Published on December 28, 2023, 1:37 pm

New Regulations Require Non-Financial Businesses To Report Suspicious Transactions

The Anti-Money Laundering Council (AMLC) has implemented new regulations requiring designated non-financial businesses and professions (DNFBPs) to report all suspicious transactions, whether completed or attempted. This is part of the effort to combat “dirty money” and terrorism financing.

Under the guidelines set forth by AMLC’s Regulatory Issuance No. 2, DNFBPs are now required to file all covered and suspicious transaction reports (CTR/STR) with the AMLC. The reporting should be done in accordance with the registration and reporting guidelines provided by the AMLC. It is important to note that these reports should cover all transactions, regardless of whether they were successfully completed or merely attempted.

The AMLC has specifically stated that these guidelines apply to various entities such as jewelry dealers, lawyers, law firms, accountants, and company service providers acting on behalf of juridical persons or arrangements. These guidelines aim to ensure that DNFBPs promptly report any suspicious activities related to money laundering or terrorism financing.

According to the guidelines, DNFBPs are required to submit suspicious transaction reports on the next working day after an incident occurs. Additionally, they have five working days to report all covered transactions unless otherwise specified by the AMLC within 15 days following the incident.

The AMLC emphasizes that DNFBPs must make a definitive decision on whether to file a suspicious transaction report based on established suspicions or suspicious nature of a transaction or activity. If a transaction is determined to be both covered and suspicious, it should be reported as a suspicious transaction.

Notably, lawyers and accountants have additional obligations under Section 12, Canon 2 of the Code of Professional Responsibility and Accountability. They are required to report any suspicious or unlawful activity to the AMLC. Lawyers and accountants providing services for third parties as part of their business operations must also file CTRs and STRs if an incident occurs.

While making these reports, lawyers are assured that they will not violate their duty of confidentiality when disclosing covered and suspicious transactions to the AMLC.

The AMLC clarifies that “no administrative, criminal or civil proceedings shall lie against any person for having made a covered transaction or suspicious transaction report in the regular performance of his/her duties and in good faith.” This means that individuals filing such reports will be protected as long as they comply with the AML Act and other relevant laws.

There is an exemption for independent lawyers and accountants who work for private firms or operate as sole practitioners providing exclusively legal and accounting services. These individuals are not required to file CTRs and STRs.

The Financial Action Task Force (FATF) defines DNFBPs as entities operating outside traditional financial sectors but with potential vulnerability to exploitation for money laundering, terrorist financing, or other illicit financial activities.

Currently, the Philippines is striving to be removed from FATF’s “gray list” of jurisdictions under increased monitoring for dirty money risks by January next year. To achieve this goal, the country has committed to fulfilling several action plan items outlined by FATF.

In its October update, FATF highlighted specific areas that the Philippines should focus on. These include demonstrating effective risk-based supervision of DNFBPs, ensuring proper utilization of anti-money laundering controls relating to casino junkets, enhancing access to beneficial ownership information for law enforcement agencies, and strengthening investigation and prosecution efforts related to money laundering and proliferation financing.

By addressing these areas and implementing necessary measures, the Philippines aims to improve its standing in terms of anti-money laundering practices and emerge from FATF’s gray list.

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