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FINAL SEC PHASE 1 > Module 6 > Flashcards

Module 6 Flashcards

1
Q

the process of creating the appearance that large amounts of money obtained from criminal activity, such as drug trafficking or terrorist activity, originated from a legitimate source. The money from the illicit activity is considered dirty, and the process “launders” the money to make it look clean.

A

Money laundering

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2
Q

Why do criminals launder
money?

A
  • Conceal the source of the proceeds
  • Avoid prosecution
  • Avoid taxes
  • Make illegally obtained money appear legal
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3
Q

Salient Features of AMLA,
as amended

  1. ______________ money laundering.
  2. Identifies and _________________ to money laundering.
  3. Imposes ___________ to be undertaken by covered persons (customer due diligence, recordkeeping and transaction reporting).
  4. Created a _______________ unit, the AMLC, empowering the same to recover criminal proceeds and prosecute money launderers .
  5. Authorizes _______________________ cooperation.
A
  1. Criminalizes
  2. defines predicate offenses
  3. preventive measures
  4. financial intelligence
  5. international and domestic
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3
Q

Unlawful Activities
It refers to any act or omission involving the following:

A

– Kidnapping for Ransom
– Comprehensive Dangerous Drugs Act of 2002 or Republic Act (RA) 9165
– Anti-Graft and Corruption Practices Act or RA 3019
– Plunder or RA 7080
– Robbery and Extortion or the Revised Penal Code
– Jueteng and Masiao or Presidential Decree (PD) 1602
– Piracy on the High Seas or PD 532
– Qualified Theft
– Swindling or Other Forms of Swindling
– Smuggling or RA 455 and RA 1937
– Electronic Commerce Act of 2000
– Hijacking or RA 6235
– Terrorism and Conspiracy to Commit Terrorism or RA 9372
– Financing of Terrorism or RA 10168
– Bribery
– Frauds and Illegal Exactions and Transactions
– Malversation of Public Funds and Property
– Forgeries and Counterfeiting
– Anti-Trafficking in Persons Act of 2003
– Revised Forestry Code of the Philippines
– Philippine Fisheries Code of 1998
– Philippine Mining Act of 1995
– Wildlife Resources Conservation and Protection Act or RA 9147
– National Caves and Cave Resources Management Protection Act or RA 9072
– Anti-Carnapping Act of 2002 or RA 6539
– Codying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing In, Acquisition
– Anti-Fencing Law or PD 1612
– Migrant Workers and Overseas Filipinos Act of 1995 or RA 8042
– Intellectual Property Code of the Philippines or RA 8293
– Anti-Photo and Video Voyeurism Act of 2009 RA 9995
– Anti-Child Pornography Act of 2009 or RA 9775
– Special Protection of Children Against Abuse, Exploitation and Discrimination or RA 7610
– Fraudulent practices and other violations under Securities Regulation Code of 2000 or RA 8799
– Felonies or offenses of a nature similar to the aforementioned punishable under the penal laws of other countries.

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4
Q

The Anti-Money Laundering Act

A
  • R.A. No. 9160 (took effect on 17 Oct. 2001) – only threshold reporting, AMLC’s executive freeze
  • R.A. No. 9194 (took effect on 23 Mar 2003) – freezing power given to courts, STR now required
  • R.A. No. 10167 (took effect on 6 Jul 2012) – ex parte petitions
  • R.A. No. 10365 (took effect on 7 Mar 2013 – expanded CP, additional predicate crimes
  • R.A. No. 10927 (took effect on 10 June 2017) – inclusion of casinos (internet and ship-based); single casino transaction in excess of Php 5 million
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5
Q

T or F. Launderers will have to find ways to make the dirty money appear to have originated from legitimate sources.

A

T

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6
Q

Elements of Money Laundering

A

Crime/Unlawful Activity (Predicate Offense) + Criminal Proceeds/ Dirty Money + Circumstances amounting to ML + Knowledge = Money Laundering

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6
Q

How is Money Laundering
is Committed? and What is the penalty?
(SEC. 4, AMLA as Amended)

A

Money Laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under this Act to be reported to the Anti-Money Laundering Council (AMLC), fails to do so

Penalty:
- 6 months to 4 years imprisonment
- Fine of Php 100,000.00 to Php 500,000.00 or
- Both

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7
Q

The Money Laundering process can
be accomplished in three stages:

A
  1. Placement
  2. Layering
  3. Integration
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8
Q

It involves initial placement or introduction of the illegal funds into the financial system. Financial institutions are
usually used at this point

A

PLACEMENT

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9
Q

Placement is the ___________ of cash proceeds derived from the illegal activity.

