This document discusses topics related to anti-money laundering (AML) and know your customer (KYC) compliance. It provides an overview of money laundering offenses and penalties under Philippine law. It also explains what terrorist financing is, how efforts to combat money laundering and terrorist financing are linked, and how corruption and money laundering are linked. Additional sections cover why customer due diligence is necessary, the role of financial intelligence units, and five ways for businesses to comply with AML laws. The document also defines KYC, provides an overview of KYC requirements and compliance, and discusses how AML relates to KYC as well as KYC practices for cryptocurrency.

1. ANOTHER TOPIC OF
AMLA AND KYC

2. BUCASAS, MIBE KIRSTEEN
OMANDAM, LAICA
PILAPIL, AZIEL ANN
QUITAIN, JUSTINE FATE
REM, KATHLEEN
TIAPES, NIEL IVER
DE GUZMAN, KYLE MARION USTARIS, LORI MAE
ZONIO, VANESSA
ZOSA, JENNIE ANDRIA
GROUP 3 REPORTERS
ARTIFICIO, JOMAR

3. ANOTHER TOPIC OF AMLA AND KYC
ANTI-MONEY LAUDERING COUNCIL
a. Money Laundering Offenses and Penalties
b. What is Financing of Terrorism
c. How are Efforts to Combat Money Laundering
and Financing of Terrorism linked
d. How are Corruption and Money Laundering
linked. What are Typologies?
f. Why is Customer Due Diligence necessary
g. What are Financial Intelligence Units (FIUs)
h. 5 Ways Your Business Can Comply with the
Anti-Money Laundering Act
KNOW YOUR CUSTOMER
a. What Is Know Your Client (KYC)
b. Understanding Know Your Client
c. KYC Requirements
d. KYC Compliance
e. AML and KYC
f. KYC and Cryptocurrency
g. What is KYC verification
h. What Is KYC in the Banking Sector
i. What are KYC documents
j. The Bottom line

4. ANTI-MONEY LAUDERING
Money Laundering Offenses and Penalties
• Knowingly transacting or attempting to transact any monetary instrument/property
which represents, involves or relates to the proceeds of an unlawful activity. Penalty is 7
to 14 years imprisonment and a fine of not less than P3M but not more than twice the
value of the monetary instrument/property.
•Knowingly performing or failing to perform an act in relation to any monetary
instrument/property involving the proceeds of any unlawful activity as a result of which
he facilitated the offense of money laundering. Penalty is 4 to 7 years imprisonment and a
fine of not less than P1.5M but not more than P3M.
•Knowingly failing to disclose and file with the AMLC any monetary
instrument/property required to be disclosed and filed. Penalty is 6 months to 4 years
imprisonment or a fine of not less than P100,000 but not more than P500,000, or both.
BUCASAS, MIBE KIRSTEEN

5. OTHER OFFENSES/PENALTIES
• Failure to keep records is committed by any responsible official or employee of a
covered institution who fails to maintain and safely store all records of all transactions
of said institution, including closed accounts, for five (5) years from the date of the
transaction/closure of the account. Penalty is 6 months to 1 year imprisonment or a fine
of not less than P100,000 but not more than P500,000, or both.
• Malicious reporting is committed by any person who, with malice or in bad faith,
reports/files a completely unwarranted or false information relative to money
laundering transaction against any person. Penalty is 6 months to 4 years imprisonment
and a fine of not less than P100,000 but not more than P500,000, at the discretion of
the court. The offender is not entitled to avail the benefits of the Probation Law.
ANTI-MONEY LAUDERING
BUCASAS, MIBE KIRSTEEN

6. OTHER OFFENSES/PENALTIES
Breach of confidentiality
● When reporting covered or suspicious transactions to the AMLC, covered institutions
and their officers/employees are prohibited from communicating directly or
indirectly, in any manner or by any means, to any person/entity/media, the fact that
such report was made, the contents thereof, or any other information in relation
thereto. In case of violation thereof, the concerned official and employee of the
covered institution shall be criminally liable.
● Neither may such reporting be published or aired in any manner or form by the mass
media, electronic mail or other similar devices.
● In case of a breach of confidentiality published or reported by media, the responsible
reporter, writer, president, publisher, manager and editor-in-chief shall also be held
criminally liable. Penalty is 3 to 8 years imprisonment and a fine of not less than
P500,000 but not more than P1M.
ANTI-MONEY LAUDERING
DE GUZMAN, KYLE MARION

