A. Anti-Money Laundering/Counter-Terrorism Financing – R.A. No. 1.

Know Your Customer (KYC)/ Customer Due Diligence (CDD)

10365  establish and record the true identity of their clients
based on official documents
Sec. 1. Covered persons:  should inquire to prove that it is a real person and is
1. banks, non-banks, quasi-banks, trust entities, foreign exchange dealing with a legitimate transaction and source of
dealers, pawnshops, money changers, remittance and transfer funds is valid
companies and other similar entities and all other persons and 2. Record-keeping
their subsidiaries and affiliates supervised or regulated by the  maintain and safely store all records of all their
BSP; transactions for 5 years from the transaction dates
2. insurance companies, pre-need companies and all other persons  ensure that said records/files contain the full and true
supervised or regulated by the Insurance Commission identity of the owners or holders of the accounts
3. (i) securities dealers, brokers, salesmen, investment houses and involved in the covered transactions and all other
other similar persons managing securities or rendering services identification documents
as investment agent, advisor, or consultant, (ii) mutual funds, 3. Reporting
close-end investment companies, common trust funds, and other  Covered Transaction Report (CTR) – transaction in
similar persons, and (iii) other entities administering or cash or other equivalent monetary instrument
otherwise dealing in currency, commodities, or financial involving a total amount in excess of Php500,000
derivatives based thereon, valuable objects, cash substitutes and within one banking day
other similar monetary instruments or property supervised or  Suspicious Transaction Report (STR) – suspicious
regulated by the SEC; transactions are transactions, regardless of amount,
4. jewelry dealers in precious metals, who, as a business, trade in where any of the following cirumstances exists:
precious metals, for transactions in excess of one million pesos; a. There is no underlying legal or trade
5. jewelry dealers in precious stones, who, as a business, trade in obligation, purpose or economic
precious metals, for transactions in excess of one million pesos; justification;
6. company service providers which, as a business, provide any of b. The client is not properly identified;
the following services to third parties: (i) acting as a formation c. The amount involved is not commensurate
agent of juridical persons; (ii) acting as (or arranging for another with the business or financial capacity of the
person to act as) a director or corporate secretary of a company, client;
a partner of a partnership, or a similar position in relation to d. Taking into account all known
other juridical persons; (iii) providing a registered office, circumstances, it may be perceived that the
business address or accommodation, correspondence or client’s transaction is structured in order to
administrative address for a company, a partnership or any other avoid being the subject of reporting
legal person to act as a nominee shareholder for another person; requirements under the act;
and, e. Any circumstance relating to the transaction
7. persons who provide any of the following services: which is observed to deviate from the profile
 managing of client money, securities or other assets; of the client and/or the client’s past
 management of bank, savings or securities accounts; transactions with the covered institution;
 organization of contributions for the creation, f. The transaction is in any way related to an
operation, or management of companies; and, unlawful activity or any money laundering
 creation, operation or management of juridical persons activity or offense under this act that is
or arrangements, and buying and selling business about to be, is being or has been committed;
entities or

Obligations imposed upon covered institutions:

 g. Any transaction that is similar, analogous or 2. You can only do business if you create
identical to any of the foregoing. branches/ROHQs/Subsidiaries