A

physical disposal

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10
Q

It 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.

A

LAYERING

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11
Q

The money is once again made available to the criminal with the occupational and geographic origin obscured or concealed. The laundered funds are now integrated back into the legitimate economy through the purchase of properties, businesses, and other investments.

A

INTEGRATION

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11
Q

Layering involves further distancing the proceeds of criminal activity from their origin through complex and multiple financial transactions.

  • Involves moving money away from ___________.
  • Complex layers of financial transactions to ______________ and to _______________________.
  • Use of widely scattered and _______________; dummies and corporations
A
  • point of origin
  • obstruct the audit trail; disguise the origin of funds
  • fictitious accounts
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12
Q

Integration is when the money launderer re-enters the funds to legitimate circulation.

  • Putting _______________________ in a way that the money appears to have originated from legitimate sources.
  • The ______ generated from the money _____________.
  • The source of the money could be further masked by investing in _______________________________, etc.
A
  • money back into circulation
  • income ; appears clean
  • real estate, cars, jewels, investment products
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12
Q

Criminal Proceeds

Amount derived or realized from an unlawful activity, such as:

A
  1. Coins or currency
  2. Credit instruments (Document that serves as evidence of debt)
  3. Drafts, checks and notes
  4. Stocks or shares
  5. Securities, bonds and other deposit substitutes
  6. Insurance policies
  7. Properties
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13
Q

Covered Persons:
1. Covered Persons Supervised or Regulated by the Bangko Sentral ng Pilipinas (BSP)

A
  • Banks;
  • Offshore banking units; (located in an international financial center)
  • Quasi-banks; (non-bank but engages in borrowing of funds)
  • Trust entities;
  • Non-stock savings and loan associations;
  • Pawnshops;
  • Foreign exchange dealers;
  • Money changers;
  • Money remittance or transfer companies;
  • Electronic money issuers; and
  • All other persons and their subsidiaries and affiliates supervised or regulated by the BSP.
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14
Q

Covered Persons:
2. Covered Persons Supervised or Regulated by the Insurance Commission (IC)

A
  • Insurance companies, pre-need companies and all other persons supervised or regulated by the IC;
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14
Q

Covered Persons
6. Company service providers which, as a business, provide any of the following services to third parties:

A

i. managing of client money, securities or other assets;
ii. management of bank, savings or securities accounts;
iii. organization of contributions for the creation, operation or management of companies; and
iv. creation, operation or management of juridical persons or arrangements, and buying and selling of business entities.

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15
Q

Covered Persons:
3. Covered Persons Supervised or Regulated by the Securities and Exchange Commission (SEC)

A
  • Securities dealers, brokers, salesmen, investment houses and other similar persons managing securities or rendering services as investment agent, advisor, or consultant;
  • Mutual funds, close-end investment companies, common trust funds, and other similar persons; and
  • 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 SEC.
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16
Q

4 & #5

Covered Persons

A
  1. Jewelry dealers in precious metals, who, as a business, trade in precious metals;
  2. Jewelry dealers in precious stones, who, as a business, trade in precious stones;
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17
Q

Duties of Covered Persons

A
  • Customer Due Diligence (CDD)
  • Transaction Reporting
  • Record Keeping
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18
Q

Customer Due Diligence (CDD)
Covered Persons shall:

A
  1. Establish and record the true identity of clients based on official documents
  2. Maintain a system of verifying the identity
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18
Q

