ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 48  October 2024 CPA Licensure Examination

RFBT-13
REGULATORY FRAMEWORK for BUSINESS TRANSACTIONS J.C. DOMINGO  N. SORIANO

BANKING LAWS
SECRECY OF BANK DEPOSITS (RA 1405, AS AMENDED)

PURPOSE OF THE LAW: It hopes to discourage private hoarding and at the same time encourage the people to deposit their
money in banking institutions, so that it may be utilized by way of authorized loans and thereby assist in economic development.

PROHIBITED ACTS: It shall be unlawful:

1. Bank (any official or employee or independent auditor of a bank) - to disclose to any person other than a bank director,
official or employee authorized by the bank, any information concerning deposits.
2. Any person, including the government – to inquire, examine or look into bank deposits or bonds issued by the government.

DEPOSITS COVERED:
1. All deposits of whatever nature with banks or banking institutions in the Philippines, including Trust Accounts.
2. Investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities.

EXCEPTIONS; Peso Deposits: (WIOBMU CARO TEA)

1. When there is a written permission of the depositor or investor
2. Impeachment cases
3. Upon the order of a competent court in cases:
a. of bribery or dereliction of duty of public officials (including plunder)
b. Where the money deposited or invested is the subject of litigation
c. Involving unexplained wealth under RA 3019, or the Anti-Graft and Corrupt Practices Act.
4. Upon inquiry by the Commissioner of BIR for the purpose of determining the net estate of a deceased depositor
5. Upon the order of a competent court or in proper cases by the AMLC where there is probable cause of money laundering
and in some instances even without court order
6. Reports:
a. Disclosure to the Treasurer of the Philippines for unclaimed balances under the Unclaimed Balances Act (RA 3936)
b. Report of banks to AMLC of covered and/or suspicious transactions.
7. The Ombudsman has the power to issue subpoena and subpoena duces tecum, take testimony in any investigation or
inquiry, as well as examine and access bank accounts and records. The power of the Ombudsman to subpoena deposit
information of a government official may be exercised when the following conditions concur: (1) there must be a case
pending before a court of competent jurisdiction; (2) the account must be clearly identified; (3) the inspection must be
limited to the subject matter of the pending case; and (4) the bank personnel and the account holder must be notified to
be present during the inspection.
8. Upon order of the CA, examination by law enforcement officers in terrorism cases under the Human Security Act of 2007
(RA 9372)
9. Examination is made:
a. In the course of a special or general examination of bank and is specifically authorized by the Monetary Board (BSP)
after being satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has been or is
being committed and that is necessary to look into the deposit to establish such fraud or irregularity.
b. By the Philippine Deposit Insurance Commission (PDIC) who may inquire into bank deposits when there is a
finding of unsafe or unsound banking practices.
c. By the Commission on Audit (COA) who is authorized to examine and audit government deposits pertaining to the
revenue and receipts of, and expenditures or uses of funds and properties, owned or held in trust by, or pertaining to,
the Government or any of its subdivisions, agencies or instrumentalities, including government-owned and controlled
corporations with original charters.
d. By the Presidential Commission on Good Government (PCGG) who, in the conduct of its investigations to recover
ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates
and close associates, may issue subpoenas requiring the attendance and testimony of witnesses and/or the production
of books, papers, contracts, records, statement of accounts and other documents.
10. Examination is made by an independent auditor hired by the bank to conduct its regular audit provided that the
examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank

EXCEPTIONS for Foreign Currency Deposits (FOREIGN CURRENCY DEPOSIT ACT): foreign currency deposits in banks
are likewise absolutely confidential and cannot be disclosed, except:
1. When there is written consent of depositor under Section 8 of the Foreign Currency Deposits Act (RA 6426)
2. Under Section 11 of the Anti-Money Laundering Act (probable cause established that it is related to an unlawful activity
as defined or money laundering)
3. Under Section 27 and 28 of the Human Security Act (existence of probable cause in anti-terrorism cases and those
involving persons charged with or suspected of the crime of terrorism or conspiracy to commit terrorism, judicially declared
and outlawed terrorist organization, association, or group of persons, or member of such organization, association, or group
of persons)
4. Examination by the BSP, PDIC, PCGG, COA and Independent Auditor.

