach of Confidentiality
d. Administrative offenses

48
Q

s is committed by any
responsible official or employee of a covered
institution who fails to maintain and safely store
all records of transactions for 5 years from the
dates the transactions were made or when the
accounts were closed.
- The penalty is 6 months to 1 year imprisonment
or a fine of not less than P100,000.00 but not
more than P500,000.00, or both.

A

a. Failure to keep records

49
Q

is committed by any
person who, with malice or in bad faith, reports
or files a completely unwarranted or false
information regarding a money laundering
transaction against any person.
- The penalty is 6 months to 4 years imprisonment
and a fine of not less than P100,000.00 but not
more than P500,000.00. The offender is not
entitled to the benefits of the Probation Law.

A
  • b. Malicious reporting
50
Q

For this offense, the
penalty is 3 to 8 years imprisonment and a fine of
not less than P500,000.00 but not more than P1
million. In case the prohibited information is
reported by media, the responsible reporter,
writer, president, publisher, manager, and editorin-chief are held criminally liable.

A

c. Breach of Confidentiality

51
Q

The AMLC, after due
investigation, can impose fines from P100,000.00
to P500,000.00 on officers and employees of
covered institutions or any person who violates
the provisions of the AMLA, as amended, the
Implementing Rules and Regulations, and orders
and resolutions issued pursuant thereto.

A

d. Administrative offenses

52
Q

KEY TAKEAWAYS?

A
  • Anti Money Laundering (AML) seeks to deter criminals by making it harder for them to hide ill-gotten money.
  • Criminals use money laundering to conceal their crimes and the money derived from them.
  • AML regulations require financial institutions t monitor customers’ transactions and report on suspicious financial activity.
53
Q

FATF
AMLA
AMLC
RIRR

A

Financial Action Task Force (FATF).
Anti-Money Laundering Act (AMLA)
Anti-Money Laundering Council (AMLC)
Revised Implementing Rules and Regulations (RIRR)

54
Q

Financial institutions can?

A

-:monitor customer deposits and other transactions to ensure they aren’t part of a money-laundering scheme.
- must verify the origin of large sums, monitor suspicious activities, and report cash transactions

55
Q

what are the mission of the AML

A

Its mission is to
- devise international standards to prevent money laundering
- and promote their implementation.

56
Q

Effective KYC involves knowing a customersnidentity, their financial activities and the risk they pose.

A

Customer Identification Program Customer Due Diligence

57
Q

is a critical element of effectively
managing your risks and protecting yourself against criminals, terrorists, and Politically Exposed Persons (PEPs) who might present a risk.

A

customer due diligence (CDD)

bus fin (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions