Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS.
First Regular Session

HOUSE BILL NO. 4407

Introduced by Rep. Winston “Winnie”

EXPLANATORY NOTE

In 2012, the Financial Action Task Force (FATF), the international body tasked to
set standards and promote effective implementation of legal, regulatory and operational
measures for combating money laundering and terrorist financing, identified the
Philippines as one of the countries with deficiencies in their anti-money laundering and
combating the financing of terrorism (AML/CFT) regime. The FATF found that
Designated Non-Financial Businesses and Professions (DNFBPs) such as casinos, real
estate agents and brokers, and dealers in precious metals and stones, are now being
used by money launderers to cover their transactions. Thus, the FATF recommended
that these DNFBPs be included in the coverage of reporting entities under the Anti-
Money Laundering Act (AMLA).

In response thereto, the Philippines enacted Republic Act No. 10365, which
expanded the coverage of AMLA. The amendments, however, still failed to comply with
the FATF recommendation as it still exempted casinos from the covered institutions.

The importance of including casinos in the coverage of AMLA is highlighted by
the “Bangladesh Bank Heist’ in February 2016. Reports show that foreign hackers
diverted about $81 million from the Bank of Bangladesh's account with the Federal
Reserve Bank of New York to four Philippine banks. A remittance company then
converted the funds from US dollars to Philippine pesos and part of the sum made its
way to the casino industry through junket operators. Attempts to recover the money
were futile, considering the fact that the current AMLICFT legislation does not cover
casinos,

To address this deficiency, this bill proposes to extend the coverage of reporting
entities to include DNFBPs, such as casinos, real estate brokers, and art and luxury car
dealers,

The inclusion of art and luxury motor vehicle dealers, while not included in the
FATF recommendations, is also being proposed. It is obvious that these industries are
vulnerable to money laundering considering the high value associated with certain


works of art and luxury vehicles and the tradition of secré¢y surrounding transactions

involving these items.

This amendment hopes to strengthen our AML/GFT regime and thus ensuré the
integrity of financial and banking transactions and congequently thwart illegal activities
that are channelled through the country's financial system.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 0

Introduced by Rep. Winston “Winnie” Castelo

AN ACT FURTHER STRENGTHENING REPUBLIC ACT NO. 9160, OTHERWISE
KNOWN AS THE ANTI-MONEY LAUNDERING ACT OF 2001, AS AMENDED

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

SECTION 1. Section 3(a) of Republic Act No. 9160, as amended, is hereby
amended to read as follows:

“(a) ‘Covered persons’, natural or juridical, refers to:

"(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) (i) 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 AND PRECIOUS STONES; [,
who, as a business, trade in precious metals, for transactions in excess of
One million pesos (P1,000,000.00):]


["(6) 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);]

“(8) CASINO OPERATORS, WITH RESPECT TO THEIR GAMING
OPERATIONS;

“(6) REAL ESTATE BROKERS, AS DEFINED UNDER REPUBLIC ACT
NO. 9646, OTHERWISE KNOWN AS THE “REAL ESTATE SERVICE
ACT OF THE PHILIPPINES”;

“(7) ART DEALERS;
“(8) LUXURY MOTOR VEHICLE DEALERS; AND

"(9) 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

"(40) persons who provide any of the following services:

(i) managing of client money, securities or other assets;
(i) management of bank, savings or securities accounts;

(iit) 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 business entities[.]; AND

(V) BUYING AND SELLING OF REAL ESTATE.

“Notwithstanding the foregoing, the term ‘covered persons’ shall exclude
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 2. Section 3 (b) of the same Act is hereby amended to read as follows:


“(b) "Covered transaction" [is a transaction in cash or other equivalent
monetary instrument involving a total amount in excess of Five hundred
thousand pesos (Php 500,000.00) within one banking day.] REFERS TO:

1, A TRANSACTION IN CASH OR OTHER EQUIVALENT MONETARY
INSTRUMENT INVOLVING A TOTAL AMOUNT IN EXCESS OF FIVE
HUNDRED THOUSAND PESOS (PHP 500,000.00) WITHIN ONE
BANKING DAY;

2, FOR COVERED PERSONS UNDER PARAGRAPHS (4), AND (7) OF
SECTION 3 (A) HEREOF, ANY SINGLE TRANSACTION
EXCEEDING ONE MILLION PESOS (PHP 1,000,000.00);

3. FOR COVERED PERSONS UNDER PARAGRAPH (5) OF SECTION
3 (A) HEREOF, ANY SINGLE OR AGGREGATE OF
TRANSACTIONS EXCEEDING ONE HUNDRED FIFTY THOUSAND
PESOS (PHP 150,000.00) INONE GAMING DAY; AND

4, FOR COVERED PERSONS UNDER PARAGRAPH (6) OF SECTION
3 (A) HEREOF, ANY SINGLE TRANSACTION EXCEEDING THREE
MILLION PESOS (PHP 3,000,000.00).

“(b-1) "Suspicious transactions” are transactions with covered institutions,
regardless of the amounts involved, where any of the following
circumstances exist:

1. 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;

4, taking into account all known circumstances, it may be
perceived that the client's transaction is structured in order to
avoid being the subject of reporting requirements under the Act;

5. any circumstances relating to the transaction which is observed
to deviate from the profile of the client and/or the client's past
transactions with the covered institution;

6. the transactions is in a way related to an unlawful activity or
offense under this Act that is about to be, is being or has been
committed; or

7. any transactions that is similar or analogous to any of the
foregoing AS MAY BE DETERMINED BY THE ANTI-MONEY
LAUNDERING COUNCIL (AMLC).”

2.
3.

SEC. 3. Section 3 of the same Act shall have new paragraphs, as follows:

(L) “CASINO” SHALL REFER TO GAMBLING CASINOS WHERE THE
BUILDING, ROOM OR SPACE IS USED FOR SOCIAL AMUSEMENTS;
SPECIFICALLY, ONE USED FOR GAMBLING THROUGH GAMES OF


CHANCE, GAMES OF CARDS AND GAMES OF NUMBERS AND ARE BEING
REGULATED AND SUPERVISED BY THE PHILIPPINE AMUSEMENT AND
GAMING CORPORATION (PAGCOR), THE CAGAYAN ECONOMIC ZONE
AUTHORITY (CEZA), OR ANY OTHER APPROPRIATE SUPERVISING
AUTHORITY. FOR PURPOSES OF THIS ACT, IT ALSO INCLUDES
INTERNET- AND SHIP-BASED CASINOS.

1. INTERNET-BASED CASINO REFERS TO GAMBLING CASINOS IN
WHICH PERSONS PARTICIPATE BY THE USE OF REMOTE
COMMUNICATION FACILITIES SUCH AS, BUT NOT LIMITED TO,
INTERNET, TELEPHONE, TELEVISION, RADIO OR ANY OTHER KIND
OF ELECTRONIC OR OTHER TECHNOLOGY FOR FACILITATING
COMMUNICATION.

2. SHIP-BASED CASINO REFERS TO GAMBLING CASINOS, THE
OPERATION OF WHICH IS UNDERTAKEN ON BOARD A VESSEL,
SHIP, BOAT OR ANY OTHER WATER-BASED CRAFT WHOLLY OR
PARTLY INTENDED FOR GAMBLING.

(M) “ART” REFERS TO ALL ORIGINAL WORKS OF ART LIKE DRAWING,
PAINTING, SCULPTURE, ENGRAVING AND ART WORK PRODUCED IN
MULTIPLES SUCH AS GRAPHIC AND PHOTOGRAPHIC WORKS AND
SCULPTURE CASTS, BUT SHALL NOT INCLUDE WORKS INTENDED TO BE
MASS-PRODUCED.

(N) “LUXURY MOTOR VEHICLE” REFERS TO ANY MOTOR VEHICLE
EXCEEDING THE FOLLOWING TECHNICAL SPECIFICATIONS:

1. CAR (SEDAN OR HATCHBACK) WITH AN ENGINE DISPLACEMENT
EXCEEDING 2200 CC. IF GASOLINE-FED OR 3000 CC. IF DIESEL-
FED; AND WITH AN ENGINE EXCEEDING 4 CYLINDERS;

2. PASSENGER VAN OR PICK-UP WITH AN ENGINE DISPLACEMENT
EXCEEDING 2200 CC IF GASOLINE-FED OR 3000 CC. IF DIESEL-
FED, AND WITH AN ENGINE EXCEEDING 4 CYLINDERS;

3. CROSSOVER UTILITY VEHICLE (CUV)/MULTI-PURPOSE VEHICLE
(MPV)ASIAN UTILITY VEHICLE (AUV) WITH AN ENGINE
DISPLACEMENT EXCEEDING 2000 CC. IF GASOLINE-FED OR 2500
CC. IF DIESEL-FED, AND WITH AN ENGINE EXCEEDING 4
CYLINDERS; AND

4, SPORTS UTILITY VEHICLE (SUV) WITH AN ENGINE DISPLACEMENT
EXCEEDING 2700 CC. IF GASOLINE-FED OR 3000 CC. IF DIESEL-
FED, AND WITH AN ENGINE EXCEEDING 4 CYLINDERS.

(0) “DEALER” REFERS TO ANY PERSON WHO BUYS, SELLS,
EXCHANGES OR OTHERWISE DEALS IN PRECIOUS METALS, PRECIOUS


STONES, WORKS OF ART, OR LUXURY MOTOR VEHICLE, AS THE CASE
MAY BE, IN THE COURSE OF ITS BUSINESS.

SECTION 4. Separability Clause. If any provision or part hereof is held invalid or
unconstitutional, the remainder of the provision not otherwise affected shall remain valid
and subsisting.

SECTION 5. Repealing Clause. Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation contrary to,
or inconsistent with, the provisions of this Act is hereby repealed, modified or amended
accordingly.

SECTION 6. Effectivity. This Act shall take effect after fifteen (15) days following
its publication in at least two (2) newspapers of general circulation.

Approved,