CDD – Customer Identification
Valid Identification Documents

A
  1. Passport including those issued by foreign governments
  2. Driver’s license
  3. Professional Regulation Commission (PRC) ID
  4. National Bureau of Investigation (NBI) clearance
  5. Police clearance
  6. Postal ID
  7. Voter’s ID
  8. Tax Identification Number
  9. Barangay certification
  10. Governement Service Insurance System (GSIS) e-Card
  11. Social Security System (SSS) card
  12. Senior Citizen card
  13. Overseas Workers Welfare Administration (OWWA) ID
  14. Overseas Filipino Workers (OFW) ID
  15. Seaman’s book
  16. Alien Certification of Registration/Immigrant Certificate of Registration
  17. Government office and GOCC ID (e.g., AFP, HDMF IDs)
  18. Certification from the National Council for the Welfare of Disabled Persons (NCWDP)
  19. Department of Social Welfare and Development (DSWD) certification
  20. Integrated Bar of the Philippines (IBP) ID
  21. Company IDs issued by private entities or institutions registered with or supervised or regulated either by the BSP, SEC or IC.
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19
Q

CDD – Customer Identification

  1. Conduct ____________ at the commencement of the relationship or as reasonably practicable so as not to disrupt the normal conduct of business.
  2. Gather minimum ________________________________.
A
  1. face-to-face contact
  2. customer information and
    identification documents
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19
Q

CDD – Customer Identification
a. For Individual Customers

A
  1. Name of customer
  2. Date and place of birth
  3. Name of beneficial owner, if applicable
  4. Name of beneficiary
  5. Present address
  6. Permanent address
  7. Contact numbers
  8. Nationality
  9. Specimen signatures or biometrics of the customer
  10. Nature of work and name of employer or nature of self employment/business
  11. Source of fund(s)
  12. TIN, SSS or GSIS number, if applicable
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20
Q

CDD – Customer Identification
b. For Business Entities

A
  1. Name of entity
  2. Name of authorized signatory
  3. Name of beneficial owner, if applicable
  4. Official address
  5. Contact numbers or information
  6. Nature of business
  7. Specimen signatures or biometrics of the authorized signatory
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21
Q

CDD – Customer Identification
Identification Documents

A
  1. Certificatesof Registrationor Certificate of Incorporation
  2. Secondary License or Certificate of Authority
  3. Articles of Incorporation
  4. Latest GIS
  5. Corporate/Partners’ Secretary Certificate citing the Board/Partners’ Resolution authorizing the signatory to sign on behalf of the entity
22
Q

CDD – Customer Identification
3. Customer Identification, including face-to-facecontact, may be performed through the following
arrangements:

A

a. Third Party Reliance; and
b. Outsourcing.

22
Q

CDD – Risk Assessment

A
  • Low Risk = Reduced Due Diligence
  • Normal Risk = Average Due Diligence
  • High Risk = Enhanced Due Diligence
  • Money Laundering
23
Q

CDD – Risk Assessment

A
  1. Nature of services or products to be availed of by the customer.
  2. Purpose of the transaction.
  3. Size of transactions undertaken.
  4. Regularity or duration of the transactions.
  5. Customer coming from a high risk jurisdiction.
  6. Existence of suspicious transaction indicators.
24
Q

High-Risk Customers

A
  1. Red Flags
  2. Forex dealers
  3. Customers from a country w/ inadequate AML standards or does not sufficiently apply regulatory supervision or the FATF recommendations.
    a. Iran
    b. Democratic People’s Republic of Korea (North Korea)
    c. Afghanistan
    d. Bosnia and Herzegovina
    e. Iraq
    f. Lao PDR
25
Q
  • Inaccurate information or document
  • Transacting w/o any underlying legal or trade obligation, purpose or economic justification
  • Transacting an amount that is not commensurate with the business or financial capacity or deviates from his profile
  • Structuring transactions in order to avoid being the subject of CT Reporting
  • Knowing that the customer was or is engaged or engaging in any unlawful activity
A

Red Flags

26
Q

NCCT list

A

a. Syria
b. Uganda
c. Vanuatu
d. Yemen
e. Haiti
f. Suriname

27
Q

Covered Institutions: ANTI-MONEY LAUNDERING COUNCIL

A
  • Bangko Sentral ng Pilipinas
  • Securities and Exchange Commission
  • Insurance Commission
28
Q

Reduced Due Diligence requires covered person to:

A
  1. Conduct face-to-face-contact;
  2. Gather minimum information from customer;
  3. Require the customer to present at least one (1) valid ID; and
  4. On-going monitoring
29
Q

Enhanced Due Diligence requires covered persons to:

A
  1. Gather additional information;
  2. Conduct validation procedures;
  3. Conduct enhanced ongoing monitoring of business relationship; and
  4. Secure senior management approval to commence or continue transacting with the customer.
30
Q

