AMLC says implementation of freeze orders will be closely monitored by FATF

THE ANTI-MONEY Laundering Council (AMLC) told covered entities to urgently follow freeze order processes, as the Philippines needs to show tangible progress in effectively implementing tighter laws on anti-money laundering and counter-terrorism financing (AML/CTF) to be able to exit the Financial Action Task Force’s (FATF) “gray list.”

The AMLC advisory comes over a week since the country was added to jurisdictions placed under the FATF’s increased monitoring, specifically the implementation of AML/CTF measures.

AMLC Executive Director Mel Georgie B. Racela said urgent compliance to freeze orders will be closely monitored by the FATF.

“Covered persons’ mandate to urgently implement freeze orders as required in the 2018 Implementing Rules and Regulations of the Anti-Money Laundering Act of 2001, is a key component in ensuring that the Philippines sufficiently addresses the International Co-operation Review Group (ICRG) action plan items, particularly those relative to money laundering and counter-terrorism financing investigations; and targeted financial sanctions that would effectively deny funds to designated terrorists,” Mr. Racela said in a Viber message on Sunday.

The AMLC told covered persons to strictly observe the period for filing of returns and to consider the start of the 20-day effectivity of freeze orders from the time the accounts are actually frozen.

According to the AMLC advisory, some covered persons only implement freeze orders a few days or weeks before the expiry of the period prescribed by the court.

The AMLC said some covered persons only submit returns for related accounts when the six-month effectivity of a freeze order is almost at its expiry.

Based on implementing rules and regulations, written returns with pertinent details on an account should be submitted to the AMLC and the Court of Appeals (CA) within 24 hours since the account was frozen.

A freeze order covers a main account, which the AMLC and CA determined there is probable cause that it is related to money laundering and terrorist financing. On the other hand, related or materially linked accounts are determined by covered persons in compliance with the freeze order.

Mr. Racela said there could be serious repercussions from the delayed implementation of freeze orders against designated persons and suspected money launderers.

“If freeze orders are not immediately implemented, the accounts not frozen can be disposed of by the owner, thwarting the AMLC’s efforts in building its case and eventually filing civil forfeiture proceedings and/or prosecuting the owner. Worse, the money in the accounts can be further used in the commission of unlawful activities and/or money laundering,” Mr. Racela said.

The late implementation of a freeze order as well as delayed submission or non-filing of returns are considered as money laundering offenses that could result in penalties for uncooperative covered persons, the AMLC said.

The agency also stressed that failure to immediately freeze accounts upon receipt of a freeze order is considered a grave violation under Republic Act 9160 or the Anti-Money Laundering Act of 2001 (AMLA), as amended.

The late implementation of a freeze order and the subsequent delay in the filing of returns are also considered money laundering offenses that could be punishable with imprisonment of four to seven years and a fine of not less than P1.5 million, the AMLC said. Covered persons that fail to comply may face penalties from P25,000 to P500,000 per violation, it added.

In case the delayed implementation of a freeze order involving accounts in relation to the Terrorism Financing Prevention and Suppression Act of 2012 and the Anti-Terrorism Act of 2020, the action could be considered as dealing directly or indirectly with the designated persons. AMLC said this could be punishable with reclusion temporal in its maximum period of 20 years to reclusion perpetua (up to forty years) and a fine of P500,000 to not more than P1 million.

Meanwhile, submitting late written returns or incomplete information related to a freeze order are considered as lighter offenses, the AMLC said. A complete written return should include the account number; names of account holder/s; amount in an account at the time it was frozen; all relevant information pertaining to the nature of an account or property; any information on related accounts or property related to the frozen asset, and the time when a freeze order took effect.

Under the Republic Act 11521 which further tightened the AMLA, covered persons were expanded to include Philippine offshore gaming operators and service provides as well as real estate brokers and developers.

In January, the Bangko Sentral ng Pilipinas (BSP) ordered lenders to submit their reports on accounts that have links to the Communist Party of the Philippines (CPP), the New People’s Army (NPA), and Islamic extremist groups following freeze orders issued by the AMLC.

To recall, Republic Act 11521 was enacted into law on Jan. 29, only days ahead of the Feb. 1 deadline set by the FATF for the country to show effective implementation of tighter AML/CFT laws. Republic Act 11479 or the controversial Anti-Terrorism Act of 2020 took effect in July 2020.

BSP Governor and AMLC Chairman Benjamin E. Diokno is hopeful that the country will be able to show its progress and leave the gray list on or before January 2023. — Luz Wendy T. Noble