GARNISHMENT: Bank accounts may be garnished by the creditors of the depositor. In garnishment, there is no violation of
the bank secrecy law since the amount of the deposit is not actually disclosed.

Deposits exempt from garnishment:

1. Foreign currency deposits, Section 8 of RA 6426 (except for transient foreigners)
2. Those exempt under Rules of Court

Penalties for violation

Peso Deposits Foreign Currency Deposits

Imprisonment Not to exceed 5 years 1 to 5 years
Fine Not to exceed P20,000 P5,000 to P25,000

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PDIC ACT (RA 3591, AS AMENDED)

Functions: to act as
1. Deposit Insurer – the PDIC shall promote and safeguard the interests of the depositing public by way of providing
permanent and continuing insurance coverage on all insured deposits.
2. Co-regulator of banks – as a bank regulator, the PDIC is empowered to examine and investigate banks.
3. Receiver and liquidator of closed banks – the PDIC as receiver shall control, manage and administer the affairs of the
bank.

INSURED DEPOSITS: Amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation
of the depositor to the insured bank as of the date of closure, but not to exceed P500,000.

Coverage: The deposit liabilities of any bank or banking institution, which is engaged in the business of receiving deposits as
herein defined on the effective date of the PDIC Act, or which thereafter may engage in the business of receiving deposits, shall
be insured with the PDIC.

Deposit accounts not entitled to payment: (SHA OU2I)

1. Deposit products that resulted from splitting of deposit.

Splitting of Deposit – occurs whenever:

a. A deposit account with an outstanding balance more than P500,000 is broken down and transferred to two or more
accounts in the name of persons or entities who have no beneficial ownership in the transferred deposits in their names
b. within 120 days immediately preceding or during a bank-declared bank holiday or immediately preceding a closure
order issued by the Monetary Board
c. for the purpose of availing the maximum deposit insurance coverage.

This is considered a criminal act punishable by imprisonment of not less than 6 years but not more than 12 years or a fine
not less than P50,000 but not more than P10,000,000, or both, at the discretion of the court.

2. Deposit products or money placements by the head office of a foreign bank in its branch in the Philippines because
there is only one entity.
3. Deposits that are determined to be the proceeds of an unlawful activity as defined under RA 9160 or the Anti-Money
Laundering Act, as amended
4. Deposits payable in a place outside the Philippines (like those in foreign branches)
5. Deposit accounts or transactions which are unfunded and that are fictitious or fraudulent
6. Deposit accounts or transactions constituting and/or emanating from, unsafe and unsound banking practice/s, as
determined by PDIC, in consultation with BSP, after due notice and hearing, and publication of a cease and desist order
issued by PDIC against such deposit accounts or transactions.
7. Investment products such as bonds and securities, trust accounts and other similar instruments

DETERMINATION OF THE AMOUNT DUE

Per Bank: the entitlement to deposit insurance is on a per bank basis. Such that if X has a deposit with A Bank and B Bank
and both banks closed, X is entitled to P500,000 insurance coverage for each bank.

Per Depositor, Per Capacity Rule: all deposits in the bank maintained in the same right and capacity for his benefit either in
his own name or in the name of others shall be added together in determining the insured amount, and regardless of the type
of account.

Accounts “By”, “In Trust For (ITF)” or “For the Account of (FAO)” another person:
1. In a “By” account (Juan by Pedro) – Juan is the depositor.
2. In an “ITF” account (Juan ITF Pedro) – Pedro is the depositor.
3. In a “FAO” account (Juan FAO Pedro) – Pedro is the depositor.

Joint accounts: A joint account regardless of whether the conjunction “and”, “or”, “and/or” is used shall be insured
separately from any individually-owned deposit account, provided that:
1. If the account is held jointly by two or more natural persons, or by two or more juridical persons or entities, the maximum
insured deposit shall be divided into as many equal shares as there are individuals, juridical persons or entities, unless a
different sharing is stipulated in the document of deposit, and
2. If the account is held by a juridical person or entity jointly with one or more natural persons, the maximum insured deposit
shall be presumed to belong entirely to such juridical person or entity.

Provided, further, that the aggregate of the interest of each co-owner over several joint accounts, whether owned by the same
or different combinations of individuals, juridical persons or entities, shall likewise be subject to the maximum insured deposit
of P500,000.

