IMPORTANT:

This document is proprietary to Philippine National Bank and no part of this material shall be
shared or disclosed to third parties without the express written authorization of Philippine
National Bank, Global Compliance Group

Continuing Education on AML

Compliance
A Home Study Training Program AML
REVIEWER
Global Compliance Group
March 2019
Declaration of Policy

The Bangko Sentral adopts the policies of the State to (a) protect and preserve the integrity of the
Philippine financial system, including the confidentiality of bank accounts; (b) ensure that the Philippines,
in general, and the covered persons, in particular, shall not be used, as money laundering sites and
conduit for the proceeds of unlawful activities as herein defined; (c) protect life, liberty and property
from acts of terrorism and to condemn terrorism and those who support and finance it and reinforce the
fight against terrorism by criminalizing the financing of terrorism and related offenses; (d) recognize
terrorism and terrorist financing as inimical and dangerous to national security and the welfare of the
people; and make the financing of terrorism a crime against the Filipino people, against humanity and
against the law of nations; and (e) adhere to international commitments to combat financing of
terrorism, specifically the International Convention for the Suppression of the Financing of Terrorism, as
well as other binding terrorism related resolutions of the United Nations Security Council, pursuant to
Chapter 7 of the United Nations Charter.”

Definition of Terms

a) “Account” refers to a bank account, electronic money account, investment account, insurance
policy, membership account, and other similar contract or service agreement, business or
professional relationships between a covered person and its customers where funds or any
monetary instrument of the latter are held by the former.

b) “Anti-Money Laundering Act” (AMLA) refers to Republic Act No. 9160, as amended by Republic
Act Nos. 9194, 10167, 10365, and 10927.

c) “Anti-Money Laundering Council” (AMLC) refers to the Philippines’ central AML/CTF authority
and financial intelligence unit, which is the government instrumentality mandated to implement
the AMLA and TFPSA. It also refers to the official name of the Council, which is the governing body
of the said government agency.

For purposes of this IRR, the government agency shall be referred hereafter as the “AMLC”, while
the governing body shall be referred hereafter as the “Council”.

d) “Appropriate Government Agency” (AGA) refers to the Philippine Amusement and Gaming
Corporation (PAGCOR), Cagayan Economic Zone Authority (CEZA), Aurora Pacific Economic Zone
and Freeport Authority (APECO), or other government agency, as may be determined by law,
which may authorize casinos to engage in gaming operations.

e) “Asset” refers to a monetary instrument, property, or both.

f) “Asset Preservation Order” (APO) refers to a provisional remedy aimed at preserving monetary
instruments or properties in any way related to an unlawful activity or money laundering offense
defined herein, during the pendency of civil forfeiture proceedings.
g) “Average Due Diligence” (ADD) refers to the normal level of customer due diligence that is
appropriate in cases where there is medium risk of money laundering or terrorism financing.

h) “Bangko Sentral ng Pilipinas” (BSP) refers to the central bank of the Republic of the Philippines
established pursuant to the provisions of the 1987 Constitution and Republic Act No. 7653.

i) “Bank Inquiry” (BI) refers to a provisional remedy that allows the AMLC to examine or inquire into
particular bank accounts or investment with a bank or non-bank financial institution,
notwithstanding the provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as
amended; Republic Act No. 8791; and other bank secrecy laws.

j) “Bearer Negotiable Instruments” (BNIs) refers to monetary instruments in bearer form such as,
traveler’s checks; negotiable instruments, including checks, promissory notes and money orders,
that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or
otherwise in such form that title thereto passes upon delivery; and incomplete instruments,
including checks, promissory notes and money orders, signed, but with the payee’s name omitted.

k) “Bearer Shares” refers to negotiable instruments that accord ownership in a juridical person to
the person who possesses the bearer share certificate.

l) “Beneficial Owner” refers to any natural person who:

1) Ultimately owns or controls the customer and/or on whose behalf a transaction or activity is
being conducted;
2) Has ultimate effective control over a juridical person or legal arrangement; or
3) Owns, at least, twenty percent (20%) shares, contributions or equity interest in a juridical
person or legal arrangement. Page 7 of 94

Control includes whether the control is exerted by means of trusts, agreements, arrangements,
understandings, or practices, and whether or not the individual can exercise control through
making decisions about financial and operating policies.

m) “Beneficial Ownership Verification” (BOV) is the process of taking reasonable measures to

identify and verify the beneficial owner, including the determination of the true nature of the
beneficial owner’s capacities and duties vis-à-vis his agent, nominee or trustee.

n) “Beneficiary” refers to:

1) General: any person for whose benefit an account was created, or transaction was made.
2) For trust agreements: any person for whose benefit the trust has been created.
3) For life insurance or investment-linked insurance policies: any person who will be paid the
policy proceeds.
4) For wire transfers refers to a person or legal arrangement who is identified by the originator
as the receiver of the requested wire transfer.

o) “Beneficiary Financial Institution” refers to the financial institution, which receives the wire
transfer from the originating/ordering financial institution, directly or through an intermediary
financial institution, and makes the funds available to the beneficiary.
p) “Biometric Information” refers to front facing photograph, fingerprint, iris scan, and/or such
other unique identifiable features of an individual.

q) “Casino” refers to a business authorized by the appropriate government agency to engage in

gaming operations.

r) “Casino Cash Transaction” refers to transactions involving the receipt of cash by a casino paid by
or on behalf of a customer; or transactions involving the payout of cash by a casino to a customer
or to any person in his behalf.

s) “Civil Forfeiture” (CF) refers to the non-conviction-based proceedings aimed at forfeiting, in favor
of the government, monetary instruments or properties related to an unlawful activity or money
laundering offense defined herein.

t) “Close Relationship/Associate” refers to persons who are widely and publicly known, socially or
professionally, to maintain a particularly close relationship with the PEP, and include persons who
are in a position to conduct substantial domestic and international financial transactions on behalf
of the PEP.

u) “Correspondent Banking” refers to the provision of banking services by one bank, called the
correspondent bank, to another bank, called the respondent bank.

v) “Company Service Provider” (CSP) refers to a person engaged in the business of providing the
following services for customers, who need to perform or offer a service or activity, but are not
capable of doing or do not want to do so directly due to financial or operational reasons, or
business judgment:

1) acting as a formation agent of juridical persons;

2) acting as (or arranging for another person to act as) a director or corporate secretary of a
company, a partner of a partnership, or a similar position in relation to other juridical persons;
3) providing a registered office; business address or accommodation, correspondence or
administrative address for a company, a partnership or any other juridical person or legal
arrangement; and
4) acting as (or arranging for another person to act as) a nominee shareholder for another
person.

w) “Cover Payment” refers to a wire transfer that combines a payment message sent directly by the
originating/ordering financial institution to the beneficiary financial institution with the routing of
the funding instruction, called the cover, from the originating/ordering financial institution to the
beneficiary financial institution through one or more intermediary financial institutions.

x) “Covered Transaction” refers to:

1)A transaction in cash or other equivalent monetary instrument exceeding Five Hundred Thousand
pesos (PHP500,000.00).
 2)A transaction with or involving jewelry dealers, dealers in precious metals and dealers in precious
stones in cash or other equivalent monetary instrument exceeding One Million pesos
(Php1,000,000.00).
3)A casino cash transaction exceeding Five Million Pesos (PHP5,000,000.00) or its equivalent in
other currency.

y) “Covered Transaction Report” (CTR) refers to a report on a covered transaction, as herein

defined, filed by a covered person before the AMLC.

z) “Cross-Border Wire Transfer” refers to any wire transfer where the originating and/or beneficiary
financial institutions are located in different countries. It shall also refer to any chain of wire
transfers in which, at least, one of the financial institutions involved is located in a different
country.

aa) “Customer/Client” refers to any person who keeps or maintains an account, or otherwise
transacts business with a covered person. It includes the following:
1) Beneficial owner, or any natural person who ultimately owns or controls a customer and/or
on whose behalf an account is maintained, or a transaction is conducted;
2) Transactors, agents and other authorized representatives of beneficial owners;
3) Beneficiaries of trusts, investment and pension funds, insurance policies, and remittance
transactions;
4) Persons whose assets are managed by an asset manager;
5) trustors/grantors/settlors of a trust; and
6) Insurance policy holders, whether actual or prospective.

bb) “Customer Due Diligence” (CDD) refers to the procedure of identifying and verifying the true
identity, of customers, and their agents and beneficial owners, including understanding and
monitoring of their transactions and activities.

cc) “Customer Identification Process” (CIP) refers to the process of determining the identity of the
customer vis-à-vis the valid and acceptable identification document submitted to, and/or
presented before, the covered person.

dd) “Customer Verification Process” (CVP) refers to the process of validating the truthfulness of the
information, and confirming the authenticity of the identification documents, presented,
submitted and provided by the customer; or other ways of verifying the identity and assessing the
risk profile of customers, and their agents and beneficial owners, through the use of reliable and
independent sources, documents, data or information.

ee) “Dealer in Precious Metals and Stones/Jewelry Dealer” refers to an individual or entity who buys
and/or sells precious metals, precious stones, and/or jewelry in the course of its business
activities. The purchases or sales of precious metals, precious stones, and/or jewelry, as referred
to herein, exclude those carried out for, connected with, or for the purpose of extracting precious
metals or precious stones from a mine, or cutting or polishing precious stones.

ff) “Designated Non-Financial Businesses and Professions” (DNFBP) refer to businesses and
professions, which are not under the supervision or regulation of the BSP, SEC and IC, and
designated as covered persons under the AMLA.
gg) “Determination of the Purpose of Relationship” (DPR) refers to the process of identifying the
purpose and intended nature of the account, transaction, or business or professional relationship.

hh) “Domestic Wire Transfer” refers to any wire transfer where the originating and beneficiary
financial institutions are located in the same country. It shall refer to any chain of wire transfers
that takes place entirely within the borders of a single country, even though the system used to
transfer the payment message may be located in another country.

ii) “Demographic Data” refers to a person’s full name, sex, date and place of birth, address,
citizenship or nationality, and such other personal information from which the identity of a person
can be ascertained.

jj) “Enhanced Due Diligence” (EDD) refers to the enhanced level of scrutiny intended to provide a
more comprehensive understanding of the risks associated with the client, as well as confirmation
of factual information provided by the client, to mitigate risks presented.

kk) “Financial Intelligence” refers to the gathering and analysis of information about the transactions
and financial activities of persons of interest, to understand their nature and capabilities, and
predict their future actions. It may also refer to intelligence information, which is the result of the
analysis of the information gathered.

ll) “Financial Intelligence Unit” (FIU) refers to the national center for the receipt and analysis of: (a)
suspicious transaction reports; and (b) other information relevant to ML/TF and associated
unlawful activities, and for the dissemination of the results of that analysis.

mm) “Financial Investigation” refers to an inquiry into the financial affairs of persons related to ML/TF
and associated unlawful activity, with a view to:
1) identifying the extent of criminal networks and/or the scale of criminality;
2) identifying and tracing the proceeds and instrumentalities of crime, terrorism funds or any
other assets that are, or may become, subject to forfeiture proceedings; and
3) developing and/or gathering of evidence which can be used in litigation of cases.

nn) “Freeze Order” (FO) refers to a provisional remedy aimed at blocking or restraining monetary
instruments or properties in any way related to an unlawful activity, as herein defined, from being
transacted, withdrawn, deposited, transferred, removed, converted, concealed, or otherwise
moved or disposed without affecting the ownership thereof.

oo) “Gaming Operations” refers to games of chance and variations thereof offered by casinos and
approved by the AGA under their enabling laws and other applicable issuances. It shall exclude:
1) Traditional bingo operations authorized by the AGA;
2) Lotteries and sweepstakes of the Philippine Charity Sweepstakes Office; and
3) Such other games of chance and variations as may be declared exempt by the AGA based on
the result of their risk assessment, in consultation with AMLC.

pp) “Identification and Verification of Agents” (IVA) refers to the process of establishing and
recording the true and full identity and existence of an agent, nominee, trustee or other
authorized representatives who is acting as an account holder or transactor, and other person
 who is acting in behalf of a beneficial owner or principal, including verifying the validity of the
authority of the agent, nominee, trustee, or authorized representative.

qq) “Identification Data” refers to both the identification information and identification document,
as herein defined.

rr) “Identification Document” (ID) refers to any of the following evidence of identity:
1) For Filipino citizens: Those issued by any of the following official authorities:
a. PhilID;
b. Other identification documents issued by the Government of the Republic of the
Philippines, including its political subdivisions, agencies, and instrumentalities; and
c. Other identification documents that can be verified using reliable, independent source
documents, data or information.
2) For foreign nationals:
a. PhilID, for resident aliens;
b. Passport;
c. Alien Certificate of Registration; and
d. Other identification documents issued by the Government of the Republic of the
Philippines, including its political subdivisions, agencies, and instrumentalities.
3) For Filipino students:
a. PhilID;
b. School ID signed by the school principal or head of the educational institution; and
c. Birth Certificate issued by the Philippine Statistics Authority; and
d. For low risk customers: Any document or information reduced in writing which the
covered person deems sufficient to establish the client’s identity.

ss) “Identification Information/Personal Information” refers to the demographic data and

biometric information of a natural person, or information about a juridical person or legal
arrangement, from which the identity of a person is apparent or can be reasonably and directly
ascertained by the person holding the information, or when put together with other information
would directly and certainly identify a person.

tt) “Immediate Family Member” refers to individuals related to the PEP within the second degree of
consanguinity or affinity.

uu) “Independent Legal/Accounting Professional” refers to lawyers/accountants working in a private

firm or as a sole practitioner who, by way of business or occupation, provides purely legal or
accounting services to their clients.

vv) “Information and Communication Technology” (ICT) refers to the totality of electronic means to
access, create, collect, store, process, receive, transmit, present and disseminate information.

ww) “Institutional Risk Assessment” refers to a comprehensive exercise to identify, assess and
understand a covered person’s ML/TF threats, vulnerabilities and the consequential risks, with a
view to mitigate illicit flow of funds and transactions.

xx) “Instrumentality” refers to any monetary instrument or property used to finance, operate,
and/or maintain an unlawful activity.
 This definition is in relation to “monetary instrument or property related to unlawful activity”.

yy) “Insurance Commission” (IC) refers to the Philippines’ regulator of the insurance and pre-need
industries.

zz) “Intermediary Financial Institution” refers to a financial institution in a serial payment or cover
payment chain that receives and transmits a wire transfer on behalf of the ordering financial
institution and the beneficiary financial institution, or another intermediary financial institution.

aaa) “Internet-Based Casino” refers to casinos in which persons participate by the use of remote
communication facilities such as, but not limited to, internet, telephone, television, radio or any
other kind of electronic or other technology for facilitating communication.

bbb) “Jewel” refers to organic substances that have a market-recognized gem level of quality, beauty
and rarity, such as pearl, amber and coral.

ccc) “Jewelry” refers to finished goods deriving fifty percent (50%) or more of their value from jewels,
precious metals or precious stones constituting, forming part of, or attached to said finished
goods.

ddd) “Law Enforcement Agency” (LEA) refers to the Philippine National Police, National Bureau of
Investigation, and other government agencies that are responsible for the prevention,
investigation, apprehension, and/or detention of individuals suspected of, or convicted for,
violations of criminal laws.

eee) “Materially-linked Accounts” refer to:

1) All accounts or monetary instruments under the name of the person whose accounts,
monetary instruments, or properties are the subject of the freeze order or an order of inquiry;
2) All accounts or monetary instruments held, owned, or controlled by the owner or holder of
the accounts, monetary instruments, or properties subject of the freeze order or order of
inquiry, whether such accounts are held, owned or controlled singly or jointly with another
person;
3) All “In Trust For” accounts where either the trustee or the trustor pertains to a person whose
accounts, monetary instruments, or properties are the subject of the freeze order or order of
inquiry;
4) All accounts held for the benefit or in the interest of the person whose accounts, monetary
instruments, or properties are the subject of the freeze order or order of inquiry;
5) All accounts of juridical persons or legal arrangements that are owned, controlled or
ultimately effectively controlled by the natural person whose accounts, monetary instruments
or properties are subject of the freeze order or order of inquiry, or where the latter has
ultimate effective control; and
6) All other accounts, shares, units, or monetary instruments that are similar, analogous, or
identical to any of the foregoing.

fff) “Monetary Instrument” refers, but is not limited, to the following:

1) Coins or currency of legal tender of the Philippines, or of any other country;
 2) Credit instruments, including bank deposits, financial interest, royalties, commissions, and
other intangible property;
3) Drafts, checks, and notes;
4) Stocks or shares, participation or interest in a corporation or in a commercial enterprise or
profit-making venture and evidenced by a certificate, contract, instrument, whether written
or electronic in character, including those enumerated in Section 3 of the Securities
Regulation Code;
5) A participation or interest in any non-stock, non-profit corporation;
6) Securities or negotiable instruments, bonds, commercial papers, deposit certificates, trust
certificates, custodial receipts, or deposit substitute instruments, trading orders, transaction
tickets, and confirmations of sale or investments and money market instruments;
7) Contracts or policies of insurance, life or non-life, contracts of suretyship, pre-need plans, and
member certificates issued by mutual benefit association; and
8) Other similar instruments where title thereto passes to another by endorsement, assignment,
or delivery.

ggg) “Monetary Instrument or Property Related to an Unlawful Activity” refers to:

1) All proceeds of an unlawful activity;
2) All instrumentalities of an unlawful activity, including all moneys, expenditures, payments,
disbursements, costs, outlays, charges, accounts, refunds, and other similar items for the
financing, operations, and maintenance of any unlawful activity;
3) All monetary instruments or property, including monetary, financial or economic means,
devices, accounts, documents, papers, items, objects or things, used in or having any relation
to any unlawful activity or money laundering, regardless of the current owner or possessor,
and circumstances of ownership or acquisition; and
4) For purposes of freeze order and bank inquiry order: related and materially-linked accounts.

hhh) “Money Laundering” (ML) refers to the crime defined under Section 4 of the AMLA

iii) “Money Laundering/Terrorism Financing Prevention Program” (MTPP) refers to a covered

person’s comprehensive, risk-based, and written internal policies, controls and procedures to
implement the relevant laws, rules and regulations, and best practices to prevent and combat
ML/TF and associated unlawful activities in the operational level.

jjj) “Money or Value Transfer Service” (MVTS) refers to financial services that involve the acceptance
of cash, checks, other monetary instruments or other stores of value, and the payment of a
corresponding sum in cash or other form to a beneficiary by means of a communication, message,
transfer, or through a clearing network to which the service provider belongs.

kkk) “Mutual Legal Assistance” (MLA) refers to the formal method of cooperation between two
jurisdictions for purposes of seeking assistance in the production of documents, asset freezing and
forfeiture, extradition, enforcement of foreign judgment, and other kinds of legal assistance in
criminal matters.

lll) “National Risk Assessment” (NRA) refers to a comprehensive exercise to identify, assess and
understand a country’s ML/TF threats, vulnerabilities and the consequential risks, with a view to
mitigate illicit flow of funds and transactions.
mmm) “Non-Profit Organization” (NPO) refers to a juridical person, legal arrangement or organization
that primarily engages in raising or disbursing funds for purposes such as charitable, religious,
cultural, educational, social or fraternal purposes, or for the carrying of other types of “good
works”.

nnn) “Offender” refers to any person who commits a money laundering offense.

ooo) “Ongoing Monitoring Process” (OMP) refers to the process of conducting continuing due
diligence, including continually assessing the risks, understanding the transactions and activities,
and updating, based on risk and materiality, the identification information and/or identification
documents, of customers, their agents and beneficial owners.

ppp) “Originating/Ordering Financial Institution” refers to the financial institution, which initiates the
wire transfer and transfers the funds upon receiving the request for a wire transfer on behalf of
the originator.

qqq) “Originator” refers to the account holder who allows the wire transfer from that account or
where there is no account, the person that places an order with the originating/ordering financial
institution to perform a wire transfer.

rrr) “Other Government Agency” (OGA) refers to a government agency that is not an SA, AGA or LEA.

sss) “Parallel Financial Investigation” refers to conducting a financial investigation or investigation

into the ML/TF aspect of a case alongside, or in the context of, the investigation into the
associated unlawful activity.

ttt) “Payable-through Accounts” refers to correspondent accounts that are used directly by third
parties to transact business on their own behalf.

uuu) “Person/Entity” refers to any natural or juridical person.

vvv) “Philippine Identification Card” (PhilID) refers to the non-transferrable identification card issued
by the Philippine Statistics Authority (PSA) to all citizens and resident aliens registered under the
Philippine Identification System. It shall serve as the official government-issued identification
document of cardholders in dealing with all government agencies, local government units,
government and controlled corporations, government financial institutions, and all private sector
entities.

www) “Philippine Identification System” (PhilSys) refers to the Philippine Government’s central
identification platform, established under Republic Act No. 11055, otherwise known as the
“Philippine Identification System Act” (PhilSys Act), for all citizens and resident aliens of the
Philippines.

xxx) “PhilSys Number” (PSN) refers to the randomly generated, unique and permanent identification
number assigned to every citizen or resident alien, upon birth or registration, by the PSA.
yyy) “Politically-Exposed Person” (PEP) refers to an individual who is or has been entrusted with
prominent public position in (a) the Philippines with substantial authority over policy, operations
or the use or allocation of government-owned resources; (b) a foreign State; or (c) an
international organization.

zzz) “Precious Metals” refers to gold, silver, platinum, palladium, rhodium, ruthenium, iridium, and
osmium at a level of purity of five hundred (500) parts per one thousand (1,000), singly or in any
combination, and alloys of precious metals, solders, and plating chemicals, such as rhodium and
palladium plating solutions, potassium gold cyanide containing at least sixty-eight and three-
tenths percent (68.3%) gold, potassium silver cyanide containing at least sixty-eight percent (68%)
silver and silver cyanide in salt solution containing at least fifty-four percent (54%) silver.

aaaa) “Precious Stones” refers to all gems and stones used in jewelry making, such as gemstones,
jewels, and those substances that have market-recognized gem level of quality, beauty, and rarity,
such as diamond, corundum (including rubies and sapphires), beryl (including emeralds and
aquamarines), chrysoberyl, spinel, topaz, zircon, tourmaline, garnet, crystalline and
cryptocrystalline quartz, olivine peridot, tanzanite, jadeite jade, nephrite jade, spodumene,
feldspar, turquoise, lapis lazuli, opal and pearl.

bbbb) “Probable Cause” refers to such facts and circumstances which would lead a reasonably discreet,
prudent, or cautious man to believe that:
1) any monetary instrument or property sought to be frozen, inquired into or preserved is in any
way related to any unlawful activity and/or money laundering offense; or
2) ML/TF has been committed and that the respondent is probably guilty thereof.

cccc) “Proceeds” refers to an amount derived or realized from any unlawful activity, as herein defined.

dddd) “Property” refers to anything or item of value, real or personal, tangible or intangible, or any
interest therein, or any benefit, privilege, claim, or right with respect thereto, including:
1) Personal property, including proceeds derived therefrom, or traceable to any unlawful
activity, as herein defined, such as, but not limited to:
a. Cash;
b. Jewelry, precious metals and stones, and other similar items;
c. Works of art, such as paintings, sculptures, antiques, treasures, and other similar precious
objects;
d. Perishable goods; and
e. Vehicles, vessels, aircraft, or any other similar conveyance.
2) Personal property, used as instrumentalities in the commission of any unlawful activity, as
herein defined, such as:
a. Computers, servers, and other electronic information and communication systems; and
b. Any conveyance, including any vehicle, vessel, and aircraft.
3) Real estate, improvements constructed or crops growing thereon, or any interest therein,
standing upon the record of the registry of deeds or local government unit in the name of the
party against whom the freeze order or asset preservation order is issued, or not appearing at
all upon such records, or not belonging to the party against whom the freeze order or asset
preservation order is issued and held by any other person, or standing on the records of the
registry of deeds or local government unit in the name of any other person, but are:
 a. derived from, or traceable to, any unlawful activity; or
b. used as an instrumentality in the commission of any unlawful activity, as herein defined.

eeee) “Purely Legal/Accounting Service” refers to:

a. Rendition of purely litigation, notarial, legal counseling, and/or other services that can only
be undertaken by a lawyer, as a professional; or
b. Rendition of purely accounting, auditing and/or other services that can only be undertaken
by a certified public accountant, as a professional.

ffff) “Relationship” refers to business or professional relationship between the covered person and its
customer.

gggg) “Request for Information” (RFI) refers to a request for information by FIUs, LEAs and OGAs,
whether domestic or foreign, for intelligence or investigative purposes only.

hhhh) “Realty Transaction” refers to a real estate transaction involving an amount in excess of Five
Hundred Thousand Pesos (PHP500,000.00).

iiii) “Realty Transaction Report” (RTR) refers to a report, including copies of the relevant documents,
on a realty transaction, as herein defined, filed by the Land Registration Authority and all its
Registry of Deeds, before the AMLC.

jjjj) “Reduced Due Diligence” (RDD) refers to the lowest level of customer due diligence that is
appropriate in cases where there is low risk of money laundering or terrorism financing.

kkkk) “Related Account” refers to an account, the funds and sources of which originated from and/or
are materially-linked to the monetary instruments or properties subject of the freeze order or an
order of inquiry, regardless of the layer of accounts that the funds had passed through or
transactions that they had undergone.

llll) “Risk” refers to risk of loss arising from ML/TF activities.

mmmm) “Risk-Based Approach” refers to the process by which countries, competent authorities, and
covered persons identify, assess, and understand the ML/TF risks to which they are exposed, and
take the appropriate mitigation measures in accordance with the level of risk. This includes
prioritization and efficient allocation of resources by the relevant key players and stakeholders in
applying AML/CTF measures in their operations in a way that ensures that they are commensurate
with the risks involved.

nnnn) “Sectoral Risk Assessment” refers to a comprehensive exercise to identify, assess and understand
an industry’s, or business or professional sector’s, threats, vulnerabilities and the consequential
risks, with a view to mitigate illicit flow of funds and transactions.

oooo) “Securities and Exchange Commission” (SEC) refers to the Philippines’ company register and
regulator of the securities industry.
pppp) “Serial Payment” refers to a direct sequential chain of payment where the wire transfer and
accompanying payment message travel together from the originating/ordering financial
institution to the beneficiary financial institution, directly or through one or more intermediary
financial institutions.

qqqq) “Shell Bank” refers to a bank that has no physical presence in the country in which it is
incorporated and licensed, and which is unaffiliated with a regulated financial group that is subject
to effective consolidated supervision.

rrrr) “Ship-Based Casino” refers to casinos, the operation of which is undertaken on board a vessel,
ship, boat or any other water-based craft wholly or partly intended for gambling.

ssss) “Source of Fund” refers to the origin of the funds or other monetary instrument that is the subject
of the transaction, or business or professional relationship between a covered person and its
customer, such as cash on hand, safety deposit box with a covered person, and a particular bank
or investment account.

tttt) “Source of Wealth” refers to the resource from which the customer’s wealth, including all
monetary instruments and properties, came, comes, or will come from, such as employment,
business, investment, foreign remittance, inheritance, donation, and winnings.

uuuu) “Straight-through Processing” refers to payment transactions that are conducted electronically
without the need for manual intervention.

vvvv) “Strategic Analysis” refers to the high-level macro analysis of data to decipher the underlying
patterns and trends that would enable the AMLC to draw conclusions and develop long-term
strategies for the prevention of ML/TF, and to provide input for policy formulation.

wwww) “Substantial Evidence” refers to such level of evidence which a reasonable mind might accept as
adequate to justify or support a conclusion that a specific violation was committed.

xxxx) “Supervising Authority” (SA) refers to the BSP, the SEC, the IC, or other government agencies
designated by law to supervise or regulate a particular financial institution or DNFBP.

yyyy) “Suspicious Circumstance” refers to any of the following circumstances, the existence of which
makes a transaction suspicious:
1) there is no underlying legal or trade obligation, purpose or economic justification;
2) the client is not properly identified;
3) the amount involved is not commensurate with the business or financial capacity of the
client;
4) taking into account all known circumstances, it may be perceived that the client’s transaction
is structured in order to avoid being the subject of reporting requirements under the AMLA;
5) any circumstance relating to the transaction which is observed to deviate from the profile of
the client and/or the client’s past transactions with the covered person;
6) the transaction is in any way related to ML/TF or related unlawful activity that is about to be
committed, is being or has been committed; or
7) any transaction that is similar, analogous or identical to any of the foregoing, such as the
relevant transactions in related and materially-linked accounts, as herein defined.
zzzz) “Suspicion” refers to a person’s state of mind—based on his skills, experience, and/or
understanding of the customer profile—which considers that there is a possibility that any of
the suspicious circumstances exists.

aaaaa) “Suspicious Transaction” refers to a transaction, regardless of amount, where any of the
suspicious circumstances, as herein defined, is determined, based on suspicion or, if available,
reasonable grounds, to be existing.

bbbbb) “Suspicious Transaction Report” (STR) refers to a report on a suspicious transaction, as herein
defined, filed by a covered person before the AMLC.

ccccc) “Tactical Analysis” refers to the analysis of data directed towards the short-term development of
investigative priorities and deployment of resources, which include the analysis of time, space,
offender, victim, and modus operandi for individual high-profile crimes, repeat incidents, and
crime patterns, with a specific focus on crime series.

ddddd) “Terrorism Financing” (TF) refers to the crime defined under Sections 4 of the TFPSA.

eeeee) “Terrorism Financing Prevention and Suppression Act” (TFPSA) refers to Republic Act No. 10168.

fffff) “Transaction” refers to any act establishing any right or obligation or giving rise to any
contractual or legal relationship between the covered person and its customer. It also includes
any movement of funds, by any means, in the ordinary course of business of a covered person.

ggggg) “Trustee” refers to a person in whom confidence is reposed as regards property for the benefit
of another person called the trustor/grantor/settlor.

hhhhh) “Trustor/Grantor/Settlor” refers to a person who establishes a trust, or who transfers ownership
of his assets to a trustee by means of a trust deed or similar arrangement.

iiiii) “Unique Transaction Reference Number” refers to a combination of letters, numbers or

symbols, determined by the payment service provider, in accordance with the protocols of the
payment and settlement system or messaging system used for the wire transfer.

jjjjj) “Virtual Asset” refers to a digital representation of value that can be digitally traded, or
transferred, and can be used for payment or investment purposes.

kkkkk) “Virtual Asset Provider” refers to any person who, as a business, conducts one or more of the
following activities or operations for or on behalf of another person:
a) Exchange between virtual assets and fiat currencies;
b) Exchange between one or more forms of virtual assets;
c) Transfer (the conduct of a transaction on behalf of another person that moves a virtual
asset from one virtual asset address or account to another) of virtual assets;
d) Safekeeping and/or administration of virtual assets or instruments enabling control over
virtual assets; and
e) Participation in and provision of financial services related to an issuer’s offer and/or sale of
a virtual asset.
lllll) “Wire Transfer” refers to any transaction carried out on behalf of an originator, through an
originating/ordering financial institution, by electronic means, with a view to making an amount
of funds available to a beneficiary at a beneficiary financial institution, irrespective of whether
the originator and the beneficiary are the same person.

“UNLAWFUL ACTIVITY” refers to any act or omission, or series or combination thereof, involving or
having direct relation, to the following:
1) “Kidnapping for Ransom” under Article 267 of Act No. 3815, otherwise known as the Revised
Penal Code, as amended;
2) Sections 4, 5, 6, 8, 9, 10, 11, 12,13, 14, 15 and 16 of Republic Act No. 9165, otherwise known as
the “Comprehensive Dangerous Drugs Act of 2002”;
3) Section 3 paragraphs b, c, e, g, h and i of Republic Act No. 3019, as amended, otherwise known
as the “Anti-Graft and Corrupt Practices Act”;
4) “Plunder” under Republic Act No. 7080, as amended;
5) “Robbery” and “Extortion” under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised
Penal Code, as amended;
6) “Jueteng” and “Masiao” punished as illegal gambling under Presidential Decree No. 1602;
7) “Piracy on the High Seas” under the Revised Penal Code, as amended, and Presidential Decree
No. 532;
8) “Qualified Theft” under Article 310 of the Revised Penal Code, as amended;
9) “Swindling” under Article 315 and “Other Forms of Swindling” under Article 316 of the Revised
Penal Code, as amended;
10) “Smuggling” under Republic Act No. 455, and Republic Act No. 1937, as amended, otherwise
known as the “Tariff and Customs Code of the Philippines”;
11) Violations under Republic Act No. 8792, otherwise known as the “Electronic Commerce Act of
2000”;
12) “Hijacking” and other violations under Republic Act No. 6235, otherwise known as the “Anti-
Hijacking Law”; “Destructive Arson”; and “Murder”, as defined under the Revised Penal Code, as
amended;
13) “Terrorism” and “Conspiracy to Commit Terrorism”, as defined and penalized under Sections 3
and 4 of Republic Act No. 9372;
14) “Financing of Terrorism” under Section 4 and offenses punishable under Sections 5, 6, 7 and 8 of
Republic Act No. 10168, otherwise known as the “Terrorism Financing Prevention and
Suppression Act of 2012”;
15) “Bribery” under Articles 210, 211 and 211-A of the Revised Penal Code, as amended, and
“Corruption of Public Officers” under Article 212 of the Revised Penal Code, as amended;
16) “Frauds and Illegal Exactions and Transactions” under Articles 213, 214, 215 and 216 of the
Revised Penal Code, as amended;
17) “Malversation of Public Funds and Property” under Articles 217 and 222 of the Revised Penal
Code, as amended;
18) “Forgeries” and “Counterfeiting” under Articles 163, 166, 167, 168, 169 and 176 of the Revised
Penal Code, as amended;
19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the “Anti-Trafficking
in Persons Act of 2003, as amended”;
 20) Violations of Sections 78 to 79 of Chapter IV of Presidential Decree No. 705, otherwise known as
the “Revised Forestry Code of the Philippines, as amended”;
21) Violations of Sections 86 to 106 of Chapter IV of Republic Act No. 8550, otherwise known as the
“Philippine Fisheries Code of 1998”;
22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known as the
“Philippine Mining Act of 1995”;
23) Violations of Section 27(c), (e), (f), (g) and (i) of Republic Act No. 9147, otherwise known as the
“Wildlife Resources Conservation and Protection Act”;
24) Violations of Section 7(b) of Republic Act No. 9072, otherwise known as the “National Caves and
Cave Resources Management Protection Act”;
25) Violation of Republic Act No. 6539, otherwise known as the “Anti-Carnapping Act of 2002, as
amended”;
26) Violation of Sections 1, 3, and 5 of Presidential Decree No. 1866, as amended, otherwise known
as the decree “Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing In,
Acquisition or Disposition of Firearms, Ammunition or Explosives”;
27) Violation of Presidential Decree No. 1612, otherwise known as the “Anti-Fencing Law”;
28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the “Migrant Workers and
Overseas Filipinos Act of 1995, as amended”;
29) Violation of Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the
Philippines, as amended”;
30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the “Anti-Photo and Video
Voyeurism Act of 2009”;
31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the “Anti-Child Pornography
Act of 2009”;
32) Violations of Sections 5, 7, 8, 9, 10 (c), (d) and (e), 11, 12 and 14 of Republic Act No. 7610,
otherwise known as the “Special Protection of Children Against Abuse, Exploitation and
Discrimination”;
33) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the
“Securities Regulation Code of 2000”;
34) Felonies or offenses of a nature similar to the aforementioned unlawful activities that are
punishable under the penal laws of other countries.

In determining whether or not a felony or offense punishable under the penal laws of other countries
is “of a similar nature” so as to constitute an unlawful activity under the AMLA, it is sufficient that
both the Philippines and the other jurisdiction criminalize the conduct or activity underlying the
offense, regardless of whether both countries place the offense within the same category, or
denominate the offense under the same nomenclature.

COVERED PERSONS

The following are the covered persons under the AMLA:

a) The following financial institutions:

1) Persons supervised and/or regulated by BSP, including their subsidiaries and affiliates, which are
also covered persons, supervised and/or regulated by the BSP such as:
a. Banks;
 b. Quasi-banks;
c. Trust entities
d. Pawnshops;
e. Non-stock savings and loan associations;
f. Other Non-bank financial institutions which under special laws are subject to BSP supervision
and/or regulation;
g. Electronic money issuers; and
h. Foreign exchange dealers, money changers, and remittance and transfer companies.

2) Persons supervised or regulated by IC, such as:

a. Insurance companies;
b. Pre-need companies;
c. Insurance agents;
d. Insurance brokers;
e. Professional reinsurers;
f. Reinsurance brokers;
g. Holding companies;
h. Holding company systems;
i. Mutual benefit associations; and
j. All other persons and their subsidiaries and affiliates supervised or regulated by the IC.

3) Persons supervised or regulated by SEC, such as:

a. Securities dealers, brokers, salesmen, investment houses, and other similar persons
managing securities or rendering services, such as investment agents, advisors, or
consultants;
b. mutual funds or open-end investment companies, close-end investment companies or
issuers, and other similar entities; and
c. other entities, administering or otherwise dealing in commodities, or financial derivatives
based thereon, valuable objects, cash substitutes, and other similar monetary instruments or
properties, supervised or regulated by the SEC.
b) The following DNFBPs:
1) Jewelry dealers.
2) Dealers in precious metals, and dealers in precious stones.
3) Company service providers, which, as a business, provide any of the following services to third
parties:
a. acting as a formation agent of juridical persons;
b. acting as (or arranging for another person to act as) a director or corporate secretary of a
company, a partner of a partnership, or a similar position in relation to other juridical
persons;
c. providing a registered office; business address or accommodation, correspondence or
administrative address for a company, a partnership or any other juridical person or legal
arrangement; and
d. acting as (or arranging for another person to act as) a nominee shareholder for another
person.
4) Persons, including lawyers, accountants and other professionals, who provide any of the
following services:
a. Managing of client money, securities or other assets;
b. Management of bank, savings, securities or other assets;
c. Organization of contributions for the creation, operation or management of companies; and
d. Creation, operation or management of juridical persons or arrangements, and buying and
selling business entities.
5) Casinos, including internet-based casinos and ship-based casinos, with respect to their casino
cash transactions related to their gaming operations.

The “Casino Implementing Rules and Regulations of Republic Act No. 10927” shall govern the
implementation of the AMLA with regard to casinos, unless, otherwise indicated therein by the
AMLC and the AGAs.

MONEY LAUNDERING AND TERRORISM FINANCING

Money laundering is committed by:

a) Any person who, knowing that any monetary instrument or property represents, involves, or relates
to the proceeds of any unlawful activity:
1) transacts said monetary instrument or property;
2) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or
property;
3) conceals or disguises the true nature, source, location, disposition, movement or ownership of or
rights with respect to said monetary instrument or property;
4) attempts or conspires to commit ML offenses referred to in (1), (2), or (3) above;
5) aids, abets, assists in, or counsels the commission of the ML offenses referred to in (1), (2), or (3)
above; and
6) performs or fails to perform any act as a result of which he facilitates the offense of ML referred
to in items (1), (2), or (3) above.
b) Any covered person who, knowing that a covered or suspicious transaction is required under the
AMLA to be reported to the AMLC, fails to do so.
Financing of Terrorism is a crime committed by a person who, directly or indirectly, willfully and without
lawful excuse, possesses, provides, collects or uses property or funds or makes available property, funds
or financial service or other related services, by any means, with the unlawful and willful intention that
they should be used or with the knowledge that they are to be used, in full or in part: (1) to carry out or
facilitate the commission of any terrorist act; (2) by a terrorist organization, association or group; or (3)
by an individual terrorist.

Stages of Money Laundering

Money laundering is the criminal practice of processing ill-gotten gains, or “dirty” money, through a
series of transactions; in this way the funds are “cleaned” so that they appear to be proceeds from legal
activities. Money laundering generally does not involve currency at every stage of the laundering process.
Although money laundering is a diverse and often complex process, it basically involves three
independent stages, namely: placement, layering and integration that can occur simultaneously:
1. Placement. The first and most vulnerable stage of laundering money is placement. The goal is to
introduce the unlawful proceeds into the financial system without attracting the attention of
financial institutions or law enforcement. Placement techniques include structuring currency deposits
in amounts to evade reporting requirements or commingling currency deposits of legal and illegal
enterprises. An example may include: dividing large amounts of currency into less-conspicuous
smaller sums that are deposited directly into a bank account, depositing a refund check from a
canceled vacation package or insurance policy, or purchasing a series of monetary instruments (e.g.,
cashier’s checks or money orders) that are then collected and deposited into accounts at another
location or financial institution.
2. Layering. The second stage of the money laundering process is layering, which involves moving funds
around the financial system, often in a complex series of transactions to create confusion and
complicate the paper trail. Examples of layering include exchanging monetary instruments for larger
or smaller amounts or wiring or transferring funds to and through numerous accounts in one or more
financial institutions.
3. Integration. The ultimate goal of the money laundering process is integration. Once the funds are in
the financial system and insulated through the layering stage, the integration stage is used to create
the appearance of legality through additional transactions. These 2017-2018 Money Laundering &
Terrorist Financing Prevention Program (MLPP) transactions further shield the criminal from a
recorded connection to the funds by providing a believable explanation for the source of the funds.
Examples include the purchase and resale of real estate, investment securities, foreign trusts, or
other assets.

CYBERCRIME

Cybercrime is defined as a crime in which a computer is the object of the crime (hacking, phishing,
spamming) or is used as a tool to commit an offense (child pornography, hate crimes). Cybercriminals
may use computer technology to access personal information, business trade secrets, or use the internet
for exploitive or malicious purposes. Criminals can also use computer for communication and document
or data storage. Criminals who perform these illegal activities are often referred to as hackers.

Cybercrime may also be referred to as computer crime.

Common types of cybercrime include online bank information theft, identity theft, online predatory
crimes and unauthorized computer access. More serious crimes like cyber-terrorism are also of
significant concern.

The cybercrime law of the Philippines (Cybercrime Prevention Act of 2012- RA 10175) defines and
punishes certain acts, generally classified as:
• Offenses against the confidentiality, integrity and availability of computer data and systems
• Computer-related offenses
• Content-related offenses

CUSTOMER ACCEPTANCE POLICY

It is the policy of the Bank that no account shall be opened, or the transaction has to be conducted where
any of the following circumstances exists:
(a) New account to be opened or transaction to be conducted is under anonymous or fictitious names.
(b) Where the branch, unit or office is unable to verify the identity of the customer
(c) Where the branch, unit or office is unable to obtain the required information and/or documents due
to non-cooperation of the customer or non-reliability of the data or information furnished to the
Bank or to the accredited Service Provider. In all cases, decision to close an account should be taken
at the next higher level of authority.
(d) Positive match vs. OFAC/SDN/Internal Negative File or with any person with known criminal
background or with banned entities such as individual terrorists or terrorist organizations available
from BSP, AMLC Circulars, host country regulatory or enforcement agencies and other
reputable/reliable sources i.e. Dow Jones.

Important: No new account shall be opened without face-to-face.

AML CUSTOMER RISK RATING METHODOLOGY

It is the policy of the Bank to conduct risk assessment of its customers during account opening and
banking relationship to properly identify, evaluate and estimate the levels of AML risk involved in a
banking transaction and determine acceptable level of risk and accordingly provide appropriate
monitoring control to detect and report suspicious transaction in a timely manner.
Customer Risk Rating is assigned to customers at account opening stage based on several components
considered including the documentary and non-documentary evidence in knowing/identifying the
customer and subject to periodic review pursuant to the provisions hereof.

When to conduct Customer Risk Rating

Customer Risk Rating is assigned to customers, account opening stage based on several components
considered including the documentary and non-documentary evidence in knowing/identifying the
customer and subject to periodic review pursuant to the provisions hereof.
IMPORTANT:
In case a customer has an existing account in any domestic branches, the concerned unit
may request maintaining branch copy of the latest CRR and reassess based on the new
information provided.

Risk Rating Classification

After identifying, evaluating and estimating the levels of risk that a customer is likely to engage in money
laundering or terrorist financing, customers are classified as follows:
1. Low Risk - customer pose a minor risk compared to known money laundering typologies that it can
engage knowingly or unknowingly in money laundering or terrorist financing activities and is an ideal
level of risk;
2. Normal Risk - customer does not pose a significant risk compared to known money laundering
typologies that it can engage knowingly or unknowingly in money laundering or terrorist financing
activities and is an acceptable level of risk;
3. High Risk - customer pose a major risk comparable to known money laundering typologies that it can
engage knowingly or unknowingly in money laundering or terrorist financing activities although
within tolerable level of risk, but subject to enhanced monitoring;
4. Very High Risk – customer pose a serious risk comparable to known money laundering typologies
that it can engage knowingly or unknowingly in money laundering or terrorist financing activities, but
subject to extensive enhanced monitoring.

Periodic Risk Assessment

After the initial risk rating is assigned to each customer, customer risk rating shall be periodically
undertaken by the branch as follows:
• Low risk - At least every 24 months
• Normal risk - At least every 18 months
• High risk - At least every 12 months
• Very High risk – At least every 6 months

The Global AML Compliance Division whenever necessary, may issue a Compliance Bulletin to trigger the
periodic review.

Risk rating may be conducted as frequent as necessary when adverse information or knowledge relating
to an account is acquired by the branch that, based on reasonable judgment, will warrant the accelerated
re-assessment of the said customer.

The customer's initial or current risk rating can be affected by a change in circumstances as well as the
unusual transactions monitoring results. Therefore, customer risk rating may change at time from one
rating to another. Therefore, customer risk rating may change at any time from one rating to another.

Basic Risk Parameters

The risk parameters are generally classified into 3 categories, namely:

a. Account/Entity Risk - specific risk associated with the customer's type, nature of business,
occupation or declared/anticipated transaction activity.
b. Geographic Risk - specific risk associated with doing business in, opening accounts for customers
from, or facilitating transactions involving certain geographic locations.

c. Products, Services, Transactions and Delivery Channel Risk – risk associated with the nature of
specific products or services offered that can facilitate a higher degree of anonymity or involve the
handling of high volume of currency or currency equivalent or instantaneous transfer of funds from
one account to another account or to other jurisdictions, or inter-branch deposits or withdrawals.

Default Risk Classification of Selected Customers/Accounts

Regardless of the result of the Customer Risk Rating, the following are considered HIGH RISK and shall be
subject to Enhanced Due Diligence and require appropriate Senior Officer, Management Committee or
Board Committee approval:

1. Non-Governmental Organization (NGO); Non-Profit Organization (NPO), Foundation except for

the following NGOs/NPOs/Foundations which shall be tagged as “B” or Normal Risk:
a. ABS-CBM Lingkod Kapamilya Foundation
b. ABS-CBN Foundation Bantay Bata 163
c. Gawad Kalinga
d. GMA Kapuso Foundation
e. Habitat for Humanity International
f. Philippine National Red Cross
g. Salvation Army
h. Tan Yan Kee Foundation, Inc.
i. The YMCA
j. UNICEF
k. World Vision
2. Money Changers/Foreign Currency Dealers
3. Remittance Companies/Agents
4. Custom Brokerage
5. Dealers of Precious Metals
6. Dealers of Precious Stones
7. Jewelry Dealers
8. CASA Accounts with Special Power of Attorney (SPA)
9. Designated Non-Financial Business and Professions (DNFBP)
10. Pawnshops/Pawnshops with MSB License
11. Gun Ammunition/Military Equipment Dealers
12. Politically Exposed Persons:
A. Natural PEP
i. Heads of state or of government
• President of the Republic of the Philippines
• President of a foreign country
• Prime Minister of a foreign country
ii. Senior national or local government officials
• Vice-President
• Cabinet members
 • Members of Senate (Senators) and Congress (Congressmen)
• PNP Chief
• Foreign ambassadors
• Governors
• Vice-Governors
• Mayors
• Vice Mayors
iii. Judicial Officials
• Supreme Court Justices
• Court of Appeals Justices
• Sandiganbayan Justices
• Ombudsman
• Solicitor General
• Signatories to the accounts of the above
iv. Senior Military Officials
• Chief of Staff
• Heads of its 4 major branches (i.e. Army, Navy, Marines, Air Force)
• Signatories to the accounts and/or related accounts of AFP
v. Senior executives of Government Owned or Controlled Corporations (GOCCs)
government agencies, instrumentalities and LGUs
• Heads of government agencies
• Signatories to the accounts of GOCCs, government agencies (including Philippine
National Police) and local government units (LGUs)
vi. Important political party officials
• Secretary General
vii. Other prominent public positions in the Philippines or in a foreign state
• Foreign ambassadors
• Consul-General
• Signatories to the account(s) of an embassy
viii. Immediate family members and close associates of PEPs listed under items i-viii.
In determining immediate family member, refer to below table:
Degree Consanguinity Affinity
st
1 Degree Parents and Child Spouse
2nd Degree Grandparent Parent-in-Law
Brother/Sister Daughter/Brother-in-Law
Grandchild

B. Juridical PEP

A private entity wherein a natural PEP sits as Chairman, Director, Senior Executive, signatory
to the account or beneficial owner who owns at least 20% of the authorized capital stock of
the said company shall be considered Juridical PEP.
 Note: “Senior Officer” shall refer to the next higher authority of the approving officer (i.e.,
Area Heads or Regional Heads of branches, Group Heads or Sector Heads of Marketing
Units).

Customer Risk Rating – Risk Factors

Individual:
RISK FACTOR RATIONALE/REMARKS
Risk Classification of Person To identify Account/Customer/Entity Risk, classified as follows
based on numeric weights:
Notes:
1. Individual/s other than those listed as designated
• If risk rating is 3 (High Risk), professionals
CRR shall be automatically 2. Designated Professionals (Lawyers and Accountants acting
tagged as HIGH as Independent Professionals)
3. PEP, its immediate family members and close associates,
• If risk rating is 4 (very high Precious Metal/Stone Dealers; Gun/Ammunition/Military
Risk), CRR shall be Equipment Dealers; Remittance Agent, Money Changer,
automatically tagged as FX Dealer, Custom broker.
VERY HIGH RISK 4. Junket Operator/Casino Marketing Arrangement

Citizenship To identify Account/Customer/Entity Risk and Geographic Risk,

classified as follows based on numeric weights:
Notes:
1. Filipino Citizen, whether resident or non-resident
• If risk rating is 3 (High Risk), 2. Resident Alien other than No. 1 above
CRR shall be automatically 3. Resident alien or Non-resident alien from FATF Identified
tagged as HIGH Risk Jurisdictions with AML/CFT Deficiencies
4. Non-resident alien from Global Terrorism Index (GTI) to
• If risk rating is 4 (very high be with highest impact of terrorism (Compliance Bulletin
Risk), CRR shall be AMLDOM 013-2018)
automatically tagged as
VERY HIGH RISK
Geographical Address To identify Geographic Risk, classified as follows based on
numeric weights:
Ref: Annex B – High Risk and Very
High Risk Philippine Areas 1. Present or permanent address is within the
branch/operating unit vicinity known to branch/operating
Notes: unit personnel and properly identified thru KYC
Documents
• If present or permanent 2. Present or permanent address is not falling under any of
address is included in the the High Risk Philippine Areas or outside the
FATF Identified Jurisdiction branch/operating unit vicinity.
with AML/CFT Deficiencies 3. Present or permanent address is within the High Risk
risk rating is 3 (High Risk), Philippine Areas and outside the branch/operating unit
CRR shall be automatically vicinity, or Non-Philippine address.
tagged as HIGH
 RISK FACTOR RATIONALE/REMARKS
Present or permanent address is included in the FATF
• If risk rating is 4 (very high Identified Jurisdiction with AML/CFT Deficiencies
Risk), CRR shall be
automatically tagged as 4. Present or permanent address is within the Very High Risk
VERY HIGH RISK Philippine Areas or Non-Philippine address identified by
the Global Terrorism Index (GTI)
Please always refer to the
Compliance Bulletins issued for the
update of the FATF Identified
Jurisdiction with AML/CFT
Deficiencies and GTI

Individual identification To identify Account/Customer/Entity Risk, classified as follows

based on numeric weights:

1. Use of primary and secondary photo-bearing Philippine

Government issued IDs
2. Use of primary or secondary photo-bearing Philippine
Government issued IDs:
3. Use of Foreign government photo-bearing issued ID

Occupation/Nature of work or To identify Account/Entity Risk, classified as follows based on

self-employment numeric weights:

1. Employed locally; retired employee; pensioner, OFW;

beneficiary of an OFW
2. Student; self-employed or unemployed but with spouse
income
3. Expatriates, Consular/ambassadorial staff; UN staff,
unemployed but income is not derived from spouse or
immediate family member (father, mother, son,
daughter, brother or sister).

Source of Funds To identify Account/Customer/Entity Risk, classified as follows

based on numeric weights:

1. Salary, Property, Pension, Financial Products

TYPE DESCRIPTION
Salary Income from employment, professional
fees (doctors, lawyers) services (tutorial,
therapy)
Property Lease/rent, sale of property, inheritance
Pension Retirement fund, payment drawn to
support a person’s retirement (SSS, GSIS)
Financial Insurance proceeds, investments, trust
Products funds (stocks, funds drawn from accounts
 RISK FACTOR RATIONALE/REMARKS
with other banks)

2. Business, commission, allotment

TYPE DESCRIPTION
Business Income from business (any form of legal
trade/business)
Commission Agent or Sales Persons percentage from
sales (e.g. property, product, insurance)
Allotment Allowance, remittance (e.g. medical,
education, domestic expenses, IRA)

3. Donations, gaming
TYPE DESCRIPTION
Donation Contribution, aids, tithes, church collection,
stipend, love gift
Gaming Winnings (gaming, lottery)

Account Opening Method: To identify Account/Entity Risk, classified as follows based on

CASA/TD, Treasury, Trust, SAMG, numeric weights:
Loan and Credit Card Application
1. Face-to-face with (all) account owner/s/signatory/i.e.;
credit card applicants
2. Face-to-face with some account owners/signatories,
credit card applicants but authenticated by a PNB
domestic/overseas branch/operating unit Officer
3. Account owners/signatories, loan borrowers/signatories;
credit card applicants are authenticated by PNB overseas
branch/office Officer

Declared Monthly Transaction To identify Account/Customer/Entity Risk and Products and

Volume (MTV) Services Risks, classified as follows based on numeric weights:

1. Individuals with Declared Monthly Transaction Volume of

less than P100,000
2. Individual/s with declared monthly transaction volume of
over P100,000 to P500,000
3. Individual/s with declared monthly transaction volume of
over P500,000

Opening Deposit, if applicable To identify Account/Entity Risk and Products and Services Risk,
classified as follows based on numeric weights:

1. Cash, fund transfer from depositor’s other deposit

accounts in the bank, manager’s check, payroll check or
other Government check less than P100,000.00
 RISK FACTOR RATIONALE/REMARKS
2. Cash, fund transfer from depositor’s other deposit
accounts in the bank, local check of more than
P100,000.00 and up to P500,000.00
3. Cash, fund transfer from depositor’s other deposit
account in the bank or local check of over P500,000.00

Actual Gross Monthly Volume of To identify Products and Services Risk during re-assessment
Transaction (GMVT) - to be used based on actual gross account movements (credits only),
during risk assessment classified as follows based on numeric weights:

1. GMVT up to P100,000 or its equivalent in other foreign

currencies
2. GMVT is over P100,000 and up to P500,000 or its
equivalent in other foreign currencies
3. GMVT – is over P500,000 or its equivalent in other foreign
currencies

Length of Relationship To identify Account/Customer/Entity Risk and Products and

Services Risk, classified as follows based on numeric weights:

1. Existing customer with relationship of at least 1 year

2. Existing customer with relationship of less than 1 year
3. No prior relationship

Products and Services; To identify Products and Services Risk, classified as follows
Transactions and delivery channels based on numeric weights:

Numeric
Products and Services
Weight
a. Check deposit/encashment 1
b. Purchase of MC/DD 1
c. Loans 1
d. Trust/UITF 1
e. Credit Card 2
g. Cash Card & GFMC 2
f. Internet Banking/Phone or Mobile 3
Banking
h. Local fund transfer (PDDTS/RTGS)
i. Inter-branch deposits or 3
withdrawals
j. Dollar savings account 3
(for sole proprietary
business)
k. Foreign remittance (inward/outward) 3
a. Treasury (Govt bonds, money market) 3
l. Buy/Sell Foreign Exchange 3
Non-Individual (Corporations, Partnerships, Associations, Charitable Institutions):
RISK FACTOR
Designated Authorized Signatories
Notes:
• If one of the authorized
signatories is a PEP, the
Corporation shall be
automatically tagged as PEP
(Juridical PEP)
• If any of the authorized
signatories or primary officer a
citizen of the FATF Identified
Jurisdictions with AML/CFT
Deficiencies, the Corporation
shall be tagged as High Risk
• If any of the authorized
signatories or primary officer a
citizen of any country in the
Global Terrorist (GTI), the
Corporation shall be tagged as
Very High Risk
Nature/Type of Industry Business
Notes:
• If risk rating is 3 (High Risk),
CRR shall be automatically
tagged as HIGH
• If risk rating is 4 (Very High
Risk), CRR shall be
automatically tagged as VERY
HIGH RISK
RATIONALE/REMARKS
To identify Account/Entity Risk, classified as follows based on
numeric weights:
Citizenship
1. Resident or non-resident Filipino Citizen
2. Resident Alien – not included in the FATF Identified
Jurisdictions with AML/CFT Deficiencies
3. Non-resident alien not included in the FATF Identified
Jurisdictions with AML/CFT Deficiencies
4. Resident alien or non-resident alien included in the GTI
list
Individual Identification
1. Use of primary and secondary photo-bearing Philippine
Government issued ID
2. Use of primary or secondary photo-bearing Philippine
Government issued IDs
3. Use of Foreign government photo-bearing issued ID
Risk Classification of Person
1. Individual/s other than those listed as designated
professionals
2. Designated Professionals (Lawyers and Accountants acting
as Independent Professionals)
3. PEP, its immediate family members and close associates;
Precious Metal/Stone Dealers; Gun/Ammunition/Military
Equipment Dealers; Remittance Agent, Money Changer,
FX Dealer, Junket Operator/Agent
To identify Account/Entity Risk, classified as follows based on
numeric weights:
1. Government owned and controlled corporations; publicly
listed companies, banking institutions; trust entities and
quasi-banks authorized by the BSP; government agencies;
LGUs not listed under the High Risk Philippine Areas
(Annex B)
2. Businesses not falling under numeric weights 1 or 3;
Reputable NGOs/NPOs listed under Compliance Bulletin
AMLDOM-021-2014
3. NGOs/NPOs/Foundation not listed under Compliance
Bulletin AMLDOM-021-2014, Money Changers, FX
Dealers, Remittance Companies/Agents, Casino and
Related Gaming Entities, Custom Brokerage, Jewels/Gem
 RISK FACTOR
Place of Incorporation/
Registration
Notes:
• If risk rating is 3 (High Risk),
CRR shall be automatically
tagged as HIGH
• If risk rating is 4 (Very High
Risk), CRR shall be
automatically tagged as VERY
HIGH RISK
Corporate address/Principal To identify Account/Entity Risk, classified as follows based on
Headquarters/Head office numeric weights:
Notes:
• If present or permanent
address is included in the FATF
Identified Jurisdiction with
AML/CFT Deficiencies risk
rating is 3 (High Risk), CRR
shall be automatically tagged
as HIGH
• If risk rating is 4 (very high
Risk), CRR shall be
automatically tagged as VERY
HIGH RISK
Corporate/Organization
RATIONALE/REMARKS
Precious Metals/Stone Dealers, Gun, Ammunition,
Military Equipment Dealers, LGUs listed under the High
Risk Philippine Areas
4. NGOs/NPOs/Foundation, Money Changers, FX Dealers,
Remittance Companies/Agents maintaining an account in
Very High risk Areas (Compliance Bulletin AMLDOM 013-
2018)
Casinos and related gaming entities (Compliance Bulletin
AMLDOM 019-2018)
To identify Account/Entity Risk, classified as follows based on
numeric weights:
1. Incorporated/registered in the Philippines
2. Incorporated/registered outside the Philippines but
country is not listed in FATF list.
3. Incorporated/registered outside the Philippines and
country is listed in the FATF list (Annex A)
4. Incorporated/registered outside the Philippines and
country is listed in the GTI to be with highest impact of
terrorism (Annex A)
1. Present or permanent address is within the
branch/operating unit vicinity known to branch/operating
unit personnel and properly identified thru KYC
Documents
2. Present or permanent address is not falling under any of
the High Risk Philippine Areas or outside the
branch/operating unit vicinity.
3. Present or permanent address is within the High Risk
Philippine Areas and outside the branch/operating unit
vicinity, or Non-Philippine address.
Present or permanent address is included in the FATF
Identified Jurisdiction with AML/CFT Deficiencies
4. Present or permanent address is within the Very High Risk
Philippine Areas or Non-Philippine address identified by
the Global Terrorism Index (GTI)
To identify Account/Entity Risk, classified as follows based on
 RISK FACTOR RATIONALE/REMARKS
Documents numeric weights:

1. Use of Philippine issued registration/ incorporation

documents;
2. Use of non-Philippine incorporation/ registration papers
duly authenticated by Philippine Consulate Office/s
3. Use of registration documents as a Remittance Agent,
Money Changer, Money Exchange Dealer or Money
Service Business.
Account Opening Method: To identify Account/Entity Risk classified as follows based on
CASA/TD, Treasury, Trust, SAMG, numeric weights:
Loan and Credit Card Application
1. Face-to-face with all signatories/account owners; loan
borrowers/signatories; credit card applicants
2. Face-to-face with some account owners/signatories; loan
borrowers/signatories; credit card applicants but
authenticated by a PNB domestic/ overseas
branch/operating unit Officer
3. Account owners/signatories; loan borrowers/signatories;
credit card applicants are authenticated by a PNB
overseas branch/office Officer

Declared Gross Monthly Volume of To identify Products and Services Risk during account opening
Transactions (GMVT) – to be used based on declared monthly volume of transactions classified
only at account opening based on numeric weights:

1. Declared Gross Monthly Volume of Transaction of less

than or equal to P5.0M
2. Declared Gross Monthly Volume of Transaction is over
P5.0M to P10.0M
3. Declared Gross Monthly Volume of Transaction is over
P10.0M

Actual Gross Monthly Volume of To identify Products and Services Risk during re-assessment
Transaction (GMVT)-to be used in based on actual gross account movements (credits only),
risk re-assessment classified based on numeric weights:

1. Gross Monthly Volume of Transaction of less than or

equal to P5 Million
2. Gross Monthly Volume of Transaction is over P5 Million to
P10 Million
3. Gross Monthly Volume of Transactions is over P10 Million

Length of Relationship To identify Account/Entity Risk and Products and Services Risk,
classified as follows based on numeric weights:
 RISK FACTOR RATIONALE/REMARKS
1. Existing customer with relationship of equal to or more
than one year
2. Existing customer with relationship of less than 1 year
3. No prior relationship

Products and Services; To identify Products and Services Risk classified as follows
Transactions and Delivery based on numeric weights:
Channels (availed or to be availed
by client) Numeric
Products and Services
Weight
a. Check deposit/encashment 1
b. Purchase of MC/DD 1
c. Loans 1
d. Trust/UITF 1
e. Credit Card 2
g. Cash Card & GFMC 2
f. Internet Banking/Phone or Mobile Banking 3
h. Local fund transfer (PDDTS/RTGS) 3
i. Inter-branch deposits or withdrawals 3
j. Dollar savings account 3
(for sole proprietary
business)
k. Foreign remittance (inward/outward) 3
l. Treasury (Govt bonds, money market 3
li. Buy/Sell Foreign Exchange 3

Customer Risk Rating Range

Customer Risk Rating Total (CRRT) refers to the overall result when all the Risk Factors are summed up
according to each of their relative numeric weights. The risk rating range is as follows:

Risk Rating Numeric Range

Low Risk 25 or less
Normal Risk 26-35
High Risk 36 or higher
Very High Risk Default if falls with the definition of VHR Customer and
Geographic Location

Enhanced Due Diligence (EDD)

EDD for High Risk customers is especially critical in understanding their transactions and implementing a
suspicious transaction monitoring system that reduces the bank’s reputation, compliance and
transaction risks. Very High Risk and High Risk customers and their transactions should be reviewed more
closely at account opening and more frequently throughout the term of their relationship with the Bank.
When to Conduct EDD
Branches/Offices/Operating Units shall apply EDD when any of the following circumstance exists/occurs:
• Raises doubt as to the accuracy of any information or document provided or the ownership of the
entity;
• Justifies re-classification of the customer from low or normal risk to high-risk pursuant to AMLC, BSP
rules and regulations or the Bank’s policy or when there is knowledge in the activity changes (e. g,
low risk rate upon opening but later subject of suspicious transaction reporting; change from regular
to Politically Exposed Person account or vice versa and the like). Should there be a need to maintain
and change customer risk rating (e.g., expected account activity, change in employment or business
relations), approval of a Senior Officer is required. (See Section 9.4 for the definition of Senior
Officer)
• Any of the circumstance for the filing of suspicious transaction exists but not limited to the following:
1. Transacting without any underlying legal trade, purpose or economic justification;
2. Transacting an amount that is not commensurate with the business or financial capacity of the
customer or deviates from his profile;
3. Structuring transactions in order to avoid being the subject of covered transaction reporting;
4. Knowing that a customer was or is engaged or engaging in any unlawful activity defined under
the AMLA; or
5. Any transaction that is similar, analogous or identical to any of the foregoing.
• Watchlist of individuals and entities engaged in illegal activities or terrorist related activities as
circularized by the BSP, AMLC and other international entities or organizations such as Office of
Foreign Asset s Control (OFAC) of the US Department of Treasury and United Nations Security Council
that requires Senior Officer’s approval.
• All complex, unusually large transactions, all unusual patterns of transactions, which have no
apparent economic or unlawful purpose, and other transactions that may be considered suspicious.

When Conducting EDD, gather documents to support the following:

1. Sources of wealth and funds;
2. Nature of occupation and/or business;
3. Reason for intended of performed transaction; and
4. Other identification information, which the covered person deems necessary to verify the
identity of the customer, and their agents and beneficial owners.

Additional Measures When Conducting EDD

Whenever enhanced due diligence is applied as required by BSP Circular 950, the Branch AML
Compliance Officer/Operating Unit shall in addition to profiling of customers and monitoring of
customer’s transactions do the following:

1. Obtain additional information other than the minimum information and/or documents.
For individuals:
• Supporting information on the intended nature of the business relationship/source of funds/
source of wealth (such as financial profile, ITR, Loan Application, Deed of Donation, Deed of sale,
etc.);
• Reasons for intended or performed transactions;
 • List of companies where he is a stockholder, director, officer, or authorized signatory;
• Other relevant information available through public databases or internet; and
• List of banks where the individual has maintained or is maintaining an account.
For corporate or juridical entities:
• Prior or existing bank references;
• Name, present address, nationality, date of birth, nature of work, contact number and source of
funds of each of the primary officers (e.g. President, Treasurer);
• Volume of assets, other information available through public databases or internet and
supporting information on the intended nature of the business relationship, source of funds or
source of wealth of the customer (ITR, Audited Financial statement, Loan Application, Deed of
Donation, Deed of sale, etc.); and
• Reasons for intended or performed transactions.
2. Conduct validation procedures on any or all the information provided;
3. Obtain senior management approval for establishing and continuing business relationship with the
customer;
4. Conduct enhanced ongoing monitoring, including more frequent or regular updating of identification
information and documents;
5. Require the first payment to be carried out through an account in the customer's name with a bank
subject to similar CDD standards, where applicable; and
6. Perform such other measures as may be deem reasonable or necessary.

Customer Validation Procedures

Verification of procedures for individual customers shall include but not limited to the following:
• Confirming the date of birth from a duly authenticated official document
• Verifying the permanent address through evaluation of utility bills, bank credit card statement, or
other documents showing permanent address or through on-site visitation
• Contacting the customer by phone, email or letter (such as sending of “thank you letters”); and
• Determining the authenticity of the identification documents through validation of its issuance by
requesting a certification from the issuing authority or by any other means.
• Determining the veracity of the declared source of funds.
• Validation procedures for corporate or juridical entities shall include but not limited to the
following:
1. Require the submission of audited financial statements conducted by a reputable
accounting/auditing firm;
2. Inquiring from the supervising authority the status of the entity
3. Obtaining bank references;
4. Verifying the address through on-site visitation of the company, sending thank you letters, or
other documents showing address;
5. Contacting the entity by phone or email.
IMPORTANT: Where additional information cannot be obtained, or any information or document
provided is false or falsified, or result of the validation process is unsatisfactory, the
Branch/Office/Operating Unit shall not allow account opening or initiate termination of the banking
relationship with the individual or entity without prejudice to the reporting of a suspicious transaction to
the AMLC when circumstances warrant.

Minimum Information and Documents Required for Individual Customers and Authorized Signatory/ies
of Corporate/Juridical Entities

Individual customers shall open and maintain the account only in the true and full name of the account
owner or owners, their true and full identity fully established. For sole proprietorship entities, the bank
must establish the relationship of the trade name with the registered owner and the customer account.

The following minimum information shall be required to be obtained from individual customers or
authorized signatory/ies of corporate or juridical person. This information shall be confirmed with the
valid identification documents mentioned under Section 14.3 of the MTPP.

• Name of customer and/or PhilSys number

• Date and place of birth
• Sex
• Address
• Contact number or information
• Citizenship or Nationality
• Specimen signature or biometrics of the customer
• Name, address, date and place of birth, contact number or information and citizenship or nationality
of beneficiary or beneficial owner, whenever applicable.

Minimum Information and Documents Required for Juridical Person

The following minimum information shall be required to be obtained from juridical person:
1. Customer Information
• Name of juridical person/s;
• Name, address, citizenship or nationality of beneficial owner, if applicable, and authorized
signatories;
• Official Address
• Contact numbers or information;
• Nature of business; and
• Specimen signature of the authorized signatory.

2. Identification Documents
• Certificates of Registration issued by the Department of Trade and Industry (DTI) for sole
proprietors, Certificate of Incorporation or Partnership issued by the Securities and Exchange
Commission for corporations and partnerships respectively, and by the BSP for money changers,
foreign exchange dealers and remittance agents by AMLC for covered persons;
• Proof of registration with the Anti-Money Laundering Council (AMLC) for remittance agents,
money changers and foreign exchange dealers.
 • Secondary license or certificate of authority issued by the supervising authority or government
agency;
• Articles of incorporation/Partnership
• Registration Data Sheet/Latest General Information Sheet;
• Secretary’s Certificate citing the pertinent portion of the Board or Partners’ resolution,
authorizing the signatory to sign on behalf of the entity; and
• For entities registered outside of the Philippines, similar documents and/or information shall be
obtained duly authenticated by a senior officer or the designated officer of the covered person
assigned in the country of registration; in the absence of said officer, the documents should be
authenticated by the Philippine Consulate, company register or notary public, where said entities
are registered.

Approving Officers shall have the primary responsibility of requesting credit investigation on the business
activity and validation of business registration documents to ensure that the entity has not been or in the
process of being, dissolved, struck-off, wound up, terminated, or otherwise placed under receivership or
liquidation. In instances wherein the bank officer is not comfortable and/or fully satisfied with the
information provided, additional verification may be conducted by requesting credit investigation on
business operations and authorized signatories of the company. Credit investigation is optional for
companies listed in the Philippine Stock Exchange or in the Top 1000 Corporations in the Philippines.

Minimum Required Information/Documents Required for Legal Arrangement (e.g. Trusts)

The following minimum information shall be required to be obtained from Legal Arrangements:
1. Name of legal arrangement and proof of existence;
2. Address and country of establishment;
3. Nature, purpose and objects of the legal arrangement
4. The names of the settlor, the trustee, the trustor, the protector, if any, the beneficiary and any other
natural person exercising ultimate effective control over the legal arrangement;
5. Description of the purpose/activities of the legal arrangement
6. Expected use of the account; and
7. Amount, number, type, purpose and frequency of the transaction expected.

In addition, the following rules shall apply for trustees:

a. trustees of any express trust shall obtain and hold adequate, accurate, and current information on
the identity of the trustor/settlor/grantor, the trustee, the beneficiary or class of beneficiaries, and
any other natural person exercising ultimate effective control over the trust.

The Bank shall obtain sufficient information, such as the full name, place and date of birth or date of
registration of the beneficiary/ies of these trusts, or of similar legal arrangements. This is to ensure
that the Bank will be able to identify and verify the identity of the beneficiary at the time of the
payout or at the time of the exercise by the beneficiary of its vested rights.

b. trustees of any trust shall hold basic information on other regulated agents of, and service providers
to, the trust, including investment advisors or managers, accountants, and tax advisors;

c. trustees shall disclose their status when forming a business or professional relationship, or in carrying
out an occasional transaction above the threshold of a relevant business transaction; and
d. trustees shall make available to competent authorities, to the extent allowed by law, information on
the beneficial ownership and the assets of the trust to be held or managed under the terms of the
business or professional relationship.

Identification and Verification of Agents and Authorized Representatives

The Bank shall verify that the person purporting to act on behalf of a customer is so authorized and shall
identify and verify the identity of that person.

The following information shall be obtained:

1. Name
2. Address
3. Citizenship or nationality

Beneficial Owner

Beneficial owner refers to any natural person(s) who ultimately owns or controls the customer and/or on
whose behalf a transaction is being conducted; or those who has ultimate effective control over a
juridical person or legal arrangement.

Ultimate effective control refers to situation in which ownership/control is exercised through actual or
chain or ownership or by means other than direct control.

In this regard, the Bank must identify the beneficial owner based on the following:
1. Has controlling ownership interest or ownership of/entitlement to at least 20% or more shares or
capital.
2. Has control to appoint majority of the directors or to control the management or policy decisions
including by virtue of their shareholding or management rights or shareholders agreements or
voting agreements.
3. Where no natural person is identified as stated under (1) and (2) above, the beneficial owner is
the relevant natural person who holds the position of senior managing official.

However, where the customer or the owner of the controlling interest is a company listed on stock
exchange and subject to disclosure requirements, no need to identify and verify the identity of any
shareholder or beneficial owner of such company.

Branches and operating units shall request business customers to fill-up the Ultimate Beneficial
Ownership Declaration Form (UBOD Form).

Use of Aliases or Other Names

To ensure sustain compliance with BSP Circular No. 1022 on Customer identification Subsection X806.2
on the establishment and verification of the customer’s true identity based on official document or other
reliable, independent source of documents, data or information, below procedures to be observe
/complied with by the business and support units on the use of an “alias or other name” aside from the
“true name” of the customer.
Valid IDs

The following guidelines govern the acceptance of valid ID cards for all types of financial transaction by a
customer and the authorized signatory/ies of a corporate or juridical person, including financial
transactions involving Overseas Filipino Workers (OFWs), in order to promote access of Filipinos to
services offered by formal financial institutions, particularly those residing in areas wherein bank
branches are not accessible, as well as to encourage and facilitate remittances of OFWs through the
banking system.

a. Customers and authorized signatory/ies of a corporate or juridical person who engage in a financial
transaction with the Bank for the first time shall be required to present the original copy and submit
clear copy of valid photo-bearing IDs with signature issued by an official authority.

LOW/NORMAL RISK HIGH RISK AND VERY HIGH RISK

• Any 1 of the valid IDs
(primary or secondary ID)
• 2 valid IDs - 1 primary and 1 secondary; or 2 primary IDs
and
• Submission of any 1 of the following:
- Latest bank/broker’s/ insurance statements
- Latest telephone bills
- Latest utility/cable bills
- Latest credit card bills
- Latest club membership bills
- Latest GIS submitted to SEC as proof of being a Director/
Officer of an entity

FOREIGN NATIONALS
• 2 valid IDs – Passport WITH ACR issued by Bureau of Immigration AND
• Any of the following IDs issued by their country of origin or by the Republic of the Philippines:
- National ID; or
- Internal Revenue Service (IRS) ID or;
- Social Security Number (SSN) ID; or
- Driver’s License; or
- Work permit issued by DOLE (mandatory requirement) if employed in the Philippines; or
- Company ID issued by private entities or institutions registered with or supervised or
regulated either by the BSP, SEC, or IC

Valid IDs include the following:

Primary:
• Philippine Identification Card (PhilID) issued by the Philippine Statistics Authority (PSA)
under the Philippine Identification System (PhilSys)
• Valid Passport
• Driver’s license with Official Receipt
• Unified Multi-Purpose ID
• Digitized BIR TIN Card
• SSS ID
 • GSIS e-Card
• PRC ID
• IBP Lifetime Membership ID
• NBI Clearance
• Work permit issued by DOLE for foreign nationals

Secondary:
• Police Clearance
• Digitized Postal ID
• Voter’s ID
• Tax Identification Number Card
• Barangay Certification
• Senior Citizen Card
• MARINA Professional Identification Card
• OWWA ID
• OFW ID
• Seaman’s book
• Alien Certification of Registration/Immigrant Certificate of Registration
• Government Office and GOCC ID (e.g. AFP, HDMF IDs)
• Certification from NCWDP
• DSWD Certification
• IBP ID
• Phil-Health ID Health Insurance Card ng Bayan
• Company IDs issued by private entities or institutions registered with or supervised or
regulated either by the BSP, SEC or IC”

Foreign Government Issued IDs

• Valid Passport
• Driver’s License
• National ID
• Internal Revenue Service (IRS) ID
• Social Security System (SSS) ID

b. Students who are beneficiaries of remittances/fund transfers and who are not yet of voting age, may
be allowed to present the original and submit a clear copy of one (1) valid photo-bearing school ID
duly signed by the principal or head of the school.

c. Where the customer or authorized signatory is a non-Philippine resident, similar IDs duly issued by
the foreign government where the customer is a resident, or a citizen may be presented.

d. The bank shall require their customers or authorized signatory to submit a clear copy of one (1) valid
ID on a one-time basis only at the commencement of business relationship. They shall require their
clients to submit an updated photo and other relevant information on the basis of risk and
materiality.

e. The bank may classify identification documents based on its reliability and ability to validate the
information indicated in the identification document with that provided by the customer.
f. Whenever it deems necessary, the bank may accept other IDs not enumerated above provided that it
shall not be the sole means of identification.

g. In case the identification documents mentioned above or other identification documents acceptable
to the covered institution do not bear any photo of the customer or authorized signatory, or the
photo bearing ID or a copy thereof does not clearly show the face of the customer or authorized
signatory, the bank may utilize its own technology to take the photo of the customer or authorized
signatory.

It is encouraged that the customer submits at least two valid IDs, one of which must be photo bearing
and with signature.

Face-to-face Contact

No new account shall be opened and created without face-to-face contact and personal interview
between the Bank’s duly authorized personnel.

Updating of Customer Identification Information and Documents based on Materiality and Risk

It is the policy of the Bank to update customer’s identification information and documents at least every
three (3) years. Consistent with the policy and to ensure sustained compliance with BSP Circular 950
subsection X806.3 re: On-going Monitoring of Customers, Accounts and Transactions, branch and
operating units maintaining the accounts have to update the customer information and documents
based on risk and materiality.

The updating of customer information and documents may be triggered by, but not limited to the
following scenarios:

a) Alerts from media, news and Giftsweb system;

b) An unusual activity was identified and EDD was conducted; and
c) Upgrading and downgrading of Customer Risk Rating (CRR)

The aforesaid scenarios are commonly prompted during the review of Large Transaction Report by Sales
and Service Head/Treasury/Trust/Special Assets Management Section - Sales Division/Lending Unit
Designated Officer; Transaction Profile Review by Domestic AML Transaction Monitoring and Analysis
Department (DATMAD); and during the Annual Risk Assessment Review. If after EDD, the results of
evaluation do not warrant filing Unusual Transaction Evaluation Report (UTER), request to the
customer/client to update his/her information with the Bank using the attached updating Customer
Information Form. For customers with no updates the branch shall certify in a call report to the effect
that all information indicated in the CIF file are current and updating is not needed.

However, where additional information cannot be obtained, or any information or document provided is
false or falsified or result of the validation process is unsatisfactory, operating units shall deny banking
relationship with customer without prejudice to the reporting of an Unusual Transaction Evaluation
Report (UTER) to Philippine AML Review Committee for possible reporting of suspicious transaction to
the AMLC when circumstances warrants.
The following are the information for updating:
Individual Juridical Persons
1. Address 1. Official Address
2. Occupation/ Nature of work 2. Articles of Incorporation and By-Laws
3. Contact number or information 3. General Information Sheet
4. Source of fund /Source of Wealth 4. Secretary Certificate of Authorized Signatories and
5. Unexpired Valid ID with Photo signature
6. Citizenship 5. Beneficial Owners & Authorized Signatories (same with
7. Specimen Signature in Signature Card individual document requirements)
6. Signature Cards
7. Regulating Government Agency Certification (i.e. BSP
Certificate and AMLC Certificate for MSBs)
8. Nature of Business
9. Source of fund /Source of Wealth

OFAC-CIF Matching Review – Process and Reporting

The Bank shall conduct screening of all existing customers (CIF) in BBS/BBI against OFAC Watch List
whenever there is an update notified by the US Department of Treasury- Office of the Foreign Asset
Control (OFAC).

The following are the objectives of OFAC-CIF Matching Review:

• to ensure that the Bank does not provide products and services to watch-listed individuals and
entities engaged in financial crimes, illegal activities or terrorism financing identified by the Office of
the Foreign Assets Control (OFAC) under the US Treasury and
• In full compliance with the requirements of BSP Circular 950 Section 806.3 – On-going monitoring of
customers, accounts and transactions.

Watch list Screening

The names of the company, board of directors, shareholders, owners and officers of the remittance
entities, whether in a tie-up or payout arrangement with the Bank must also be screened against Dow
Jones Risk and Compliance Software and the Centralized Watch list System of the Bank by the Account
Officer. For remittance partners initiated by the Head Office, the Account Officer shall refer to the
Domestic AML Third Party Arrangement/FATCA Department the names needed to be screened against
Dow Jones Risk and Compliance Software. The screening performed must be documented with the date
and time of the screening specified.

A name-match should prompt verification by the Account Officer from the partner and in the event of a
positive match, senior management must be informed and approval from the same must be sought.
Ceasing any discussions for a potential remittance partnership must also be considered to protect the
Bank from possibly being used to launder money or finance terrorists.
Electronic Monitoring Systems for Money Laundering

Electronic Monitoring Systems of the Bank are being utilized by the Domestic AML Compliance and
Overseas AML Compliance Departments of the Global Compliance Group primarily in detecting,
monitoring and reporting covered and suspicious transactions. Enhancements, modifications and system
upgrades are handled by the Compliance Systems Support Department also of the Global Compliance
Group in close coordination with the Infrastructure Technology Group and affected business units.

a. Giftsweb EDD

The Bank acquired the Giftsweb EDD System in 2005, the electronic AML monitoring system compliant
with the requirements of BSP Circular 495 issued in 2006. The system has undergone series of system
enhancements and system interfaces from Flexcube Corporate and Retail System, TAPS Trust System,
OPICS Treasury System, Remittance Systems (IRS, GSR, and ARS) and the AML Data Capture System.
These system enhancements resulted to the roll-out of the Giftsweb EDD System to other foreign
branches like PNB New York, PNB Singapore, PNB Tokyo, PNB Hong Kong and PNB London.
The Giftsweb EDD System adopted by the Bank can detect suspicious activity that may ultimately link
to money laundering and terrorist financing activity.

b. Dow Jones Risk and Compliance Software

The Bank subscribed to Dow Jones Risk and Compliance Software for accurate, complete and up-to-
date risk data for robust compliance with anti-money laundering and Know Your Customer regulation.
Dow Jones Watchlist contains data on the relatives and close associates of Politically Exposed Persons,
helping to alert organizations to individuals who may require closer scrutiny. Dow Jones's team of
researchers and analysts update a global collection of law enforcement, government sanction lists and
other information on a daily basis.

c. Centralized Watchlist System (CWS)

The CWS, an internally developed system designed to help the Bank minimize its exposure to risk of
financial crime and to comply with Philippine and international AML-CFT rules and regulations. The
CWS contains the following lists:

1. OFAC-SDN
2. United Nations (UN) Sanction Lists
3. European Union Sanction List
4. Her Majesty Treasury-Bank of England
5. Philippine National Senior Government Officials
6. Internal Watch list
7. Consolidated Sanctions List - maintained by the Office of Foreign Assets Control which contains
the following non-SDN list:
a. Foreign Sanctions Evaders (FSE) List
b. Sectoral Sanctions Identification (SSI) List
c. Palestinian Legislative Council (NS-PLC) List
d. The list of Foreign Financial Institutions Subject to Part 561(The Part 561 List)
e. NON-SDN Iranian Sanctions Act (NS-ISA) List
 8. OFAC/FATF Sanctioned Country List
9. Anti-Social Force List

When to use CWS:

Branches, Offices and Operating Units are required to screen the client’s name, authorized
signatories, purchaser, payee, remitter or beneficiary, against CWS when:
1. Establishing business relationship/opening an account
2. Sale of bank drafts
3. Over the counter payment of remittances
4. FXOTT, RTGS or PDDTS
5. Conducting enhanced due diligence

What to do in case of a “name-match”

In the event of “name match” print the result with date and time and refer to Branch Head or Division
Head for guidance and subject to EDD. If upon further verification of the Branch Head or Division Head
confirmed positive match, the transaction should not proceed. Responsible unit must submit UTR
within 48 hours to RBS-OSD AML Committee for the branches and to Global Compliance Group for
other operating units for endorsement to Philippine AML Review Committee for possible Suspicious
Transaction Reporting (STR). The printed result shall be part of KYC and/or EDD documentation. If “no
match”, indicate in KYC forms accordingly.

In case of positive match vs Senior Government Official /PEP list, the branch or operating shall tag the
account as PEP and shall be subject to EDD and Senior Officers Approval.

In case of name match in CWS with remarks “With Freeze Order”, the following are the actions to be
taken/performed by the branches and HO operating units:

Type Action to be taken

Name + Birthday For Branches refer to RBS-OSD AML
Committee for Verification
Name + Address Same
Name + Date of Birth + Address Courteously decline transaction

In this regard, branches and operating units shall not establish relationship nor transact business with
these individuals or entities unless an AMLC letter confirming the lifting of the FO is presented by the
latter.

Reporting of Covered Transactions

Covered Transaction (CT) is a transaction in cash or other equivalent monetary instrument involving a
total amount in excess of FIVE HUNDRED THOUSAND PESOS (Php 500,000.00) within one (1) banking day.
All covered transactions generated by the Bank’s electronic AML System shall be reported to AMLC in
electronic form within five (5) working days from occurrence thereof, unless the AMLC prescribes a
longer period not exceeding fifteen (15) working days.

Reporting of Suspicious Transactions

Suspicious transactions (ST) are transactions with covered institutions, regardless of the amount
involved, where any of the following circumstances exist:

• There is no underlying legal or trade obligation, purpose or economic justification;

• The client is not properly identified;
• The amount involved is not commensurate with the business or financial capacity of the client;
• Taking into account all known circumstances, it may be perceived that the client's transaction is
structured in order to avoid being the subject of reporting requirements under the AMLA, as
amended;
• Any circumstance relating to the transaction which is observed to deviate from the profile of the
client and/or client's past transactions with the covered institution;
• The transaction is in any way related to an unlawful activity or any money laundering activity or
offense under the AMLA, as amended, that is about to be, is being or has been committed; or
• Any transaction that is similar or analogous to any of the foregoing, such as the relevant transactions
in related and materially-linked accounts, as herein defined.

AML Training and Countering of Terrorist Financing Training Program

It is the policy of the bank to ensure that all its directors, officers and employees wherever located, are
informed and adequately trained in matters covered by the Bank’s Money Laundering and Terrorist
Financing Prevention Program to enable them to fully comply with their obligations and responsibilities
under the AMLA as amended, its Revised Implementing Rules and Regulations, TF Suppression Act and its
Implementing Rules and Regulations, BSP Circulars, Letters, Memoranda and AMLC Resolutions.

Global Compliance Group in close coordination with the Human Resource Group is required to conduct
Anti-Money Laundering (AML) training to all its Employees. On-going education of bank personnel is an
important element in the compliance function to maintain a sound compliance program. The purpose of
the training is to make all personnel aware of the banking laws and regulations as well as the Bank’s
policies and procedures that affect their areas of responsibilities. The number of AML trainings and
frequency will depend on the business needs and priorities of the Bank. All new hires must undergo
compliance and AML awareness training prior assumption of duties while existing employees are
required to participate in refresher courses within a period of 18 to 24 months. AML trainings shall be in
the form of classroom trainings, modular workshops, on-site trainings, branch / unit meetings,
compliance reviews and surveys.
Record Keeping and Retention Period

As required by the AMLA as amended, closed accounts (KYC documents and business correspondences)
shall be preserved and safely stored for at least 5 years from date of closure. If a money laundering case
has been file in Court, records must be retained beyond the 5 year retention period and until it is
confirmed that the case has been finally resolved or terminated by the court.

Customer records and documents

a) Group Heads shall designate at least two (2) officers who will be jointly responsible and
accountable in the safekeeping of all records and documents required to be retained by the AMLA
as amended.
b) The designated officers shall have the obligation to make the customer records and documents
available without delay during BSP regular or special examinations and/or AMLC requests for
customer records.

Designation of Officers shall be:

a. Domestic Branches: Branch Head and 1 Officer
b. Business Units and Support Departments: Department head and 1 Officer

AMLC RULES ON THE IMPOSITION OF ADMINISTRATIVE SANCTIONS UNDER REPUBLIC ACT NO. 9160,
AS AMENDED

The following are the fines (in Philippine Peso) per violation based on the entity size and gravity of
violations:

Violations Large B*

Grave 500,000 these are violations of the specific remedies available to the AMLC in the
pursuit of its mandate and, requirements under the AMLA that are
essential to pending money laundering investigation and prosecution of
cases (Rule V, Section 3.A.)
Major 300,000 these are violations involving total disregard of customer due diligence,
record-keeping, or transaction reporting requirements (Rule V, Section
3.B)
Serious 200,000 these are violations of specific core provisions of the AMLA and that have
great impact on the AMLC’s ability to prevent or counter money
laundering and terrorism financing (Rule V, Section 3.C)
Less 100,000 these are violation of the AMLA and its RIRR that hamper or delay the
Serious exercise of AMLC’s compliance and investigation functions (Rule V,
Section 3.D)
Light 50,000 these are violations of specific provisions of the AMLA and its RIRR that
are necessary for the effective implementation of the AMLA and its RIRR,
but have no immediate impact in the discharge of AMLC’s mandate (Rule
V, Section 3.E)
/updated v. April 2019