REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

|
| EIGHTEENTH CONGRESS
| First Regular Session

House BillNo._6174

Introduced by Hon. Junie E. Cua
Lone District, Quirino

EXPLANATORY NOTE

Pursuant to the membership rules of the Asia Pacific Group on Money Laundering
(APG), members shall undergo a mutual peer review system to determine levels of
compliance with international anti-money laundering and combating the financing of
terrorism (. (CFT) standards. These peer reviews are referred to as “mutual evaluations”
(ME). |

‘The ME, assess as a whole, a jurisdiction's AML/CFT system. This includes the legal
framework addressing money laundering (ML), terrorism financing (TF), proliferation
financing of weapons of mass destruction (PF), and the framework for supervision of
financial institutions and designated non-financial businesses and professions (DNFBPs). The
ME will also look into the criminal justice system, from investigation to prosecution to
conviction and confiscation of the crimes of ML, TF, PF including predicate crimes (i.e.
terrorism, drug trafficking, corruption, tax crimes, fraud, environmental crimes, human
trafficking, etc.),

have undergone the Third Round of Mutual Evaluation (ME) process which was conducted in
2018 — 2019. 22 August 2019, the 3 Philippine Mutual Evaluation Report (MER) was
adopted by the Asia Pacific Group on Money Laundering (APG) and was published in its
website last 24 October 2019, The MER embodies the results Mutual Evaluation,

The Phi ter has undergone two (2) MEs, in 2003 and in 2008, and recently, we

Based on the MER ratings, the Philippines is placed under the enhanced expedited
follow-up of the APG and meets the referral criteria’ for the International Cooperation
Review Group* (ICRG). Members who meet the ICRG referral criteria enter a twelve (12)
month observation period, which also provides an opportunity for the jurisdiction to remedy

* The Philippines is placed under enhanced expedited follow-up and meets the referral criteria forthe ICRG for having been rated low or
moderate level of ness for ten (10) out ofthe eleven (11) Immediate Outcomes.
* The ICRG, which Is essentially the “grey lst’, Isa mechanism to identify and respond to jurisdictions with strategic AML/CFT deficiencies

that pose a ris tothe international financial system.



the identified shortcomings in the MER. In the case of the Philippines, the 12-month period
started in October 2019, and will end in October 2020.

Within 12-month period, it is critical that we address deficiencies for key FATF
Recommendations and demonstrate positive and tangible progress towards effectiveness for
all Immediate Outcomes rated as low/moderate, in order to avoid referral to the ICRG. This
includes the passage of laws and regulations to address deficiencies in the legal framework,
and operational enhancements (i.e. investigation and prosecution, confiscation of proceeds of

crime, supervision, etc.) to improve effectiveness of the system.

Referral to ICRG or Grey-Listing has significant negative impact on the country’s
economy as a whole. This includes public identification by the FATF that the Philippines has
strategic deficiencies. Particularly, the European Union (EU) will require its members to
immediately i ‘enhanced due diligence (EDD) on Filipino nationals and businesses
transacting through EU channels. This also means higher costs of doing business for those
individuals and entities in Europe which could results in de-banking or refused transactions.
If the Philippines will not pass the 12-month observation period, it will be automatically
referred to the ICRG or Grey-Listed. Considering the impact of grey-listing to our country, it
is critical that all relevant agencies participate in this endeavor and strive to achieve positive
and tangible progress on the implementation of the MER Recommended Actions.

At the end of the 12-month period, the Philippines will submit a comprehensive
progress report on the level of implementation of the MER Recommended Actions. The Asia-
Pacific Joint Group (AP-JG)* will evaluate the progress report, and interview relevant
government authorities regarding the details of progress made, The AMLC has developed an
Implementation Plan, based on the MER Recommended Actions, to guide the relevant
agencies in addressing the identified deficiencies in the MER.

The Implementation Plan attempts to identify “key” RAs which should be prioritized,
the immedi Ta sought to be achieved, and the type of action that needs to be

undertaken. The AP-JG will focus their review on these “key” RAs, and determine whether
the Philippines has demonstrated positive and tangible progress towards effectiveness, The
AMLC pera intends to further consult the APG Secretariat and/or a consultant to
objectively assess the “key” RAS.

The type of action identified in the Implementation Plan is classified as: a) Legislative
Action; b) Regulatory/Agency Issuance; c) Supervisory Action; d) Risk Assessment; ¢)
Operational Enhancement; f) Organizational Restructuring; and g) Capacity
Building/Outreach. The plan further identifies corresponding recommended outputs to
address the MER RAs, the agencies responsible and the timeline for implementation.