4. Compliance with AMLC derivatives – if the AMLC exercises  Question: What entities are covered by localization
supervisory or regulatory powers, the person must obey requirements?
Answer: Remittance and Platform Provider (RPP), E-money
Purpose of laundering: Issuers (EMIs), and Virtual Currency Exchange (VCE)
1. To legitimately use the money
2. Not to subsequently persecuted for tax
D. Investment Houses Law – P.D. 129
B. Securitization Act of 2004 – R.A. 9267
Section 7. Powers. In addition to the powers granted to corporations in
Securitization - act of creating asset back securities for the subsequent general, an Investment House is authorized to do the following:
issue to the public to raise capital 1. Arrange to distribute on a guaranteed basis securities of other
corporations and of the Government or its instrumentalities;
C. Liberalization of Entry of Foreign Banks - R.A. 10641 2. Participate in a syndicate undertaking to purchase and sell,
distribute or arrange to distribute on a guaranteed basis securities
Section 1. Modes of Entry. The Monetary Board may authorize foreign of other corporations and of the Government or its
banks to operate in the Philippine banking system through any one of the following" instrumentalities;
modes of entry: (i) by acquiring, purchasing or owning up to one hundred percent 3. Arrange to distribute or participate in a syndicate undertaking to
(100%) of the voting stock of an existing bank; (ii) by investing in up to purchase and sell on a best efforts basis securities of other
one hundred percent (100%) of the voting stock of a new banking subsidiary corporations and of the Government or its instrumentalities;
incorporated under the laws of the Philippines; or (iii) by establishing branches 4. Participate as soliciting dealer or selling group member in tender
with full banking authority." offers, block sales, or exchange offering or securities; deal in
options, rights or warrants relating to securities and such other
Section 4. Capital Requirements. (i) For Locally Incorporated powers which a dealer may exercise under the Securities Act
Subsidiaries – The minimum capital required for locally incorporated subsidiaries of (Act No. 83, as amended);
foreign banks shall be equal to that prescribed by the Monetary Board for domestic 5. Promote, sponsor, or otherwise assist and implement ventures,
banks of the same category. projects and programs that contribute to the economy's
development;
6. Act as financial consultant, investment adviser, or broker;
(ii) For Foreign Bank Branches – Foreign banks that shall be authorized to 7. Act as portfolio manager, and/or financial agent, but not as
establish branches pursuant to Section 2(hi) of this Act shah permanently assign trustee of a trust fund or trust property as provided for in
capital of an amount not less than the minimum capital required for domestic banks Chapter VII of Republic Act No. 337, as amended;
of the same category. The permanently assigned capital shall be inwardly remitted 8. Encourage companies to go public, and initiate and/or promote,
and converted into Philippine currency. whenever warranted, the formation, merger, consolidation,
reorganization, or recapitalization of productive enterprises, by
The foreign bank branch may open up to five (5) sub-branches as may be providing assistance or participation in the form of debt or
approved by the Monetary Board. Locally incorporated subsidiaries of foreign banks equity financing or through the extension of financial or
pursuant to Section 2(h) of this Act shall have the same branching privileges as technical advice or service;
domestic banks of the same category.” 9. Undertake or contract for researches, studies and surveys on
such matters as business and economic conditions of various
Localization Requirements: countries, the structure of financial markets, the institutional
1. Establish branches/ROHQs/Subsidiaries arrangements for mobilizing investments;
 10. Acquire, own, hold, lease or obtain an interest in real and/or evidences of indebtedness, or by financial leasing of movable as
personal property as may be necessary or appropriate to carry on well as immovable property
its objectives and purposes;
11. Design pension, profit-sharing and other employee benefits Sec. 9. Rights and powers. Financing companies shall have the following
plans; and, powers, in addition to those granted by this Act and by other laws:
12. Such other activities or business ventures as are directly or 1. Engage in quasi-banking and money market operations with the
indirectly related to the dealing in securities and other prior approval of the Bangko Sentral ng Pilipinas;
commercial papers, unless otherwise governed or prohibited by 2. Engage in trust operations subject to the provisions of the
special laws, in which case the special law shall apply. General Banking Act upon prior approval by the Bangko
Sentral ng Pilipinas;
Nothing in this section shall preclude other enterprises not covered by this Decree 3. Issue bonds and other capital instruments subject to pertinent