Period for the depositor to file and enforce claim:

1. Period to file claim – 2 years from actual takeover of the closed bank;
2. Period to enforce claim – 2 years after the 2-year period to file a claim

Proof of claim: The PDIC, in its discretion, may require proof of claims to be filed before paying the insured deposits, and that
in any case where the PDIC is not satisfied as to the validity of a claim, it may require final determination of a court of competent
jurisdiction before paying such claim.

Effects of non-filing or non-enforcement of claim within the periods above:

1. All rights of the depositor against the PDIC with respect to the insured deposit shall be barred,
2. All rights of the depositor against the closed bank and its shareholders or the receivership estate to which PDIC may
have become subrogated, shall thereupon revert to the depositor.
3. PDIC shall be discharged from any liability on the insured deposit.

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Modes of payment: made as soon as possible either:
1. By cash
2. By making available to each depositor a transferred deposit in another insured bank in an amount equal to insured deposit
of such depositor

Effect of payment: PDIC shall be subrogated to all rights of the depositor against the closed bank to the extent of such
payment. Such subrogation shall include the right on the part of PDIC to receive the same dividends and payments from the
proceeds of the assets of such closed bank and recoveries on account of stockholders’ liability as would have been payable to
the depositor on a claim for the insured deposits, but such depositor shall retain his claim for any uninsured portion of his
deposit.

Under Section 21 of the PDIC Charter, payment of an insured deposit to any person by PDIC shall discharge the PDIC, and
payment of transferred deposit to any person by the new bank or by an insured bank in which a transferred deposit has been
made available shall discharge PDIC and such new bank or other insured bank, to the same extent that payment to such person
by the closed bank would have discharged it from liability for the insured deposit.

Preference: All payments by PDIC of insured deposits in closed banks partake of the nature of public funds, and as such, must
be considered a preferred credit similar to taxes due to the National Government in the order of preference under Article
2244(9) of NCC, provided further, that this preference shall be likewise effective upon liquidation proceedings already
commenced and pending as of the approval of PDIC Act, where no distribution of assets has been made.

Period for the PDIC to settle claim: 6 months from the date of filing of the claim.

Failure to settle the claim within 6 months from the date of filing of claim for insured deposit, where such failure was due to
grave abuse of discretion, gross negligence, bad faith or malice, shall upon conviction, subject the directors, officers or
employees of PDIC responsible for the delay, to imprisonment from 6 months to one year.

Except: that the period shall not apply if the validity of the claim requires the resolution of issues of facts and/or law by another
office, body or agency.

TRUTH IN LENDING ACT

(RA No. 3765, AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH EXTENSIONS
OF CREDIT)

DECLARATION OF POLICY: It is hereby declared to be the policy of the State to protect its citizens from a lack of
awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the
uninformed use of credit to the detriment of the national economy.

Under BSP Circular No. 755 Series of 2012, it is provided that the objective of transparent pricing is not to set limits on rates,
but rather to make such rates more understandable, comparable and known to the client. Transparent pricing will facilitate
healthy competition among credit providers as clients are better able to compare products and services.

REQUIRED INFORMATION: Any creditor shall furnish to each person to whom credit is extended, prior to the consummation
of the transaction, a clear statement in writing setting forth, to the extent applicable and in accordance with rules and
regulations prescribed by the Board, the following information:
1. the cash price or delivered price of the property or service to be acquired;
2. the amounts, if any, to be credited as down payment and/or trade-in;
3. the difference between the amounts set forth under clauses (1) and (2);
4. the charges, individually itemized, which are paid or to be paid by such person in connection with the transaction but
which are not incident to the extension of credit;
5. the total amount to be financed;
6. the finance charge expressed in terms of pesos and centavos; and
7. the percentage that the finance charge bears to the total amount to be financed expressed as a simple annual rate
on the outstanding unpaid balance of the obligation.

Under Section 5 of BSP Circular No. 755, Series of 2012, the following are the required information to be disclosed:
a. the total amount to be financed;
b. the finance charge expressed in terms of pesos and centavos
c. the net proceeds of the loan; and
d. the percentage that the finance charge bears to the total amount to be financed expressed as a simple annual rate
or an effective annual interest rate (EIR). EIR may also be quoted as a monthly rate in parallel with the quotation of
the contractual rate.
All registered CGEs shall furnish each borrower with a copy of the disclosure statement, prior to the consummation of the
transaction.