To implement plan on legislative action the following amendments to Republic Act No.
9160, as amended have to be introduced:

° The APG is responsi in preparing a Post Observation Period Report (POPR) containing its assessment ofthe country’s progress and
recommendations on whether the Philipines has demonstrated postive and tangible progress towards effectiveness.



Inclusion of real estate agents as covered persons,

Inclusion of tax crimes and violation of the Strategic Trade Management
Act which indirectly includes proliferation of weapons of mass destruction
as predicate offenses to money laundering;

c) Enhancement of the investigative powers of the AMLC (ie. use of
investigative techniques, subpoena power);

d) Authority of the AMLC to implement targeted financial sanctions on
proliferation financing;

e) Prohibition on the issuance of injunctive relief against freeze orders and
forfeiture proceedings; and

£) Retention of portion of forfeited assets.

se

In view of the foregoing and the deadline by which we have to comply with the

recommendations, immediate approval of this bill is earnestly sought.

Be



| REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No,__5174

Introduced by Hon. Junie E. Cua
‘Lone District, Quirino

| ANACT.
TO FURTHER STRENGTHEN THE ANTI-MONEY LAUNDERING LAW,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS
ANTI-MONEY LAUNDERING ACT OF 2001, AS AMENDED,
| AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 2 of Republic Act No. 9160, as amended, is hereby amended to read
as follows:

“SEC 2. Deciaration of Policy. It is hereby declared 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. Consistent with its foreign policy, the State shall extend
cooperation in transnational investigations and prosecutions of persons involved in
money laundering activities wherever committed, AND ASSIST THE UNITED
NATIONS SECURITY COUNCIL IN THE IMPLEMENTATION OF ITS

SOLUTIONS INVOLVING TARGETED FINANCIAL SANCTIONS
RELATED TO THE FINANCING OF THE PROLIFERATION OF
WEAPONS OF MASS DESTRUCTION.”

SECTION 2. Section 3(a) of the same Act is also amended by inserting a new paragraph (9),
as follows:

“(a) “Covered persons”, natural or juridical refer to:
occa

“(9) REAL ESTATE DEVELOPERS AND BROKERS.”

SECTION 3. Section 3(b) of the same Act is hereby further amended by inserting a new
Paragraph, as follows:

“(b) “Covered transaction” x x x.

z\
|


ISACTION INVOLVING AN AMOUNT IN EXCESS OF ONE

Tas COVERED PERSONS UNDER SECTION 3(a)(9), A SINGLE CASH
[ILLION PESOS (P1,000,000.00).”

SECTION 4, Section 3 of the same Act is hereby further amended by inserting new
paragraphs (m) and (n), as follows:

“(m) For purposes of covered! persons under Section 3(a)(9), the following
terms are hereby defined as follows:

"Real estate developer" refers to any natural or juridical person engaged in
the business of developing real estate development project for his/her or its
own account and offering them for sale or lease.

“Real estate broker” refers to a duly registered and licensed natural person
who, for a professional fee, commission or other valuable consideration, acts
as an agent of a party in a real estate transaction to offer, advertise, solicit,
list, promote, mediate, negotiate or effect the meeting of the minds on the
sale, purchase, exchange, mortgage, lease or joint venture, or other similar
transactions on real estate or any interest therein.

“(n) targeted financial sanctions” refers to both asset freezing and
pohmitee to prevent funds or other assets from being made available,
directly or indirectly, for the benefit of any individual, natural or legal
mon or entity designated pursuant to relevant security council
resolutions.”

|
SECTION 5. Section 3(j) of the same Act is hereby further amended by inserting new
paragraphs (34) and (35), as follows:

“(33) Fraudulent practices and other violations under Republic Act
| No. 8799, otherwise known as the Securities Regulation Code
of 2000; [and]

“ G4) VIOLATION OF SECTION 19 (a3) OF REPUBLIC ACT NO.
10697, OTHERWISE KNOWN AS THE STRATEGIC TRADE
MANAGEMENT ACT IN RELATION TO PROLIFERATION OF
WEAPONS OF MASS DESTRUCTION AND ITS FINANCING.

~“(35) VIOLATIONS OF SECTION 254, 255, 257, 258, 260, 261, 262.
263, 264, 264-A, 264-B, 265 AND 265-A OF CHAPTER IL, TITLE

|X OF THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED IF THE FINAL ASSESSMENT IS IN EXCESS
| OF TEN MILLION PESOS (P10,000,000.00) ; AND”


SECTION 6.

SECTION 7.

Mone
Gover
of thi
Exch:

|Section 3(i) of the same Act is hereby renumbered, as follows:

34)] (36) Felonies and offenses of a similarnature that are

| punishable under the penal laws of other counties.

pen 7 of the same Act is hereby amended to read as follows:

Launding Council is hereby created and shall be composed of the
jor of the Bangko Sentral ng Pilipinas as Chairman, the Commissioner
Insurance Commission and the Chairman of the Securities and
nge Commission, as members The AMLC shall act unanimously in the

Mn Creation of Anti-Money Laundering Council (AMLC). — The Anti-

discharge of its functions as defined hereunder:
|

“ay

ee

“6

to require, receive AND ANALYZE covered or suspicious transactions
reports from covered persons;

x

to investigate suspicious transactions and covered transactions
deemed suspicious after DETERMINATION by AMLC, money
laundering activities, and other violations of this Act. IN THE
CONDUCT OF ITS INVESTIGATIONS, THE AMLC MAY USE
INVESTIGATION TECHNIQUES AVAILABLE TO OTHER
LAW ENFORCEMENT AGENCIES, SUCH AS, BUT NOT
LIMITED TO THE CONDUCT OF SEARCHES AND
SEIZURES, WITNESS INTERVIEW, SURVEILLANCE,
AND UNDERCOVER INVESTIGATION. AMLC
INVESTIGATIONS SHALL BE KEPT STRICTLY
CONFIDENTIAL FROM THE PUBLIC.

Sx:
“(2)xx x [Is

(13) TO SUBPOENA ANY PERSON AND COMPEL HIS

ATTENDANCE, TO PRODUCE INFORMATION, BOOKS,
PAPERS, DOCUMENTS, DATA, AND OTHER RELEVANT
INFORMATION OR OBJECTS; OR TO GIVE STATEMENT,
UNDER OATH, IN RELATION TO ITS INVESTIGATIVE
POWERS. THOSE WHO REFUSE THE SUBPOENA WITHOUT
JUSTIFIABLE CAUSE, OR WHO REFUSE TO SUPPLY THE
AMLC WITH DATA REQUESTED OR REQUIRED, SHAL|. BE
SUBJECT TO PUNISHMENT FOR CONTEMPT IN ACCORDANCE
WITH THE PROVISIONS OF THE RULES OF COURT; ANI) TO
ADMINISTER OATH OR AFFIRMATION TO ANY PERSON
APPEARING IN THE COURSE OF INVESTIGATION OR
ADMINISTRATIVE PROCEEDINGS; AND

“<a4) TQ IMPLEMENT TARGETED FINANCIAL SANCTIONS,

3


INCLUDING EX PARTE FREEZE, WITHOUT DELAY, AGAINST
THE l'UNDS AND OTHER ASSETS OF INDIVIDUALS OR ENTITIES
DESIGNATED AND LISTED UNDER UNITED NATIONS SECURITY
COUNCIL RESOLUTION NUMBERS 1718 (2006) AND 2231 (2015)
AND THEIR SUCCESSOR RESOLUTIONS AS WELL AS ANY
BINDING RESOLUTION OF THE SECURITY COUNCIL RELATING
TO THE PREVENTION, SUPPRESSION AND DISRUPTION OF
PROLIFERATION OF WEAPONS OF MASS DESTRUCTION AND
ITS FINANCING.”

SECTION 8. Section 10 of the same Act is hereby further amended by inserting « new
paragraph to tead as follows:

“Section 10. Freezing Monetary Instrument or Property. —

“(A) Upon a verified ex parte petition by the AMLC and after determination that
probable cause exists that any monetary instrument or property is in any way related
to an unlawful activity as defined in Section 3(i) hereof, the Court of Appeals may
issue a freeze order which shall be effective immediately, for a period of twenty (20)
days. Within the twenty (20)-day period, the Court of Appeals shall conduct a
summary hearing, with notice to the parties, to determine whether or not to modify or
lift the freeze order, or extend its effectivity. The total period of the freeze order
issued by the Court of Appeals under this provision shall not exceed six (6) months.
This is without prejudice to an asset preservation order that the Regional Trial Court
having jurisdiction over the appropriate anti-money laundering case or civil forfeiture
case may issue on the same account depending on the circumstances of the case,
where the Court of Appeals will remand the case and its records; Provided, That if
there is no case filed against a person whose account has been frozen within the period
determined by the Court of Appeals, not exceeding six (6) months, the freeze order
shall be deemed ipso facto lifted; Provided, further, That this new rule shall not apply
to pending cases in the courts. In any case, the court should act on the petition to
freeze within twenty-four (24) hours ‘rom filing of the petition. If the application is
filed a day before a nonworking day, the computation of the twenty-four (24)-hour
period shall exclude the nonworking clays.

The freeze order or asset preservation order issued under this Act shall be limited only
to the amount of cash or monetary instrument or value of property that court finds
there is probable cause to be considered as proceeds of a predicate offense, and the
freeze order or asset preservation order shall not apply to amounts in the same account
in excess of the amount or value of the proceeds of the predicate offense.

A person whose account has been frozen may file a motion to lift the freeze order and
the court must resolve this motion before the expiration of the freeze order.

No court shall issue a temporary restraining order or a writ of injunction against any
freeze order, except the Supreme Cours.

“(B) FOR PURPOSES OF IMPLEMENTING TARGETED FINANCIAL
SANCTIONS, AS PROVIDED UNDER SECTION 7, PAR. 14, THE AMLC
SHALL HAVE THE POWER TO ISSUE, EX PARTE, AN ORDER TO


FREEZE WITHOUT DELAY.

THE FREEZE ORDER SHALL BE EFFECTIVE UNTIL THE BASIS FOR ITS.
ISSUANCE SHALL HAVE BEEN LIFTED. DURING THE EFFECTIVITY OF
THE FREEZE ORDER, THE AGGRIEVED PARTY MAY, WITHIN
TWENTY (20) DAYS FROM ISSUANCE, FILE WITH THE COURT OF
APPEALS A PETITION TO DETERMINE THE BASIS OF THE FREEZE
ORDER ACCORDING TO THE PRINCIPLE OF EFFECTIVE JUDICIAL
PROTECTION.

THE AMLC, IF CIRCUMSTANCES WARRANTS, MAY INITIATE A CIVIL
FORFEITURE PROCEEDINGS TO PRESERVE THE ASSETS AND TO
PROTECT IT FROM DISSIPATION.

NO COURT SHALL ISSUE A TEMPORARY RESTRAINING ORDER OR A
WRIT OF INJUNCTION AGAINST THE FREEZE ORDER, EXCEPT THE
COURT OF APPEALS OR THE SUPREME COURT.”

SECTION 9. Section 12 of the same Act shall have a new paragraph (d) to be read as
follows:

“SEC, 12. Forfeiture Provisions. — X x x.

“(d) RETENTION OF FORFEITED ASSETS WITH FINALITY. — THE
AMLC SHALL RETAIN FIFTY PERCENT (50%) OF THE TOTAL
ASSETS FORFEITED.-

THE RETAINED AMOUNT SHALL BE UTILIZED BY THE AMLC
FOR MAINTENANCE AND OTHER OPERATING EXPENSES.

Xxx?
SECTION 10, Section 20 of the same Act is hereby deleted.

“[SECTION 20. Non-intervention in the Bureau of Internal Revenue (BIR)
Operations. — Nothing contained in this Act nor in related antecedent laws or
existing agreements shall be construed to allow the AMLC to participate in any
manner in the operations of the BIR.”

SECTION 11. Section 12 of the same Act is hereby amended inserting a new paragraph to
read as follows:

“(a) Civil Forfeiture — X x x.

“NO COURT SHALL ISSUE A TEMPORARY RESTRAINING ORDER OR
A WRIT OF INJUNCTION AGAINST ANY PROVISIONAL ASSET
PRESERVATION ORDER OR ASSET PRESERVATION ORDER, EXCEPT
THE COURT OF APPEALS OR THE SUPREME COURT.”


SECTION 12, Implementing Rules and Regulations - The AMLC shall within ninety
(90) days from the effectivity of this Act issue the necessary rules and regulations.

SECTION 13. Separability Clause. - If any provision or section of this Act is held
to be unconstitutional or invalid, the other provisions or sections hereof, which are not
affected thereby shall continue to be in full force and effect.

SECTION 14. Repealing Clause. - All provisions of existing laws, orders, rules and
regulations, or parts thereof which are in conflict or inconsistent with the provisions of this
Act are hereby repealed, amended or modified accordingly; Provided, that all provisions
of Republic Act No. 9160, as amended, which are not inconsistent with this Act are
hereby adopted.

SECTION 15. Effectivity. -This Act shall take effect immediately after the
completion of its publication in the Qjficial Gazette or in a newspaper of general
circulation.