from engaging in the activities listed under subsections (3) to (11) of this section, rules and regulations of the Bangko Sentral ng Pilipinas;
except as may otherwise be governed by special laws. 4. Rediscount their paper with government financial institutions
subject to relevant laws, rules and regulation;
E. Lending Company Regulation Act of 2007 – R.A. 9474 5. Participate in special loan or credit programs sponsored by or
made available through government financial institutions; and
Lending Companies 6. Provide foreign currency loans and leases to enterprises who
 refers to a corporation engaged in granting loans from its own earn foreign currency by exports or other means, subject to
capital funds or from funds sourced from not more than nineteen existing laws and rules and regulations promulgated by the
persons Bangko Sentral ng Pilipinas.
 not include banking institutions, investment houses, savings and
loan associations, financing companies, pawnshops, insurance
 Investment Houses, Lending Companies, and Financing
companies, cooperatives and other credit institutions already
Companies are subject to the supervision of the SEC
regulated by law
 Investment Houses, Lending Companies, and Financing can now
own 100% shares of a domestic bank; no nationalization
Section 4. Form of Organization. A lending company shall be established
requirement anymore, but there is still a localization
only as a corporation: Provided That existing lending investors organized as single
proprietorships or partnerships shall be disallowed from engaging in the business
 Question: When are Investment Houses Law, Lending Company
of granting loans to the public one year after the date of effectivity of this Act.
Regulation Act, and Financing Company Act under Central
Bank?
No lending company shall conduct business unless granted an authority to operate
Answer: 1) If affiliated or subsidiary of a bank; 2) Has quasi-banking
by the SEC.
license/deposit substitutes 3) Has a trust license for trust activities
F. Financing Company Act of 1996 – R.A. 8556
Difference between Lending and Financing Companies
Lending Companies Financing Companies
Financing Companies Financial capital should be at Financial capital should be at
 corporations, except banks, investment houses, savings and loan least P1,000,000 least P50,000,000
associations, insurance companies, cooperatives, and other Cannot get a quasi-banking Can get a quasi-banking
financial institutions organized or operating under other special Cannot involve trust activities Can involve trust activities
laws, which are primarily organized for the purpose of extending
credit facilities to consumers and to industrial, commercial, or
agricultural enterprises, by direct lending or by discounting or G. Electronic Money Issuers (EMIs) – BSP Circular 649
factoring commercial papers or accounts receivable, or by
buying and selling contracts, leases, chattel mortgages, or other
 Section 2. Definition. E-money shall mean monetary value as represented
by a claim on its issuer, that is – Virtual currency exchange vs E-money Issuer vs FIAT currency
a. electronically stored in an instrument or device; Virtual currency exchange - value is agreed upon by the community that use this
b. issued against receipt of funds of an amount not lesser in value currency.
than the monetary value issued; E-money – good as FIAT; stores cash in digital form
c. accepted as a means of payment by persons or entities other than FIAT currency – backed by the government’s assets and reserves
the issuer;
d. withdrawable in cash or cash equivalent; and,
e. issued in accordance with this Circular
BANKING FINALS POINTERS
Electronic money issuer shall be classified as follows:
a. Banks PRUDENTIAL MEASURES
b. Non-bank financial institutions supervised by the BSP
c. Non-bank institutions registered with the BSP as a money 1. Single Borrowers Limit (SBL) – Section 35 GBL
transfer agent under Section 4511N of the Manual of - Main purpose: Prevent the bank from making excessive loans and
Regulations for Non-Bank Financial Institutions other credit accommodations to a single borrower or corporate group.
The SBL is a damage-control mechanism.
H. Remittance and Transfer Company (RTCs) – BSP Circular 942
- The current SBL is 25% of the net worth of a bank.
Remittance services - performance of services related to movement of o The SBL may be increased by an additional 10% provided
funds from originator (OFW) to a beneficiary that the additional liabilities are adequately secured by trust
receipts, shipping documents, warehouse receipts and
Forms of RTCs: similar documents.
1. Remittance agent – any entity that operates a remittance - Loans extended by banks for projects under the Public-Private
business network Partnership (PPP) Program of the government may have a separate
o Remittance Direct Agent (RDA) – covered by a direct SBL of 25%.
contracted remittance agreement or similar agreement - Loans extended by banks to oil companies which are engaged in
