May 2024

Money laundering is considered one of the most severe financial crimes, committed by organized crime groups worldwide. Simply put, money laundering is the act of covering up the origins of illegally sourced income. This lets criminals avoid prosecution for the original crime of obtaining said “dirty money” in the first place. Republic Act No. 9160, or the Anti-Money Laundering Act of 2001, seeks to prevent and punish cases of money laundering in the Philippines. Here’s what you need to know. What is money laundering and how does it work? Money laundering “cleanses” any illegally obtained money by passing it through legitimate transactions. Doing so essentially overwrites the money’s initial origins. This then allows criminals to get away with their illegal income methods and avoid taxation. The following actions are considered to be acts of money laundering: What is the Anti-Money Laundering Council and what do they do? To address the issue of money laundering, the Anti-Money Laundering Council (AMLC) was formed alongside the Anti-Money Laundering Act of 2001. Core members include the Governor of the Bangko Sentral ng Pilipinas as the chairman, both the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as members, and a secretariat. The functions of the AMLC are as follows: What penalties will guilty parties face? The penalties listed in this act vary depending on the crime committed. They are as follows: How can money laundering be prevented? A huge part of preventing money laundering is ensuring that covered institutions meticulously record their transactions and customers.  “Covered institutions” refer to entities such as banks, non-banks, quasi-banks, trust entities, insurance companies, securities dealers, brokers, investment houses, mutual funds, pre-need companies, foreign exchange corporations, and other similar financial entities regulated by the BSP, Insurance Commission, or SEC. Covered institutions can help prevent money laundering by doing the following: Can money laundering affect me personally? Yes. This is because some money laundering strategies get innocent parties into helping criminal organizations, either knowingly or unknowingly. These parties are “money mules.”  Criminal organizations use money mules by transferring the dirty money to their accounts. The money mules then use a series of transfers and transactions to cover up the money’s origins, and then return the funds to the criminal. Money mules either use their accounts or their business accounts for this technique and are sometimes roped into it by falling for a scam organized by the criminal. By staying aware, you can prevent criminals from turning you or your business into an unwitting money mule. Money laundering criminals are good at coming up with incentivizing scams that many people fall for. It’s up to you and your discernment to differentiate scams from genuine opportunities. Here are a few examples of scams to watch out for: