ASSOCIATION OF TAXATION AND LAW STUDENTS

BRILLIANCE, EXCELLENCE, AND SUPERIORITY HONORS’ SOCIETY

HIYAS NG SILANGAN HONORS’ SOCIETY
UNIVERSITY OF THE EAST - CALOOCAN A.Y. 2023-2024
RFLIB - 1ST SEMESTER PRELIM EXAM REVIEWER

CONSUMER PROTECTION ACT ● requirements as to method of sampling, test, and

The Consumer Act of the Philippines (Republic Act codes to check the quality of product
No. 7394) is a law that protects consumers from unfair, ● precautions in storage, transporting, and
deceptive, and unconscionable sales acts and practices. packaging
It also establishes standards for product safety and quality, ● marked by clear and adequate safety warnings or
instructions following the
and requires businesses to provide consumers with
accurate information about their products and services. In the absence of a standard, the dep’t must form
The Consumer Act applies to all businesses that sell specialized technical committees to formulate and
goods or services to consumers in the Philippines, develop the standard where these committees shall
regardless of size or industry. It also covers online sales and consult with the private sector where this private sector
may, in his own initiative, develop its own quality and
transactions.
safety standards.
Consumer Product Quality and Safety
Injurious, Dangerous, and Unsafe Products (IDU)
Duty of the State: When a product is considered or has high probability
● Develop and provide safe and quality standards that it will become IDU by the initiative of the dep’t or
● Assist the consumers in evaluating the quality, safety, petition of a consumer, the dep’t must make the
performance, and comparative utility appropriate order for the recall, prohibition, or seizure of
● Protect the public against unreasonable risks the products from public sale/distribution AFTER due
associated with the product notice and hearing.
● Assure the public of the consistency of the
The ban on the sale and distribution shall stay until such
standardized product.
time that its safety can be assured or measured.
Additional powers, functions, and duties of the dep’t
● Administer & supervise the implementation In case then product has been found to be substandard
● Undertake researches, develop and establish or materially defective only, the dep’t must notify the
standards in coordination with entities closely manufacturer, distributor, or seller of the defect where
associated with the product they must
● Inspect and analyze product ● give notice to the public regarding this defect or
● Levy, assess, collect, and retain fees as necessary to failure to comply with the standard
cover cost of inspection, certification, analysis, and ● notice to each distributor or retailer of such product
test of samples
● Investigate the cause of and maintain a record of Where the dep’t must order the distributor or seller to
product-related death, illness, injuries give the REMEDIES to the injured person
● Accredit independent, competent non-gov’t bodies ● bring the product in conformity with the standard OR
○ To assist in monitoring the market for the presence of repair the defect in order to conform with the
non-certified, hazardous, of products violating this act standard
○ Other means to expand the monitoring and ● replace the product with an equivalent product that
enforcement of the dep’t regarding its manpower, complies with the standards
testing, and other resources
● refund the purchase price of the product (LESS a
This shall be enforced by the following departments in reasonable allowance for use)
● pay the consumer for reasonable damages as
the gov’t and must establish standards in quality and
safety. determined by the dep’t
They shall not charge the consumer of any expense and
● Dep’t of Health - foods, drugs, cosmetics, devices,
cost to be incurred.
and substances
● Dep’t of Agriculture - products related to agriculture
New Products
● Dep’t of Trade and Industry - other consumer
products not stated above With regards to new products, the concerned dep’t
must:
The product must consist of the following following the ● make a list of new products
standards set by the dep’ts: ● Order the manufacturer or importer to make a list of
● performance, composition, contents, design, such products with the descriptions in a newspaper
construction, finish, packaging of a product of general circulation
● requirements as to kind, class, grade, dimensions,
weights, material Imported Products

ATLASxBESHNS: Preliminary Exam Mentoring Series | 1

Basis for Consumer Products to be Refused for admission ● It is also illegal to engage in unfair or unconscionable
by the Customs of the Philippines sales practices, such as taking advantage of a
● fails to comply with the applicable standard or rule consumer's vulnerability or lack of knowledge.
● determined to be injurious, unsafe, and dangerous ● Chain distribution plans or pyramid sales schemes are
● substandard and/or material defect prohibited.
● Home solicitation sales require a permit from the
Samples of these products may be obtained by the Department of Trade and Industry and can only be
dep’t without charge from the owner or consignee conducted during certain hours by authorized
where it will undergo a hearing and if it applies to the personnel.
basis stated above, the product shall be refused to ● Receipts must be provided for home solicitation
admit UNLESS the owner or consignor none of the above sales, and certain representations are prohibited.
ground OR the defects has been cured before they are ● Referral selling plans must provide the buyer with a
sold/distributed. Products that has been banned or written undertaking that they will be compensated
withdrawn shall not be imported into the country for referring new customers to the seller.
● if the product can be modified, such product may
be released from customs custody under a bond to Product Service Warranty
permit the owner/consignee to modify it ● Manufacturers and sellers are required to provide
○ subject to supervision of the dep’t. consumers with a written warranty for consumer
● if the modification can’t be modified OR the products.
owner/consignee is not proceeding to satisfactory ● The warranty must state the terms and conditions of
modification, the products are refused to be the warranty, including the duration of the warranty,
admitted and dep’t will order its redelivery into the products or parts covered, and the remedies
customs AND seize if not redelivered. available to consumers if the product is defective.
● Consumers have the right to choose between a
Consumer Products for Export repair, replacement, or refund if a product is
The preceding article on safety shall not apply to any defective and covered by the warranty.
consumer products if: Consumers have the right to protection from deceptive
● Product is manufactured, sold, or held for sale FOR sales practices, written warranties for consumer
export from PH OR imported for export products, and to choose between a repair,
○ Except: the product is in fact distributed in replacement, or refund if a product is defective and
commerce for use in the Philippines covered by the warranty.
● Product or the packaging of it bears a stamp or label
that such product is intended for export AND actually This means that businesses cannot lie about their
exported. products or services, and they must provide consumers
with a written warranty that states how long it lasts, what
Prohibited Acts it covers, and what consumers can do if their product is
● manufacture for sale, offer for sale, distribute in defective. If a product is defective and covered by the
commerce, or import warranty, consumers can choose to have it repaired,
○ any products not complying with the standards in replaced, or refunded.
this Act
○ declared as banned in this Act Labeling and Fair Packaging
● Refuse access to OR copying of pertinent records OR Implementing Agency: Department of Trade and
fail to OR refuse to permit inspection or entry of Industry
authorized officers or employees of this dep’t
● Fail to comply relating to notification of substantial Prohibited Acts on Labeling and Packaging
product hazards and to recall, repair, replace, or The prohibition doesn’t apply to persons engaged in the
refund unsafe products. business of wholesale or retail distributors of consumer
products except to the extent that such persons:
Penalties for Prohibited Acts listed above
a) are engaged in the packaging or labeling of such
● Fine of not less than 1,000 pesos but not more than
products;
10,000 pesos, OR
b) prescribe or specify by any means the manner in
● Imprisonment of not less than 2 months but no more
which such products are packaged or labeled;or
than 1 year OR
c) having knowledge, refuse to disclose the source of
● Both imprisonment and fine
the mislabeled or mispackaged product
● If the offender is alien, he shall be deported after
serving the penalty.
Minimum Labeling Requirements for locally or
domestically manufactured products
Deceptive Sales Acts and Practices ● Registered trade name or brand name
● It is illegal to make false or misleading representations ● Registered trademark
about a product or service, such as its features, ● Registered business name
benefits, or performance. ● Address of the manufacturer, importer, repacker of

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 the consumer product in the Philippines ● Notify the bank if they don’t have enough money on
● General make or active ingredients hand or credit to cover the check payment even if
● Net quantity of contents there’s a stop payment order
● Country of manufacture if imported
● If consumer product is manufactured, refilled or Estafa vs. Bouncing Check Laws (B.P. Blg 22)
repacked under license from a principal, the label
shall state the fact Estafa, as defined in the Philippines' Revised Penal
Code, involves intentionally deceiving someone or
LEMON LAW (RA 10642)
entity through false pretenses, fraudulent activities, or
For brand new four-wheeled vehicles that are to be in
similar schemes, resulting in financial loss or damage.
nonconformity with the standards or specifications of
the vehicle’s manufacturer or distributor within twelve
(12) months from the date of original delivery to the B.P. 22 criminalizes issuing worthless or bad checks,
consumer, or up to twenty thousand (20,000) kilometers regardless of their purpose, as they are later dishonored
of operation after such delivery, whichever comes first. by the drawee bank due to lack of funds.

Requirements To Apply the Law: Estafa requires simultaneous giving of the check and the
● Written notice of consumer to manufacturer, item bought to be considered intentionally deceiving.
distributor, authorized dealer or retailer of the
unresolved complaint, and the consumer’s intention
If the insufficiency of funds is unknown, would it result in
to invoke his or her right
being liable for B.P. 22?
● 4 repair attempts Repair attempts: 4 attempts by the
manufacturer, distributor, authorized dealer or
The person wouldn’t be held accountable under B.P.
retailer (
22 if proven beyond a reasonable doubt that the
○ if the vehicle is not returned for repair, based on the
same complaint, within 30 calendar days from the date
person who gave the that was later dishonored was
of notice of release of the motor vehicle to the unaware of the insufficiency of fund when the check
consumer following this repair attempt within the Lemon was issued
Law rights period, the repair is deemed successful)
● During repair, consumers shall be provided with Philippine Deposit Insurance Corporation (PDIC)
reasonable daily transportation allowance/s OR a - PDIC, established in 1963 by Republic Act 3591, insures
service vehicle at the option of the manufacturer, bank deposits. RA 9576, enacted on April 29, 2009,
distributor, authorized dealer or retailer.
increased the coverage to P500,000 and added
● Consumer may file a complaint before the DTI
provisions for PDIC's strength and mandate.

What are the functions of PDIC?

BOUNCING CHECK LAWS (B.P. 22)
● Deposit Insurer
● Issues a check without sufficient funds and the bank ● Co-regulator of Banks
disallows the check: ● Receiver and Liquidator of Closed Banks
○ Fine: 200k pesos or equal/greater than the check’s
value. Effective June 1, 2009, the maximum deposit insurance
○ Imprisonment: MIN of 30 days, MAX of 1 yr coverage is P500,000 per depositor. All deposit accounts
○ Both fine and imprisonment by a depositor in a closed bank maintained in the same
● Issues check with sufficient funds but fails to maintain right and capacity shall be added together.
within 90 days. Same penalty.
Question: Are all banks members of PDIC?
● This Act holds individuals or entities responsible for
● Membership of banks to PDIC is mandatory; hence, all
signing checks on behalf of the drawer when drawn
operating banks are members of PDIC.
by a corporation, firm, or other body.
● If maker pays the holder for full payment w/in five Key Notes
banking days is not an evidence that knowledge of ● All deposit accounts in different banks are covered by
insufficiency is known. PDIC law, up to a maximum of PhP500,000 per
depositor per bank.
Section 3. Duty of Drawee; Rules of Evidence
Insufficient money or bad credit must be stated as the reason for
● PDIC coverage is per depositor per bank, not per
a check's dishonor or refusal to pay in writing or on paper. account. So, if you have multiple accounts in the
Any unpaid check with the drawee's rejection stamped same bank, your total deposits will be added together
on it or attached to it is regarded as proof that it was to determine your PDIC coverage.
presented for payment and was dishonored in legal ● If you have multiple accounts in different banks, your
proceedings. PDIC coverage will be up to PhP500,000 per bank.