to act in behalf of a third party engaged in remittance energy and power generation may also have an additional 15% SBL.
business
o Remittance Agent Network Provider (RANP) – entity
that provides a network to perform remittance business
2. Remittance Platform Provider (RPP) – any entity that provides a Tier 1 Tier 2
shared or common platform/IT infrastructure and maintains
settlement accounts in order to provide funds for remittance  core capital (e.g. permanent  supplementary capital (e.g.
transactions within its network shareholder equity and disclosed subordinated debt, undisclosed
3. E-money Issuers (EMIs) – any entity authorized by the Bangko reserves) and revaluation reserves)
Sentral which provides money transfer or remittance services  Tier 1 capital includes paid up  Tier 2 must not exceed Tier 1
using electronic stored money value system and similar digital common stock, paid up perpetual capital
financial services and non-cumulative preferred  Upper tier 2 capital consists of
stock, surplus and undivided paid up, perpetual and cumulative
I. Virtual Currency Exchanges – BSP Circular 944
profits of a domestic bank preferred stock, paid up lifetime
Virtual Currency Exchanges (VCE) – any entity that offers services or redeemable preferred stock and
engages in activities that provide facility for the conversion or exchange of BSP approved unsecured
fiat currency to VC or vice versa subordinated debt with a
 minimum original maturity of 10 Subsection X330.1 Exclusions from Individual Ceiling.  The following loans,
years other credit accommodations and guarantees shall be excluded in determining
 Lower tier 2 capital includes BSP- compliance with the individual ceiling. 
approved unsecured debt with a
minimum original maturity of 5 Loans, other credit accommodations and guarantees secured by assets considered as
non-risk by the Monetary Board;
years, deposit for perpetual and
cumulative preferred stock Assets considered as non-risk shall refer to the following:
subscription, and deposit for 1.   Cash;
limited life redeemable preferred 2.   Debt securities issued by the BSP or the Philippine government;
stock subscription 3.   Deposits maintained in the lending bank and held in the Philippines;
4.   Debt securities issued by the U.S. government;
5.   Debt securities issued by central governments, central banks of foreign countries
and multilateral financial institutions such as International Finance Corporation,
2. DOSRI
Asian Development Bank and World Bank, with the highest credit quality given by
- Limits of DOSRI (3) any two internationally accepted rating agencies;
1) Individual Ceiling 6.   Such other assets considered as non-risk by the Monetary Board.
o Total Allowable Outstanding Direct Credit
Accommodations to each director, officer, stockholder, or Loans, other credit accommodations and advances to officers in the form of fringe
his related interest. benefits granted in accordance with existing regulations;
o Which is an amount equivalent to his:
 Unencumbered deposits in the lending bank plus Loans, other credit accommodations and guarantees extended by a cooperative bank
the book value of his paid in capital contribution to its cooperative shareholders;
in the bank.
ANTI-MONEY LAUNDERING ACT
2) Aggregate Ceiling
1. Covered Persons (3)
o The total allowable direct and indirect credit
a. Regulated by the BSP
accommodations to DOSRI.
b. Regulated by the SEC
o 15% of the total portfolio of the bank
c. Regulated by the Insurance Commission
o 100% of the combined capital accounts d. Designated Non-Financial Business Persons
3) Ceiling on Unsecured Loans 2. Primary Responsibilities (at least 2) – LISTED ABOVE
o 30% (70% of credit accommodation must be secured)
COVERED TRANSACTIONS VS. SUSPICIOUS TRANSACTIONS (AMLA
TYPES OF LOANS NOT COVERED BY THE SBL R.A. 9160 as amended)

 Loans secured by obligations of the Bangko Sentral or the G. “Covered transaction” refers to:
Government and those fully guaranteed by the Government; 1. A transaction in cash or other equivalent monetary instrument exceeding Five
 Loans to the extent covered by deposit hold-outs; Hundred Thousand pesos (Php500,000.00)
 Loans under letters of credit to the extent covered by margin 2. A transaction exceeding One Million pesos (Php1,000,000.00) in cases of
deposits; and jewelry dealers, dealers in precious metals and dealers in precious stones.
 Other non-risk items as determined by the Monetary Board.
H. “Suspicious Transaction” refers to a transaction, regardless of amount,
NON-RISK ASSETS (BSP Circular No. 423) where any of the following circumstances exists:
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 an unlawful activity or any money
laundering activity or offense 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.

LOCALIZATION REQUIREMENTS
- Refers to the need to incorporate.
- You can only do business in the Philippines if you create subsidiaries.
- Which entities have a localization requirement?
o Remittance Platform Provider
o E-Money Issuers
o Virtual Currency Exchange