To promote financial transparency, the Anti-Money Laundering Council (AMLC) has issued for the first time guidelines on beneficial ownership for all banks, insurance companies, and other covered persons. Covered persons include entities, businesses, casinos and professions subject to the authority and jurisdiction of the AMLC on anti-money laundering and counter-terrorism financing (AML/CFT) matters.
“Beneficial owners” refers to those individuals or natural persons who ultimately own or control the customer, or those for whom another person conducts a transaction. Money launderers and terrorists routinely use the cloak of anonymity to prevent the AMLC and law enforcement agencies (LEAs) to track them down. In the case of the AMLC, they also seek to avoid freezing and forfeiture of their assets obtained through criminal activities.
In many well-publicized cases, criminal elements and a number of high-ranking public figures have used dummies, including non-governmental organizations (NGOs), and individuals, to hide their identities. These criminals then use these dummies to conduct multiple financial transactions involving multiple accounts in the millions of pesos, thereby blurring the illegal source of the funds.
In response to these criminal activities, and to prevent future circumvention of the Anti-Money Laundering Act of 2001 (AMLA) and its implementing rules, the AMLC issued the Guidelines on Beneficial Ownership. Issuance of these Guidelines was also intended to bring the Philippines more at par with international financial standards on customer due diligence (CDD). These standards require banks, other financial institutions and certain professions to identify not only the customer with whom they transact, but also the beneficial owners.
Although Philippine standards on beneficial ownership as provided under the AMLA’s implementing rules and regulations, were rated medium-high in the 2017 National Risk Assessment, the AMLC perceived the need to adopt the new Guidelines to enhance these standards and guide covered persons in identifying beneficial ownership.
The Guidelines provide that covered persons must identify beneficial owners. Covered persons must conduct the risks posed by the customer and the beneficial owners. If they pose a high risk for money laundering or terrorism financing, validation of information must be performed by the covered person. The Guidelines therefore promote transparency and dissuade criminal elements, and would-be money launderers and terrorists from hiding their identities.
The Guidelines were published on 27 November 2018 at Business World, and took effect on the same day.
To view the Guidelines, click this link.