The Anti-Money Laundering Act (RA 9160, as amended) criminalizes money laundering — the process of transacting, concealing, or converting the proceeds of an unlawful activity to make them appear legitimate. The unlawful activities (predicate crimes) include drug trafficking, graft and corruption, plunder, fraud, and many others. The law requires covered persons — such as banks, financial institutions, and certain designated non-financial businesses and professions — to know their customers, keep records, and report covered transactions (above a threshold) and suspicious transactions to the Anti-Money Laundering Council (AMLC). The AMLC can investigate, and, through the courts, apply for freeze orders, bank inquiry, and civil forfeiture of the laundered assets. Money laundering is punished separately from the predicate crime, and the freeze and forfeiture mechanisms let the State recover illicit proceeds even without a prior criminal conviction in some civil forfeiture cases.
Crime often generates dirty money — and criminals try to make it look clean. The Anti-Money Laundering Act attacks that process and lets the State seize the proceeds.
What Money Laundering Is
Money laundering is the process of transacting, concealing, or converting the proceeds of an unlawful activity to make them appear legitimate. It includes moving, disguising, or investing dirty money so its criminal origin is hidden.
The Predicate Crimes
Money laundering presupposes an unlawful activity (a predicate crime) that generated the proceeds, such as:
- Drug trafficking;
- Graft and corruption, and plunder;
- Fraud and swindling; and
- Many other serious offenses the law lists.
Covered Persons and Reporting Duties
The law imposes duties on covered persons — banks, financial institutions, and certain designated non-financial businesses and professions. They must:
- Know their customers (customer identification/due diligence);
- Keep records of transactions; and
- Report to the AMLC both covered transactions (above a threshold amount) and suspicious transactions.
The Anti-Money Laundering Council (AMLC)
The AMLC is the government's financial intelligence unit. It can:
- Receive and analyze reports;
- Investigate suspected laundering; and
- Through the courts, apply for a freeze order, a bank inquiry into accounts, and civil forfeiture of the laundered assets.
Two Powerful Features
- Separate offense — money laundering is punished separately from the predicate crime; and
- Civil forfeiture — the State can recover illicit proceeds through civil forfeiture, which in some cases can proceed even without a prior criminal conviction for the predicate crime.
Practical Takeaways
- The AMLA criminalizes laundering the proceeds of crime and punishes it separately from the underlying offense;
- Banks and other covered persons must do KYC, record-keeping, and report covered and suspicious transactions to the AMLC;
- The AMLC can obtain freeze orders, bank inquiry, and civil forfeiture to recover illicit assets.
Frequently Asked Questions
What is money laundering under the AMLA? The process of transacting, concealing, or converting the proceeds of an unlawful activity to make them appear legitimate. It includes moving, disguising, or investing dirty money to hide its criminal origin.
What are predicate crimes? The unlawful activities that generate the proceeds, such as drug trafficking, graft and corruption, plunder, fraud, and other serious offenses the law lists. Money laundering presupposes one of these.
What must banks do under the AMLA? Covered persons like banks must know their customers, keep records, and report covered transactions above a threshold and suspicious transactions to the Anti-Money Laundering Council (AMLC).
Can the government seize laundered money without a conviction? In some cases, yes. The AMLC can pursue civil forfeiture of laundered assets, which can proceed even without a prior criminal conviction for the predicate crime, in addition to freeze orders and bank inquiry.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.