The disclosure statement shall be a required attachment to the loan contract and the customer has a right to demand a copy
of such disclosure.

Loan Documents and Marketing Materials: All loan-related documents shall show repayment schedules in a manner consistent
with BSP Circular No. 755, Series of 2012. Marketing materials and presentations shall likewise be consistent with the said
circular.

Posters: In BSP Circular 730, Series of 2011, it provides that Banks shall post in conspicuous places in their principal place of
business and branches, the information contained in the revised format of disclosure statement. The posters shall include an
explicit notification that the disclosure statement is a required attachment to the loan contract and the customer has a right to
demand a copy of such disclosure. (Section 4)

PENALTIES:
a. Any creditor who in connection with any credit transaction fails to disclose to any person any information in violation of
this Act or any regulation issued thereunder shall be liable to such person whichever is greater between:

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i. in the amount of P100 or
ii. in an amount equal to twice the finance charged required by such creditor in connection with such transaction, upto
a maximum of P2,000 on any credit transaction).

Prescriptive period: Action to recover such penalty may be brought by such person within one year from the date of
the occurrence of the violation, in any court of competent jurisdiction.

Costs: In any action under this subsection in which any person is entitled to a recovery, the creditor shall be liable for
reasonable attorney's fees and court costs as determined by the court.

Except as specified in subsection (a) above, nothing contained in this Act or any regulation contained in this Act or any
regulation thereunder shall affect the validity or enforceability of any contract or transactions.

b. Any person who willfully violates any provision of this Act or any regulation issued thereunder shall be subject to a
i. Fine of not less than P1,000 or more than P5,000 or
ii. Imprisonment for not less than 6 months, nor more than one year or both.

No punishment or penalty provided by this Act shall apply to the Philippine Government or any agency or any political subdivision
thereof.

A final judgment hereafter rendered in any criminal proceeding under this Act to the effect that a defendant has willfully violated
this Act shall be prima facie evidence against such defendant in an action or proceeding brought by any other party against
such defendant under this Act as to all matters respecting which said judgment would be an estoppel as between the parties
thereto.

ANTI-MONEY LAUNDERING ACT (RA 9160, AS AMENDED BY RA 9194, 10365 and 11521)

MONEY LAUNDERING: a crime committed by any person knowing that any monetary instrument or property represents,
involves or relates to, the proceeds of any unlawful activity:
1. Transacts or attempts to transact 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 money laundering offenses referred to above;
5. Aids, abets, assists in or counsels the commission of the money laundering offenses referred to above (1 to 3)
6. Performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to
above (1 to 3);
7. Those committed by failure to report to the Anti-Money Laundering Council (AMLC) by any covered person knowing
that a covered or suspicious transaction is required under the Anti-Money Laundering Law to be reported thereto.

STAGES OF MONEY LAUNDERING:

1. Placement - The launderer inserts dirty money into a legitimate financial institution
2. Layering - Involves sending money through various financial transactions to change its form and make it more difficult to
follow.
3. Integration - At this stage the money re-enters mainstream economy in legitimate-looking form, appearing to have come
from legitimate transaction.

UNLAWFUL ACTIVITIES: Any act or omission or series or combination thereof involving or having relation to the following:
1. Kidnapping for ransom under Article 267 of RPC
2. Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 and 16 of Comprehensive Dangerous Drugs Act (RA 9165)
a. Importation of prohibited drugs
b. Sale of prohibited drugs
c. Administration of prohibited drugs
d. Distribution of prohibited drugs
e. Transportation of prohibited drugs
f. Maintenance of a den, dive, or resort for prohibited users
g. Manufacture of prohibited drugs
h. Possession of prohibited drugs
i. Use of prohibited drugs
j. Cultivation of plants which are sources of prohibited drugs
k. Culture of plants which are sources of prohibited drugs
3. Section 3, paragraphs B, C E, G, H and I of RA 3019, or the Anti-Graft and Corrupt Practices Act
a. Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit for himself or for any other
person in connection with contract or transaction between the Government and any party, wherein the public officer
in his official capacity has to intervene under the law
b. Directly or indirectly requesting or receiving any gift, present, or other pecuniary or material benefit, for himself or for
another, from any person for whom the public officer, in any manner or capacity, has secured or obtained, or will
secure or obtain, any government permit or license, in consideration for the help given or to be given
c. Causing any undue injury to any party, including the government, or giving any private party any unwarranted benefits,
advantage, or preference in the discharge of his official, administrative, or judicial functions through manifest partiality,
evident bad faith, or gross inexcusable negligence
d. Entering, on behalf of the government, into any contract or transaction manifestly and grossly disadvantageous to the
same, whether or not the public officer profited or will profit thereby
e. Directly or indirectly having financial or pecuniary interest in any business contract or transaction in connection with
which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law
from having any interest
f. Directly or indirectly becoming interested, for personal gain, or having material interest in any transaction or act
requiring the approval of a board, panel, or group of which he is a member, and which exercise of discretion in such
approval, even if he votes against the same or he does not participate in the action of the board, committee, panel,
group