7. ANTI-MONEY LAUDERING
What is Financing of Terrorism?
• Terrorist financing involves the solicitation, collection or
provision of funds with the intention that they may be used to
support terrorist acts or organizations. Funds may stem from both
legal and illicit sources.
• More precisely, according to the International Convention for the
Suppression of the Financing of Terrorism, a person commits the
crime of financing of terrorism "if that person by any means,
directly or indirectly, unlawfully and willfully, provides or
collects funds with the intention that they should be used or in the
knowledge that they are to be used, in full or in part, in order to
carry out" an offense within the scope of the Convention.
DE GUZMAN, KYLE MARION

8. How are Efforts to Combat Money Laundering and Financing of Terrorism linked?
● Terrorist financing is the collection or the provision of funds for terrorist purposes.
The primary goal of individuals or entities involved in the financing of terrorism is
therefore not necessarily to conceal the sources of the money but to conceal both the
funding activity and the nature of the funded activity.
● Similar methods are used for both money laundering and the financing of terrorism. In
both cases, the actor makes an illegitimate use of the financial sector. The techniques
used to launder money and to finance terrorist activities/terrorism are very similar and,
in many instances, identical. An effective anti-money laundering/counter financing of
terrorism framework must therefore address both risk issues: it must prevent, detect
and punish illegal funds entering the financial system and the funding of terrorist
individuals, organizations and/or activities.. OMANDAM, LAICA

9. How are Corruption and Money Laundering linked?
• Money laundering (ML) schemes make it possible to conceal the unlawful
origin of assets. Corruption is a source of ML as it generates large amounts
of proceeds to be laundered. Corruption may also enable the commission of
a ML offense and hinder its detection, since it can obstruct the effective
implementation of a country's judicial, law enforcement and legislative
frameworks.
• When countries establish corruption as a predicate offense to a money
laundering charge, money laundering arising as a corrupt activity can be
more effectively addressed. When authorities are empowered to investigate
and prosecute corruption-related money laundering they can trace, seize and
confiscate property that is the proceeds of corruption and engage in related
international cooperation.
ANTI-MONEY LAUDERING
OMANDAM, LAICA

10. What are Typologies?
In the AML/CFT context, the term “typologies” refers to the various
techniques used to launder money or finance terrorism. Criminals are very
creative in developing methods to launder money and finance terrorism.
Money laundering and terrorism financing typologies in any given location
are heavily influenced by the economy, financial markets, and anti-money
laundering/counter financing of terrorism regimes. Consequently, methods
vary from place to place and over time.
PILAPIL, AZIEL ANN

11. ANTI-MONEY LAUDERING
Why is Customer Due Diligence necessary?
In order to protect themselves, it is essential that financial institutions have
adequate control and procedures in place that enable them to know the person
with whom they are dealing. Adequate due diligence on new and existing
customers is a key part of these controls.
The application of strict Customer Due Diligence (CDD) by financial
institutions and a high degree of transparency is crucial to fight money
laundering and the financing of terrorism effectively. CDD must be applied
upon establishment of a business relationship or in preparation of a specific
cash transactions in excess of a certain amount. CDD must also be applied
whenever financial institutions suspect money laundering or terrorist
financing activities. PILAPIL, AZIEL ANN

12. What are Financial Intelligence Units (FIUs)?
One of the key elements of AML/CFT regimes is the requirement for
financial institutions and other designated non-financial businesses
(DNFBPs) to report transactions they deem suspicious of being related to
criminal or terrorist activity. Because of confidentiality traditionally attached
to financial transactions and because reporting entities do not always have the
means to substantiate their suspicion, it proves difficult to report it directly to
the authorities in charge of enforcing criminal laws. It is therefore necessary
for governments to establish a specialized agency, the Financial Intelligence
Unit (FIU), focused on processing financial information that may be related
to criminal or terrorist activity.
ANTI-MONEY LAUDERING
QUITAIN, JUSTINE FATE

