NOTES: SPECIAL LAW

COLLEGE OF LAW
ATENEO

AMLA
1. Protect and preserve the integrity and confidentiality
confidentiality of bank accounts, to ensure he the Philippines
shall not be used as a site for unlawful money laundering activities; and
. Pursue !tate"s foreign policy to e#tend cooperation in t ansnational investigations and prosecutions on
money laundering activities.

$overed transactions%
1. &reshold transactions
. !uspicious transactions
1. 'o underlying legal or trade obligation, purpose oreconomic (ustification;
. $lient is not properly identified;
). Amount involved not commensurate
commensurate with client"s business or financial
financial capacity;
capacity;
*. +ased on all known
known circumstances,
circumstances, it may
may be perceived
perceived that client"s transaction
transaction is structured in order 
to avoid being sub(ect of reporting reuirements;
-. Any
Any circumstance
circumstance relating
relating to transaction obseved
obseved to deviate from
from client"s
client"s profile andor client"s
client"s
 profile past transactions
transactions wih covered institutions;
institutions;
/. &ransactions
&ransactions is in any way related
related toan unlawful
unlawful activity or offense
offense under the act that is about to be,
is being, or has been committed;
0. !imilaror analogous transactions.

$overed institutions%
1. +anks and other entities, their subsidiaries and affiliates,
affiliates, supervised regulated by +!P;
. nsurance companies and other entities, supervisedregulated by insurance commisioner;
). !2$ supervised regulated entities.

Money laundering crime 3 is committed when the proceeds of an 4unlawful activity4 are transacted to
make them appear to have originated from legitimate sources, by the following acts%
1. &ransacting
&ransacting or attempting to transact,
transact, with monetary instrument or property
property knowing it
representinvolvesrelates
representinvolvesrelates to proceeds of any unlawful activity;
. 5acilitating
5acilitating money
money laundering
laundering referred
referred to in item 6a7 above, by knowingly performing or failing
failing to
 perform an act;
). 5ailing to disclose and file report with AML$ of any monetary instrument or property
property as reuired
under the law.

8nlawful activities%
1. 9idnapping for ransom
. :rug trafficking
t rafficking
). raft and corrupt practices
*. Plunder 
-. <obbery and e#tortion
/. =ueteng and masiao
0. Piracy on the high seas
>. ?ualified theft
@. !windling
1. !muggling
11. Biolations of 23$ommerce Act of 
1. Ci(acking, destructivearson and murder including acts of terrorism against non3combatant and persons
and similar targets
1). 5raudulent practices under the !ecurities <egulation $ode of 
1*. 5elonies or offenses of similar nature punishable under the penal laws of the countries.

=urisdiction%
D<&$% all cases of money laundering
D!A':A'+AEA'% public officers and other private persons in conspiracy with such public officers.
 'ote% 'o money laundering case can be filed, nor can here be a freeFe of account, against any candidate
for public office during an election campaign.

Penalties and other conseuences%

1. 5ines and imprisonment for conviction of money l aundering offenses;
. $ivil and criminal forfeiture of monetary instrument or property for any money laundering offense;
). $onvicted offender to pay an amount eual to value of monetary instrument or property ordered
forfeited when order of forfeiture cannot be affeted.

5reeFing of account%
&he $A may issue a freeFe order only 1.7 8pon e# parte application of AML$ .7 After the
determination that probable cause e#ists that any monetary instrument or property is in any way realted to
an 4unlawful activit,4 which shall beeffective immediately, and for a period of  days unless e#tended by
court.

AML$%
1.may seek court order to inuire into or e#amine a particular deposit or investment with a banking or
non3banking financial institution;
. Gn its own, no court order reuired, in cases involving kidnapping, drug trafficking or terrorism.
D8pon probable cause that the deposits or inveFtments are in any way related to any unlawful activity
or monel laundering offense.

Power of +!P% to ensure compliance of this act, +!P may inuire into or e#amine any deposit or
investment with any banking institution on non3bank financial institution when he e#amination is made in
the course of periodic or special e#amination.

$omposition of AML$%
D+!P overnor, as AML$ $hairman
Dnsurance $ommision $hairman
D!2$ $hairman

 '2H $2'&<AL +A'9 A$&

t is the !tate"s $entral Monetary Authority mandated in the 1@>0 $onstitution, which shall
function and operate as an independent and accountable body corporate in the discharge of its mandated
responsibilities concerning money, banking and credit.

Primary Gb(ectives of +!P%

1. &o maintain price stabiliy conducive to a balanced and sustainable growth of the economy;
. &o promoteand maintain the monetary stability and convertibility of the peso; and
). &o provide policy directions in areas of money, banking and credit, with supervision over operations of
 banks, and with regulatory powers over operations of finance companies, and non3bank financial
institutions performing uasi3banking functions.
 'ote% +!P has authority to reuest from government offices and instrumentalities, G$$s, data it
reuires for the proper discharge of its functions and responsibilities, with the power to issue subpoena for 
the production of books and records.

<oles of +!P%
1. +anker of the government
. <epresents the government with the M5
). <epresents the government with oher financial institutions
*. Maintains the fiscal operations of the government

+!P Privileges and Prohibitions

1. &a# e#empted
. 2#empted from $ustom :uties
). +!P cannot engage in development banking and financing
*. +!P shall phase out all fiscal agency functions, and transfer same to the :G5
-. +!P shall within - years phase out its regulatory powers over finance companies without uasi3banking
functions, and other institutions performing similar functions, the same to be assumed by the !2$.

MG'2&A<E +GA<:
+!P powers and functions are e#ercised by Monetary +oard, composed of 0 members appointed by
the President of the Philippines for a term of / years%
1. overnor, as chairman
. A member of the $abinet designated by he President of the Philippines
). - members who shall come from the private sector, all of whom shall serve full3time;
D 'o member of the +oard may be reappointed more than once.
D n case of emergencies where time is insufficient to call a meeting of the Monetary +oard, the
overnor with the concurrence of  other members of the +oard, may decide any matter, or take an action
within he authority of the +oard.
D &he overnor shall thereafter submit a report to the President and $ongress within 0 hours after
the action has been taken. At the soonest possible time, the overnor shall call a meeting of the Monetary
+oard to submit his for ratification.

?ualifications of the members of the Monetary +oard%

1. Must be a natural3born 5ilipino $itiFens;
. Atleast )- years of age, with the e#ception of the overnor, who should atleast be * years of age;
). Gf good moral character, of unuestionable integrity, of known probity and patriotism; and
*. Hith recogniFed competence in social and economic disciplines.

Powers and functions of the overnor%

1. Ce shall be the head of a department, and his appointment shall be sub(ect to the confirmation by he
$ommision on Appointments;
. Ce shall be +!P $hief 2#ecutive Gfficer;
). Ce shall be the principal representative of the Monetary +oard and of +!P.

:isualificationinhibition on overnor and +oard members%

1. :isualified from being director, officer, employee, consultant, lawyer, agent or stockholder of any
 bank, uasi3bank or any other institution which is sub(ect to +!P supervision, in which case, such
membershall resign from, and divest himself of any and all interest in such institution before assumption
of office;
. &hose coming from private sectors shall not hold any other public office or public employment during
their tenure;
). $annot be connected directly with any multilateral banking or financial institution, or has a substantial
interest in any private bank in the Philipines, within 1 year prior to his appointment;
*. $annot be employed in any such institution within  years aftsr e#piration of his term, e#cept when he
serves as an official representative of the overnment in such institution;
-. overnor or full3time members shall limit their professional activities to those pertaining directly to
their position with +!P, and may not accept those any other employment, whether public or private,
renumerated or ad honorem, with the e#ception of positions in eleemosynary, civic, cultral or religious
organiFationsor whenever, by designation of the president, the overnor of full3time memeber is tasked to
represent the interest of the overnment;
/. Hhen any member with personal or pecuniary interes in any matter in Monetary +oard agenda, he shall
disclose his interest and shall retire from meeting when the matter is taken up.

<emoval of overnor and +oard Memebers%

President may remove any member of the +oard fod any of the following reasons%
1. !ubseuent disualification;
. Physical or mental incapacity that he cannot properly discharge his duties and responsibilities and such
incapacity has lasted for more than / months;
). uily acts or operations, which are fraudulent or illegal character, or which are manifestly opposed to
the aims and interest of a +!P; or 
*. 'o longer possessing ualifications specified in he act.

<esponsibilities liabilities of +!P Gfficers and 2mployees%

1. &hose who willfully violate the act , or whose guilty of negligence, abuses of malfeasence or
misfeasance, or fail to e#ercise e#traordinary diligence in the performance of their duties, shall be held
liable for any loss or in(ury suffered by +!P, or other banking institution as a result hereof.
. !imilar responsibility shall apply to members, officers and employees of +!P for%
1. :isclosure of any confidential information, or any information on Monetary +oard discussions or
resolutions, or about confidential operations of +!P, unless the disclosure is in connection with the
 performance of official +!P functions, or is with prior authoriFation of Monetary +oard or overnor;
. 8se of such information for personal gain, or to the detriment of the overnment, +!P or third
 parties.

D+!P shall have supervision over, and conduct periodic or special e#aminations of, banking institutions
and uasi3banks, including their subsidiaries and affiliates engaged in allied activities.
D'o restraining order or in(unction shall be issued by the courts en(oining +!P from e#amining any
institution sub(ect to its supervision or e#amination unless it is plainly arbitrary and made in bad faith.
D&he sanction of closure would be imposed upon a bank by +!P even without notice and hearing 34close
now, hear later4 scheme
D&he refusal of any officer owner, agent, manager, director or officer3in3charge of any institution sub(et to
the supervision or e#amination b y +!P to make reports or permit e#amination is criminally punishable
under the act.

Prohibition on +ank Gfficers, :irectors, Lawyers, Agents% +!P personnel are prohibited from%
1. +eing an officer, director, lawyer or agent, employee, consultantnor stockholder, directly on indirectly,
of any institution, sub(ect to +!P supervision or e#amination 2I$2P& non3stock savings and loan
associations and provident funds organiFed e#clusively for the employees of +!P;
. :irectly on indirectly reuesting, or receiving any gift, present or pecuniary or material benefit for
himself or another, from any institution sub(ect to +!P supervision or e#amination;
). <evealing in any manner, e#cept undef orders of the court, the $ongress, or any overnment offive or
agency authoriFed by law, information relating to the condition or business of any such institution;
*. +orrowing from any such institution unless 1.7 adeuately secured, and .7 fully disclosed to Monetary
+oard.

Appointment of $G'!2<BA&G< 
Hhenever a bank or a uasi3bank is in%
1.7 A state of continuing inability; or 
.7 8nwillingness to maintain a condition of liuidity deemed adeuate to protect the interest of
depositors and creditors.
&he Monetary +oard may%
1.7 Appoint a conservator to take charge, for a period not e#ceeding 1 year, of the assets, liabilities, and
the management thereof;
. <eorganiFe the management;
). $ollect monies and debts due said bank; and
*. 2#ercise all powers necessary to restore its viability, with power to overrule or rebuke he actions of the
 previous management board of directors of the bank or uasi bank.

Hhen is $onservatoship terminatedJ

1. Hhen the Monetray +oard is satisfied that the institution can continue to operate on its own and the
conservatorship is no longer necessary;
. !hould the Monetary +oard determine that the continuance in business of the institutionn would
involve probable loss to its depositors or creditors, in which case proceedings for receivership and
liuadation shall be pursued.

Proceedings in <eceivership
Hhenever the Monetary +oard find tbat a bank or uasi bank %
1. s unable to pay its liabilities as they become due in the ordinary course of business but shall not
include inability to pay caused by e#traordinary demands induced by financial panic in the banking
community;
. Cas sufficient realiFable assets to meet its liabilities;
). $annot continue in business wihout involving probable losses to its depositors or creditors; or
*. Cas willfully violated a cease and desist order that has become final, involving acts or transactions
which amount to fraud, or a dissipation of t he assets of the institution;
the Monetary +oard may summarily and without need for prior hearing, forbid he institution
from doing business in the Philippines, and designated by P:$ as receiver of fhe banking institution.

5unctions and obligations of the receiver%

1. mmediately gather and take charge of all assets and liabilities of the institution, administer the same
for the benefit of its creditors;
. 2#ercise the general powers of a receiver;
). :etermine as soon as possible, but not later than @ days from takeover, whether the institution may be
rehabilitated or otherwise place in such a condition so that it maybe permited to resume business wih
safety to its depositors and creditors and the genral public.
DAny determination of resumption of business shall be sub(ect to the proir approval of the
Monetary Coard.

Liuidation 3 if the receiver determines that the institution cannot be rahabilitated or permitted to resume
 business, the Monetary +oard shall notify in writing the +oard of :irectors of its findings, and direct the
receiver to proceed with the liuadation of the institution.

2'2<AL +A'9' LAH

!tate recogniFes the vital role of the banks in providing an environment conducive to the sustained
development of the national economy; and 5iduciary nature of banks t hat reuires high standards of
integrity and performance &he !tate shall promote and maintain a stable and efficient banking and
financial system that is globally competitive, dynamic and responsive to the demands of a dveloping
economy. +A'9' +8!'2!! ! MP<2!!2: H&C P8+L$ '&2<2!&.

+anks refer to entities engaged in the lending of funds obtained in the form of deposits, and classified as
follows%
1. 8niversal +anks;
. $ommercial +anks;
). &hrift +anks%
a. !avings and mortgage banks
b. !tock savings and loan associations;
c. Private development banks;
*. <ural +anks
-. $ooperative +anks
/. slamic +anks

D'o person or entity shall engage in nbanking operations or uasi banking operations wihout aufhority
from the +!P. CGH2B2<, an entity auhoriFed by +!P to perform universal or commercial banking
functions shall likewise have the authority to engage in uasi banking functions.

Authority and powers of the +!P%

1. ssuance of rules of conduct or standards of operation for uniform application to all institutions or
fun#tions covered;
. $onduct of e#amination to determine compliance with laws and regulations;
). Gverseeing compliance with laws and regulations;
*. <egular investigation to determine whether an institution is conducting its business on safe or sound
 basis;
-. nuiring into solvency and liuidity of the institution;
/. 2nforcing prompt corrective action.

?uasi bank3 are entities engaged in borrowing of funds through issuance, endorsement or assignment
with resource or acceptance of deposit substitutes for purposes of re3lending or purchasing of receivables
and other obligations.

GrganiFation of +anks% Monetary +oard may authoriFe organiFation of a bank or uasi banks sub(ect to
the followig conditions%
1. 2ntity is a stock corporation;
. 5unds are obtained from the public, which shall mean  or more persons; and
). Minimum capital reuirements prescribed byMonetary +oard for each category of banks ard satisfied.
 D !2$ shall not register articles of incorporation and or by3laws of any bank or any amendment thereto
unless accompanied by a certificate of authority issued by he Monetary +oard.

D'o bank shall purchase or acuire shares of its capital stock or accept its own shares as a security for a
loan e#cept when authoriFed by Monetary +oar P<GB:2: every case stock so purchase or acuired
shall wihin /months from time of its purchase or acuisition, sold or disposed of at a public or private
sale.

D5oreign individual and non3bank corporations may own or control up to *K of voting stock of
domestic bank. <ule shall apply to 5ilipinos and domestic non3bank corporations. Percentage of foreign3
owned voting stocks in a bank shall be determined by citiFenship of indibidual stockholders in that bank.
$itiFenship of corporation which iss a stockholder in a bank shall follow the citiFenship of controlling
stockholders of the corporation, irrespectiveof placeof corporation.

+GA<: G5 :<2$&G<!
&hrere shall be atleast -, and a ma#imum of 1- members of +oard of directors of a bank,  of whom
shall be independent directors.
Dn case of bank merger or consolidation, number of diretors shall not e#ceed 1.
D'on35ilipino citiFens may become members of +oard of :irectors to e#tent of foreign euity
 participation.
DMeetings of +oard of :irectors may be conducted through, but not limited to, teleconferencing and
video conferencing.

5it and proper rule 3 &o maintain the uality of bank management and affirdna better protection to
depositors and the public in gsneral, he Monetary board shall prescribe, oass uoon and review the
ualifications and disualification of individuals elected or appointed bank directors or offeicers and
disualify those found unfit.
n determining whether individual is fit and proper to hold position of a director or
officer, regard shall be given to his integrity, e#perience, education, training and competence.

DAfter due notice to the board of directors of the bank, Monetary +oard may disualify, suspend or
remove any bank director or officer who commits or omits an act which render him unfit nfor the position

DProhibition on public officials 3 2#cept as provided in <ural +anksAct, no appointive or elective public
official, whether full time or part3time shall at the same time serve as an officer of a private bank, save in
cases where such incident to financial assistance provided by the government or a government3owned or
controlled corporation to the bank or unless otherwise provided undre e#isting laws.

D8niversal or commercial banks may open branches or other offices within or outside the aphilippines
upon prior approval of +!.P. A +A'9 A': &! +<A'$C2! A': G55$2! !CALL +2 &<2A&2:
A! 1 8'&.

D 8nless otherwise authoriFed by +!P in the interest of the banking public, all banks including their
 branches and offices shall transact business on all working days, Monday to 5riday, for / hours a day. n
addition, banks or any of their branches or offices may open for business on !aturdays, !undays or
Colidays for atleast ) hours a day. Cowever, banks which opt to open on days other than working days
shall report to +!P the additional days which they or their branches or offices shall transact business.

DAny strike or lockouts involving banks, if unsettled nin 0 calendar days shall be reported by +!P to
:GL2 !ecretary who assume (urisdiction over dispute or decide it or certify the same to 'L<$ for
compulsory arbitration .CGH2B2<, the President may intevene, at any time, and assume (urisdiction
over such dispute in order to settle or terminate the same.
&ypes of deposit%
1. &ime deposit
. !avings :eposit
). :emand deposits or current accounts.

D!ingle +orrowe"rs limit% 2#cept as Monetary +oard may otherwise prescribe fro reasons of national
interest, total amount of loans, credit accomodations and guarantees that may be e#tended by a bank to
any person, partnership, association,mcorporation or other entity shall at no time e#ceed K of the net
worth of such bank. 8nless Monetary +oard prescribes oherwise, !+L may be increasedbyan additional
1K net worth, provided additional amount is supported adeuately by trust receipts, shipping
documents, warehouse feceipts or other similar documents.

D'o dire)ctor of officer shall directly or indirectly, for himself or as representative or agent of others%
1. +orrow from such bank; nor
. !hall become an guarantor , indorser or surety formloans from such bank to others; nor 
). n manner be an obligor or incur any contractual liability to the bank.
2I$2P&% Hith a written approval of ma(ority of all :irectors of the bank, e#cluding director concerened.

MARIS Y&U
DECEMBER 1, 2018