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4. Plunder under RA 7080
5. Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of RPC
a. Robbery with violence or intimidation of persons
b. Robbery with physical injuries, committed in an uninhabited place and by a band, or with use of firearms on a street,
road, or alley
c. Robbery in an uninhabited house or public building or edifice devoted to worship

Note: Theft, or the taking of personal property with intent to gain but without violence or intimidation of persons or force
upon things, is not an unlawful activity under the AMLA. Unless what was stolen are coconuts in a coconut farm, fish in a
fish pond, mail matter, vehicle or cattle, or the crime was committed with abuse of confidence – in which cases, it will be
Qualified Theft, which is covered as an unlawful act; or if the thing stolen was sold, in which case a violation of the Anti-
Fencing Law is committed, which is likewise covered as an unlawful activity.

6. Jueteng and masiao under PD 1602

7. Piracy on the high seas under RPC and PD 532
a. Piracy on the high seas
b. Piracy in inland Philippine waters
c. Aiding and abetting pirates and brigands
8. Qualified theft under Article 310 of RPC
9. Swindling (or Estafa) under Article 315 of RPC
10. Smuggling under RA 455 and RA 1937
11. Violations of Electronic Commerce Act (RA 8792)
12. Hijacking and other violations under RA 6235
13. Destructive arson and murder as defined under RPC
14. Terrorism and conspiracy to commit terrorism as defined and penalized under Sections 3 and 4 of Republic Act No.
9372
15. 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
16. 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
17. Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216 of the Revised Penal Code, as
amended
18. Malversation of Public Funds and Property under Articles 217 and 222 of the Revised Penal Code, as amended
19. Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the Revised Penal Code, as amended
20. Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-Trafficking in Persons Act of 2003
21. 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
22. Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise known as the Philippine Fisheries
Code of 1998
23. Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known as the Philippine Mining Act of
1995
24. 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
25. Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National Caves and Cave Resources
Management Protection Act
26. Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of 2002, as amended
27. Violations 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
28. Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing Law
29. Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act
of 1995, as amended by Republic Act No. 10022
30. Violation of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines
31. Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo and Video Voyeurism Act of 2009
32. Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child Pornography Act of 2009
33. 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
34. Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the Securities Regulation
Code of 2000;
35. Violation of Sec. 19(a)(3) of RA No. 10697 (Strategic Trade Management Act) [To engage in any activity
prohibited by, or in contravention of, any orders or regulations issued by the NSC-STMCom to implement the
provisions of this Act] (as amended by RA No. 11521, effective January 31, 2021)
36. Violations of Section 254 of Chapter II of Title X of the NIRC (Tax Evasion), where the basic tax in the final
assessment is in excess of P25M per taxable year for each tax type with finding of probable cause; willful
misrepresentation or malicious intent; AMLC cannot institute forfeiture proceedings if the same has been
recovered by the BIR (as amended by RA No. 11521, effective January 31, 2021)
37. Felonies or offenses of a similar nature that are punishable under the penal laws of other countries. (as amended by
RA No. 10365)

COVERED ENTITIES:
1. Banks, offshore banking units, quasi-banks, trust entities, non-stock savings and loan associations, pawnshops, and all
other institutions and their subsidiaries and affiliates supervised and/or regulated by the BSP
2. Other entities administering or otherwise dealing in currency, commodities, or financial derivatives based thereon, valuable
objects, cash substitutes, and other similar monetary instruments or property supervised and/or regulated by the SEC
3. Insurance companies, insurance agents, insurance brokers, professional reinsurers, reinsurance brokers, holding
companies, holding company systems, and all other persons and entities supervised and/or regulation by the
Insurance Commission
4. Securities dealers, brokers, salesmen, associated persons of brokers or dealers, investment houses, investment agents
and consultants, trading advisors, and other entities managing securities or rendering similar services
5. Mutual funds or open-end investment companies or issuers and other similar entities