Record Keeping

  • Covered person shall maintain and safely store for ___________ from the dates of transactions or closure of accounts all records of _________________________.
  • If a case has been filed in court involving the account, records must be retained and safely kept until the case has been finally resolved, decided or terminated
  • Covered persons shall retain all records ________ or in such forms as are admissible in court.
  • Covered persons shall keep electronic copies of all ____________.
  • At least _________ must be designated as jointly responsible and accountable in the safekeeping of all records and documents.
A
  • five (5) years;
  • customer identification and transaction documents of their clients
  • as originals
  • CTRs and STRs
  • 2 officers
31
Q

Covered Transaction Reporting

A

Single transaction
One banking (business) day
Amount in excess of Php500,000.00 –>
CTR
–> (within 5 days)
AMLC

32
Q

The government agency tasked to implement the provisions of the AMLA.

  • Bangko Sentral ng Pilipinas:
  • Securities and Exchange Commission:
  • Insurance Commission:
A
  • Bangko Sentral ng Pilipinas: Governor of the BSP as Chairperson
  • Securities and Exchange Commission: Chairperson of SEC
    as Member
  • Insurance Commission: Commissioner of IC as Member
33
Q

Duties of the AMLC

A
  • To impose administrative sanctions
  • To issue orders addressed to the appropriate Supervising Authority
  • To require and receive covered or suspicious transaction reports
  • To require the Land Registration Authority and all its Registries of Deeds all real estate transactions involving an amount in excess of Php 500K within 15 days
  • To file complaints with the Department of Justice
33
Q

AMLC will be assisted by the ___________ in the discharge of its functions headed by an ______________ for a term of ______.

A

AMLC Secretariat; Executive Director; 5 years

34
Q

Suspicious Transaction

  • There is ____________________.
  • Client is _________________.
  • The amount involved is _______________ with the business or financial capacity.
  • Client’s ________________ in order to avoid being the subject of AMLA.
  • Transactions which are _________________ from the profile of the client and/or the client’s past transactions.
  • Transactions are in ______________________________________ or money laundering activity
  • Any transaction that is similar, analogous, or identical to any of the ____________.
A
  • no underlying legal or trade obligation.
  • not properly identified
  • not commensurate
  • transaction is structured
  • observed to deviate
  • any way related to an unlawful activity
  • foregoing
35
Q

A transaction in cash or other equivalent monetary instrument exceeding Php 500K.

A transaction exceeding Php 1M in cases of jewelry dealers, dealers in precious metals and dealers in precious stones.

A

Covered Transactions

36
Q

Confidentiality of CTRs and STRs

NO communication to any person (including the media) of the fact that:

Violation of the rule makes the concerned officer/sand employee/s or media personnel criminally liable.

A

a) CTR or STR was made;
b) the contents of the CTR or STR; and
c) any other information related to the CTR or STR.

36
Q

Suspicious Transaction Reporting

A

No underlying legal or trade obligation, purpose or economic
justification. –> STR –> (w/in 5 days) AMLC

37
Q

No administrative, criminal or civil proceedings, shall lie against any person for having made a CTR or STR in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution.

A

Safe Harbor Provision

38
Q

Salient Functions of the AMLC

A
  • conduct financial investigation
  • provide and receive legal assistance
  • institute civil forfeiture proceedings
  • cause the filing of complaints for the prosecution of money laundering offenses
  • impose administrative sanctions for violations of the AMLA, as amended and its RIRR
  • develop educational programs
39
Q

AMLC Secretariat Investigation

A
  • CTR, STR, Referral, Complaint, Intelligence Information –> Financial Investigation –> Inquiry
  • Freeze Order –> Forfeiture of Criminal Proceeds –> Prosecution for Money Laundering
40
Q

Inquiry- General Rule:

A

Inquiry order issued by the Court of Appeals.