13. 5 Ways Your Business Can Comply with the Anti-Money Laundering Act
 Review policies set by financial regulators
The BSP and the Securities and Exchange Commission (SEC) are the main
financial regulators in the Philippines. These agencies supervise all bank and
non-bank financial institutions by implementing and safeguarding various
policies derived from the different finance-related laws and regulations in the
Philippines — the AMLA included. Make sure your business reviews and
follows the guidelines and requirements of the BSP and SEC at all times!
Additionally, remain aware of any updates and/or revisions to help avoid any
legal issues that might arise from the perspective of the AMLA.
ANTI-MONEY LAUDERING
QUITAIN, JUSTINE FATE

14. 5 Ways Your Business Can Comply with the Anti-Money Laundering Act
 Monitor customer transactions regularly
Apart from following regulatory policies, it will also be important for your
business to have its own procedures in place and observe them on an ongoing
basis to ensure the financial future of your business. Having a Know Your
Customer (KYC) policy can help significantly to identify and prevent money
laundering activities, as it would help ensure the monitoring of all customer
activities and identification of financial transactions that might raise red
flags.
ANTI-MONEY LAUDERING
ARTIFICIO, JOMAR

15. 5 Ways Your Business Can Comply with the Anti-Money Laundering Act
 Keep detailed records of transactions
Record management is crucial in the financial industry. Detailed transaction
records assist in monitoring financial activities, making it easier to review the
customer’s history and understand if there’s anything unusual arising.
Implementing a filter software or transaction monitoring system can make
record management even more convenient since you can automate the
flagging of suspicious activities.
ANTI-MONEY LAUDERING
ARTIFICIO, JOMAR

16. 5 Ways Your Business Can Comply with the Anti-Money Laundering Act
 Screen customers and transactions
When taking on new customers, your business should screen them and their
previous transaction records against international and/or local watch lists.
This step lets you verify whether a potential customer is connected to
fraudulent organizations, such as those involved in funding terrorism or other
forms of unwanted activities.
ANTI-MONEY LAUDERING
TIAPES, NIEL IVER

17. 5 Ways Your Business Can Comply with the Anti-Money Laundering Act
 Require a holding period
As a safety and monitoring mechanism, some financial institutions hold on to
account deposits for a certain number of days before clearing. This additional
step in the process, which usually takes about five days, grants AMLA-
covered institutions more time to monitor the transaction for any fraudulent
intent. When you implement this in your company policy, you can manage
any risks associated with laundered money moving through banks.
ANTI-MONEY LAUDERING
TIAPES, NIEL IVER

18. What Is Know Your Client (KYC)?
Know Your Client (KYC) is a standard in the investment industry that
ensures advisors can verify a client's identity and know their client's
investment knowledge and financial profile.
Three components of KYC include the customer identification program
(CIP), imposed under the USA Patriot Act in 2001, customer due diligence
(CDD), and ongoing monitoring or enhanced due diligence (EDD) of a
customer's account once it is established
KNOW YOUR CUSTOMER
TIAPES, NIEL IVER

19. Understanding Know Your Client (KYC)
The Know Your Client (KYC) rule is an ethical requirement for those in the
securities industry dealing with customers during the opening and ongoing
maintenance of accounts.
It is implemented at the onset of the customer-broker relationship to establish
the essential personal profile of each customer before any financial
recommendations are made. The customer is also made aware of the need to
comply with all the laws, regulations, and rules of the securities industry.
KNOW YOUR CUSTOMER
USTARIS, LORI MAE