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6. Jewelry dealers in precious metals/stones, who as, a business, trade in precious metals/stones, for transactions in excess
of P1M
7. Foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar
entities
8. Casinos, including internet and ship-based casinos with respect to their casino cash transactions related to their gaming
operations. (as amended by RA No. 10927)
9. Company service providers to 3rd parties including CPAs and Lawyers
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 legal person or arrangement; and
d. acting as (or arranging for another person to act as) a nominee shareholder for another person.
10. Person providing the following services including CPAs and lawyers
a. managing of client money, securities or other assets;
b. management of bank, savings or securities accounts;
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.
11. Real Estate Developers and Brokers (as amended by RA No. 11521, effective January 31, 2021)
12. Offshore Gaming Operators and their Service Providers (as amended by RA No. 11521, effective January 31,
2021)

Lawyers and accountants: acting as independent legal professionals are NOT covered with respect to privileged information
covered by confidentiality and attorney-client relationship.

Obligations of covered institutions:

1. Customer identification: Covered institutions shall establish and record the true identity of its clients based on official
documents.
2. Record keeping: All records of all transactions of covered institutions shall be maintained and safely stored for 5 years
from the date of transactions.
3. REPORTORIAL REQUIREMENTS:
a. Covered Transactions - covered institutions shall report to the AMLC all covered transactions within 5 working
days from occurrence thereof, unless the AMLC prescribes a longer period not exceeding 15 working days. Conviction
of the unlawful activity is not necessary before a report is made.

COVERED TRANSACTION: a transaction in cash or other equivalent monetary instrument involving a total amount
in excess of P500,000 within one banking day.

For casinos, a single casino cash transaction in excess of P5,000,000 or its equivalent in any other currency. (as
amended by RA No. 10927)

For real estate developers/brokers, a single cash transaction involving an amount in excess of P7,500,000 or its
equivalent in any other currency. (as amended by RA No. 11521, effective January 31, 2021)

b. Suspicious Transactions - covered persons to promptly file suspicious transaction reports within the next working
day from occurrence thereof, which for purposes of the Rule, shall be the date of establishment of suspicion or
determination of the suspicious nature of the transaction. (as amended by Sec. 9 of 2020 IRR amending Sec. 2.2 of
2018 IRR, which originally provided: 5 working days from occurrence as well, “Occurrence” meaning the time the
covered entity has determined that the transaction is suspicious, which should not exceed 10 days from the date of
the transaction).

SUSPICIOUS TRANSACTION: a transaction with covered institutions, regardless of the amount involved, where any
of the following circumstances exist:
i. There is no underlying legal or trade obligation, purpose or economic justification
ii. The client is not properly identified
iii. The amount involved is not commensurate with the business or financial capacity of the client
iv. 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 Act
v. Any circumstances 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 institution
vi. The transaction is in any way related to an unlawful activity or offense under this Act that is about to be, is being
or has been committed
vii. Any transaction that is similar or analogous to any of the foregoing

• Should a transaction be determined to be both a covered and a suspicious transaction, it shall be reported as a
suspicious transaction.
• When reporting, it shall not be considered a violation of bank secrecy laws and similar laws. It shall be prohibited from
communicating, directly or indirectly, in any manner or by any means, to any person the fact that a covered or
suspicious transaction report was made, the content thereof, or any other information in relation thereto.

Safe Harbor: No administrative, criminal, or civil proceedings, shall lie against any person for having made a transaction report
in the regular performance of his duties and in good faith, whether or not such results in any criminal prosecution under
Philippine laws.

ANTI-MONEY LAUNDERING COUNCIL: composed of:

1. Chairman: BSP Governor
2. Members:
a. Commissioner of Insurance Commission
b. Chairman of SEC

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Freezing of Monetary Instrument or Property: The Court of Appeals, upon application ex parte by AMLC and after
determination that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity,
may issue a freeze order which shall be effective immediately (unless extended by the Court. Maximum period is 6 months)

Considering the intricate and diverse web of related and interlocking accounts pertaining to the monetary instruments or
properties that any person may create in the different covered institutions, their branches and/or other units, AMLC may apply
to freeze monetary instruments or properties in the names of the reported owners/holders, and monetary instruments or
properties named in the application of the AMLC, including all other related web of accounts.

Related Web of Accounts are those accounts, the funds and sources of which originated from and/or are materially linked to the
monetary instruments or properties subject of the freeze orders.
Authority to inquire into bank deposits: The AMLC may inquire into deposits upon order of the court when there is probable
cause that the deposits are related to the crime or unlawful activities.

However, a court order is not necessary when the offense or unlawful activity involved is any of the following:
1. Kidnapping for ransom
2. Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15 and 16 of Comprehensive Dangerous Drugs Act (RA 9165)
3. Hijacking and other violations under RA 6235, destructive arson and murder, including those perpetrated by terrorists
against non-combatant persons and similar targets
4. Terrorism and conspiracy to commit terrorism as defined under the Human Security Act.

Inquiry into deposits may be availed of even in the absence of a pre-existing criminal case under the same law. However, the
order authorizing bank inquiry cannot be issued ex parte.

MULTIPLE CHOICE QUESTIONS

1. Juan Dela Cruz maintains the following accounts with ABC Bank:

Account Name Type of Deposit Balance

Juan Dela Cruz Savings P600,000.00
Juan Dela Cruz AND Maria dela Cruz Demand 500,000.00
Juan Dela Cruz OR JDC Corporation Time 800,000.00

How much is the total insured deposit of Juan dela Cruz?

A. P300,000 C. P750,000
B. P500,000 D. P1,000,000

2. Insured deposit means the net amount due to any depositor for deposits in an insured bank but should not exceed:
A. P1,000,000 C. P250,000
B. P500,000 D. P300,000

3. Under the PDIC Law, a joint account held by a juridical person or entity jointly with a natural person shall be presumed
to belong to the:
A. Juridical person C. Both the juridical and natural persons
B. Natural person D. One who first files the claim

4. The proceeds of the insurance shall be paid by the PDIC to the depositor whenever:
A. The depositor files the claim with supporting documents
B. The insured bank submits the list of qualified depositors
C. The insured bank is closed on account of insolvency
D. The order from the BSP to pay is issued

5. The claim must be filed within how many years from the actual takeover by the receiver?
A. 5 B. 3 C. 2 D. 1

6. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued
by the Government of the Philippines, its political subdivisions and its instrumentalities, are considered __ and may not
be examined, inquired or looked into by any person, government official, bureau or office.
A. Totally confidential C. Definitely confidential
B. Generally confidential D. Absolutely confidential

7. In order for a depositor or investor to waive the secrecy of his deposits and/or investments, his waiver must be:
A. In writing
B. Made orally or in writing
C. Communicated as soon as possible to the bank manager
D. Made orally only

8. The secrecy of foreign currency deposits is not applicable in which of the following (1) when there is written consent of
depositor, (2) under Section 11 of the Anti-Money Laundering Act, and (3) under Sections 27 and 28 of the Human Security
Act.
A. 1 and 2 only C. 2 and 3 only
B. 1 and 3 only D. All of three

9. There is no secrecy of bank deposits when the banks report to the Anti-Money Laundering Council the following transaction/s:
A. Covered only
B. Suspicious only
C. Covered and/or suspicious
D. None can be reported without violating the secrecy of bank deposits

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10. There is no secrecy of bank deposits if ordered by the __, the examination by law enforcement officers in terrorism
cases.
A. Regional Trial Court C. Municipal Trial Court
B. Court of Appeals D. Supreme Court

11. Who may inquire into the bank deposits and investment for the purpose of determining the net estate of a deceased
depositor and investor?
A. Commissioner of Internal Revenue
B. Assistant Commissioner of Internal Revenue
C. BIR Regional Director
D. BIR Examiner

12. Which court can order the disclosure of bank deposits in cases where the money deposited or invested is the subject of
litigation?
A. Court of Appeals C. Supreme Court
B. Regional Trial Court D. Any competent court