41
Q

Related Accounts

Materially linked accounts include but are not limited to the following:

A

(1) All accounts or monetary instruments under the name of the person whose accounts, monetary instruments or properties are subject of the freeze order or an order of inquiry;
(2) All those held, owned or controlled by the owner or holder of the accounts, monetary instruments or properties whether held, owned or controlled singly or jointly with another person;
(3) All “In Trust For” (ITF) accounts where either the trustee or the trustor pertains to a person whose accounts, monetary instruments or properties are subject of the freeze order or order of inquiry;
(4)All accounts held for the benefit or in the interest of the person whose accounts, monetary instruments or properties are the subject of the freeze order or order of inquiry;
(5)All accounts, shares, units or monetary instruments that are similar, analogous or identical to any of the foregoing

41
Q

Inquiry - Exceptions:

A

In cases involving the following unlawful activities:
* Kidnapping for ransom;
* Violations of the Comprehensive Drugs Acts of 2002;
* Acts of Terrorism;
* Felonies or offenses of a similar nature to the first three which are punishable under the penal laws of other countries;
* Terrorism and Conspiracy to commit terrorism; and
* Terrorist Financing.

41
Q

The Court of Appeals directs covered persons to freeze the accounts, the funds and sources of which originated from and/or are materially linked to the monetary instrument or property subject of the freeze order (FO) for a period ________________________.

Freeze the accounts subject of the FO as well as related accounts, wherever these funds may be found.

A

not exceeding six (6) months.

42
Q

Important Dates

A
  • 5 not exceeding 15 working days of reporting covered and suspicious transactions
  • Covered persons shall maintain and safely store for 5 years from the dates of transactions all records of customer identification and transaction documents
  • Update all customer information and identification once every 3 years.
42
Q

Forfeiture of Criminal Proceeds

A
  • Monetary instrument or property that are any way related to an unlawful activity or money laundering offense;
  • Other monetary instrument or property having an equivalent value to that of the monetary instrument or property found to be related in any way to an unlawful activity or a money laundering offense.
  • Filing of criminal complaint before the DOJ or Ombudsman, as the case maybe, for preliminary investigation for violation of the AMLA, as amended; and
  • Trial before the Regional Trial Courts or the Sandiganbayan.
43
Q

AMLA Offenders

A
  1. Money Launderer
  2. Facilitator
  3. Silent Accomplice
44
Q

Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity, performs or fails to perform any act as a result of which he facilitates the offer of
money laundering.

A

Facilitator

44
Q

Any person knowing that any monetary instrument or property represents the proceeds of any unlawful activity transacts or attempts to transact said monetary
instrument or property.

A

Money Launderer

45
Q

Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the AMLC, fails to do so.

A

Silent Accomplice

46
Q

Penalties

A

pg. 271 FAMI deck

47
Q

shall have jurisdiction to try money laundering cases committed by public officers under its jurisdiction, and private persons who are in conspiracy with such public officers.

A

SANDIGANBAYAN

47
Q

Jurisdiction over Money Laundering Cases

A
  • SANDIGANBAYAN
  • REGIONAL TRIAL COURT
48
Q

shall have jurisdiction to try money laundering cases committed by private individuals. Court of Appeals shall implement the freeze order within 24 hours from the receipt.

A

REGIONAL TRIAL COURT

49
Q

“No administrative, criminal or civil proceedings shall lie against any person for having made a covered or suspicious transaction report in the regular performance of his duties and in good faith, whether or not such report results in any criminal prosecution under the AMLA or any other Philippine law.”

A

Safe Harbor Provision

50
Q

What are the types of unlawful activities under AMLA?
a) Offenses under E-commerce Act
b) Piracy on High Seas
c) Hijacking, destructive arson & murder
d) All of the above

A
51
Q

The amount considered as a covered transaction in the cases of jewelry dealers or dealers in precious metals
a) 50K
b) 500K
c) 1M
d) 1.5M

A

c) 1M

52
Q

A series of transactions intentionally designed to cover up the source of the money, subvert the audit trail, and ultimately prevent detection of the source.
a) Layering
b) Placement
c) Integration
d) Money Laundering

A

a) Layering

53
Q

The following are considered unlawful activities under the AMLA except:
a) Rape
b) Kidnapping for ransom
c) Swindling
d) Robbery

A

a) Rape

54
Q

Which of the following statements are considered suspicious transactions:
I. Transactions amounting exceeding Php 500K
II. Transactions regardless of the amount involved.
III. The amount involved is not commensurate with the business or financial capacity of the client.
IV. Deviations from the client profile based on past transactions.
a) I, II, III
b) II, III, IV
c) I, III & IV
d) All of the above

A

FINAL SEC PHASE 1 (9 decks)

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