20. KYC Requirements
Customer Identification Program
CIP requires that financial firms must obtain four pieces of identifying
information about a client, including name, date of birth, address, and
identification number.
Customer Due Diligence
CDD is a process in which all of a customer’s credentials are collected to
verify their identity and evaluate their risk profile for suspicious account
activity.
Enhanced Due Diligence
EDD is used for customers that are at a higher risk of infiltration, terrorism
financing, or money laundering and additional information collection is often
necessary.
KNOW YOUR CUSTOMER
USTARIS, LORI MAE

21. KYC Compliance
Two rules governing KYC include Financial Industry Regulatory Authority
(FINRA) Rule 2090 (Know Your Customer) and FINRA Rule 2111
(Suitability).
FINRA Rule 2090 states that every broker-dealer uses reasonable effort when
opening and maintaining client accounts and are required to know and keep
records on the profile of each customer, as well as identify each person who
has authority to act on the customer’s behalf.5
FINRA Rule 2111 notes that a broker-dealer must have a reasonable belief
that a recommendation is suitable for a customer based on the client’s
financial situation and needs. This rule assumes that the broker-dealer has
completed a review of the current facts and profile of the customer, including
the customer’s other securities and investments before making any purchase,
sale, or exchange of a security on the client's behalf.
KNOW YOUR CUSTOMER
USTARIS, LORI MAE

22. AML and KYC
The U.S. Financial Crimes Enforcement Network (FinCEN) requires both
customers and financial institutions to comply with KYC standards to prevent
illegal activity, specifically money laundering. AML, anti-money laundering,
is a term for the range of measures and processes used to achieve regulatory
compliance. KYC is a component of AML.
FinCEN requires financial institutions to understand the type and purpose of
the customer relationship and develop a customer risk profile, used as a
baseline for detecting suspicious customer activities.78
Financial institutions must also maintain current and accurate customer
information and continue to monitor accounts for suspicious and illegal
activities. When detected, they are required to promptly report their findings.
KNOW YOUR CUSTOMER
ZONIO, VANESSA

23. KYC and Cryptocurrency
The cryptocurrency market is praised for providing a decentralized medium
of exchange that promotes confidentiality. However, these benefits also
present challenges in preventing money laundering. Criminals see
cryptocurrency as a vehicle to launder money and as a result, governing
bodies are looking for ways to impose KYC on cryptocurrency markets.
Requiring cryptocurrency platforms to verify their customers would a line
with financial institutions, and although not yet required, many crypto
platforms have implemented KYC practices.10
Fiat-to-crypto exchanges facilitate transactions involving fiat currencies and
cryptocurrencies. Since fiat currency is the official currency of a nation, most
of these exchanges employ a measure of KYC and financial institutions
would have vetted their customers according to KYC requirements.
KNOW YOUR CUSTOMER
ZONIO, VANESSA

24. What Is KYC Verification?
The Know Your Client (KYC) verification is a set of standards and
requirements used in the investment and financial services industries to
ensure brokers have sufficient information about their clients, their risk
profiles, and their financial position
KNOW YOUR CUSTOMER
ZONIO, VANESSA

25. What Is KYC in the Banking Sector?
KYC in the banking sector requires bankers and advisors to identify their
customers, beneficial owners of businesses, and the nature and purpose of
customer relationships. Banks must also review customer accounts for
suspicious and illegal activity and maintain and ensure the accuracy of the
customer accounts.
KNOW YOUR CUSTOMER
ZOSA, JENNIE ANDRIA

26. What Are KYC Documents?
Account owners generally must provide a government-issued ID as proof of
identity. Some institutions require two forms of ID, such as a driver's license,
birth certificate, social security card, or passport. In addition to confirming
identity, the address must be confirmed. This can be done with proof of ID or
with an accompanying document confirming the address of the client.
KNOW YOUR CUSTOMER
ZOSA, JENNIE ANDRIA

27. The Bottom Line
Know Your Client (KYC) are a set of standards and requirements investment
and financial services companies use to verify the identity of their customers
and any associated risks with the customer relationship. KYC requires
customers to provide a personal identification profile and KYC ensures
investment advisors are aware of their client's risk tolerance and financial
position.
KNOW YOUR CUSTOMER
ZOSA, JENNIE ANDRIA