13. Suspicious transactions refer to transactions with covered institutions, regardless of the amount involved, where any of
the following circumstances exist:
A. No underlying legal or trade obligation, purpose or economic justification
B. Client is properly identified
C. Amount involved commensurate with client’s business or financial capacity
D. Based on all known circumstances, it may be perceived that client’s transaction is not
structured in order to avoid being subject of reporting requirements

14. Jewelry dealer is a covered institution if it deals in precious metals, who as a business or trade in excess of:
A. P10,000,000 C. P1,000,000
B. P5,000,000 D. P500,000

15. A covered person is obligated to keep records for how many years?
A. 5 B. 4 C. 3 C. 2

16. A covered person is obligated to report covered transactions to AMLC within how many days from occurrence?
A. 5 working days C. 7 working days
B. 5 calendar days D. 7 calendar days

17. The AMLC can prescribe a different period for reporting covered and/or suspicious transactions to AMLC as long as it does
not exceed:
A. 10 working days C. 15 working days
B. 10 calendar days D. 15 calendar days

18. Which professionals are not required to report covered and/or suspicious transactions if the relevant information was
obtained in circumstances where they are subject to professional secrecy or legal professional privilege?
A. Lawyers and accountants C. Accountants only
B. Lawyers only D. All professionals are required

19. Should a transaction be determined to be both a covered transaction and a suspicious transaction, the covered institution
shall be required to report the same as a:
A. Covered transaction
B. Suspicious transaction
C. Both a suspicious and covered transaction
D. At the election of the covered institution

20. All cases on money laundering shall be within the jurisdiction of:
A. Regional Trial Courts (RTC) C. Sandiganbayan (SB)
B. Court of Appeals (CA) D. Court of Tax Appeals (CTA)

21. Acts of money laundering committed by public officers, and private persons in conspiracy with such public officers shall be
within the jurisdiction of:
A. Regional Trial Courts (RTC) C. Court of Appeals (CA)
B. Sandiganbayan (SB) D. Court of Tax Appeals (CTA)

22. It is an extraordinary and interim relief issued to prevent the dissipation, removal, or disposal of properties that are
suspected to be the proceeds of, or related to, unlawful activities:
A. Status quo ante order C. Writ of injunction
B. Temporary restraining order D. Freeze order

23. The power to freeze accounts is vested unto:

A. AMLC C. Court of Tax Appeals (CTA)
B. Court of Appeals (CA) D. Supreme Court (SC)

24. What are the requisites for issuance of freeze order?

A. Application ex parte by AMLC only
B. Determination of probable cause by CA only
C. Application ex parte by AMLC and determination of probable cause by CA
D. Application ex parte by AMLC and determination of probable cause by AMLC

25. Which of the following is not a member of the AMLC?

A. The PDIC President B. The BSP Governor C. The SEC Chairman D. The Insurance Commissioner

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26. A freeze order shall be effective immediately for a period not to exceed:
A. 6 months B. 3 months C. 1 month D. 20 ays

27. A freeze order may be extended for a period not exceeding:

A. 6 months B. 3 months C. 1 month D. 1 year

28. Who serves as Chairman of the AMLC?

A. SEC Chairman C. Insurance Commission Chairman
B. BSP Governor D. DOF Secretary

29. AMLC may conduct an examination of bank accounts without a court order in cases involving:
A. Kidnapping for ransom C. Plunder
B. Drug possession D. Robbery and extortion

30. Under the Truth in Lending Act, the following are required information to be disclosed, except:
A. the total amount to be financed;
B. the finance charge expressed in terms of pesos and centavos
C. the net proceeds of the loan
D. None of the choices is an exception

31. In case of failure to disclose any information in violation of the Truth in Lending Act, the creditor shall be liable for:
A. P100 or twice the amount of finance charged (upto a maximum of P2,000), whichever is greater
B. P1,000 or twice the amount of finance charged (upto a maximum of P2,000), whichever is greater
C. P100 or twice the amount of finance charged (upto a maximum of P1,000), whichever is greater
D. P1,000 or twice the amount of finance charged (upto a maximum of P1,000), whichever is greater

1. C 12. D 22. D
2. B 13. A 23. B
3. A 14. C 24. C
4. C 15. A 25. A
5. C 16. A 26. A
6. D 17. C 27. A
7. A 18. A 28. B
8 D 19. B 29. A
9. C 20. A 30. D
10. B 21. B 31. A
11. A

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