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 ● Joint accounts are insured separately from any Constitutional Commission (Commission on Elections,
individually-owned deposit accounts even if you have Civil Service Commission and Commission on Audit)
a personal account in the same bank (1M total) and the Ombudsman for culpable violation of the
● Deposits in trust accounts are insured separately from Constitution, treason, bribery, graft and corruption,
the deposits of the trustee. other high crimes or betrayal of public trust. (Art. XI,
Sec. 2, 1987 Philippine Constitution)
● Deposits in branches of foreign banks in the Philippines
are insured by the PDIC, up to a maximum of 3. Upon the order of a competent court in cases:
PhP500,000 per depositor per branch. a. of bribery or dereliction of duty of public officials
● PDIC coverage does not apply to investments in (including plunder)
b. Where the money deposited or invested is the
securities, such as stocks and bonds.
subject of litigation
c. Involving unexplained wealth under RA 3019, or the
Secrecy of Bank Deposits Anti-Graft and Corrupt Practices Act.
BANK SECRECY LAW (RA 1405, AS AMENDED)
4. Upon inquiry by the Commissioner of BIR.:
Purpose of the law: The government encourages a. The purpose of determining the gross estate of a deceased
people to deposit their money in banks and depositor
discourages private hoarding so banks can use it in b. Pursuant to a request for tax information of specific
authorized loans to help the country's economic taxpayers made by a foreign tax authority pursuant to a
development. tax treaty under the Exchange of Information on Tax
Matters Act of 2009 (Rep. Act No. 8424, as amended by
PROHIBITED ACTS - It shall be unlawful: Rep. Act No. 10021).
1. Bank (any official or employee or independent auditor 5. Upon the order of a competent court or in proper
of a bank to disclose to any person other than a bank cases by the AMLC where there is probable cause of
director, official or employee authorized by the bank, money laundering and in some instances even
any information concerning deposits. without court order
2. Any person, including the government- to inquire,
examine or look in bank deposits or bonds issued by 6. Reports:
the government.
a. Disclosure to the Treasurer of the Philippines for unclaimed
DEPOSITS COVERED balances under the Unclaimed Balances Act (RA 3936)
1. All deposits of whatever nature with banks or banking b. Report of banks to AMLC of covered and/or suspicious
institutions in the Philippines, including Trust Accounts. transactions.
● Deposits refer to money or funds placed with a bank that
can be withdraw on the depositor's order or demand, such
As a rule, bank accounts involving all AMLA cases,
as deposit accounts in the form savings, current and time
deposits. require court order before may be inquired into.
2. Investments in bonds issued by the Government of the However, there are certain AMLA cases, where the
Philippines, its political subdivisions and its deposit may be inquired into without need of court
instrumentalities. order.
● Investments in Government Bonds are debt securities ➔ Kidnapping for ransom
which are unconditional obligations of the State, and ➔ Drugs
backed by its full taxing power. Government bonds ➔ Hijacking
include treasury bills, treasury notes, retail treasury bonds, ➔ Destructive Arson
dollar linked peso notes, and other risk-free bonds. ➔ Murder when perpetrated by terrorist against
noncombatant person.
EXCEPTIONS 7. Ombudsman issues a subpoena all deposit
Peso Deposits: information of a government official when there’s a
1. When there is a written permission of the depositor or case pending in the court.
investor. 8. Upon order of the CA, examination by law
a. DOSRI accounts: Directors, officers, stockholders and enforcement officers in terrorism cases under the
related interests who contract a loan or any form of Human Security Act of 2007 (RA 9372)
financial accommodation with their bank of related bank
9. Examination is made:
are required to execute a written waiver of secrecy of
a. A special or general examination of a bank specifically
deposits pursuant to The New Central Bank Act. (Sec. 26,
authorized by the BSP when there is reasonable ground of
Rep. Act No.7653).
bank fraud or serious irregularity.
b. Taxpayer's application for compromise: a taxpayer who is b. By the Philippine Deposit Insurance Commission (PDIC)
applying for a compromise on the ground of clear inability who may Inquire into bank deposit when there be finding,
to pay or financial incapacity, is likewise required to of unsafe or unsound banking practices
execute a waiver prior to the processing of his request. c. By commission on audit to examine and audit government
deposits pertaining to the reverse and receipts, and
2. Impeachment cases of the President, Vice President, expenditures of such fund or pertaining to government or
members of the Supreme Court, members of the anY its agencies, subdivisions, or instrumentalities (GOCCs)
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 d. By the Presidential Commission on Good Government Imprisonment Not to exceed 5
(PCGG who, in the conduct of its investigations to recover 1 to 5 years
years
ill-gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives, Fine Not to exceed
P5,000 to P25,000
subordinates and close associates, may issue subpoenas P20,000
requiring the attendance and testimony of witnesses
and/or the production of books, papers, contracts,
records, statement of accounts and other documents. Truth in Lending Act
Foreign currency deposits (FOREIGN CURRENCY DEPOSIT - the act requiring to disclose finance charges in
ACT) connection with extension of credits.
Foreign currency deposits in banks are likewise absolutely - To protect against inaccurate and unfair credit billing
confidential and cannot be disclosed, except: and credit card practices where it requires lenders to
1. When there is written consent of depositor under
provide information about a loan or credit.
Section 8 of the Foreign Currency Deposits Act (RA
6426)
2. Under Section 11 of the Anti-Money Laundering Act Obligation of Creditors to Debtors
(probable cause established that it is related to an Creditors must disclose the following to debtors before
unlawful activity as defined or money laundering) consummating the contract in a clear statement in
3. Under Section 27 and 28 of the Human Security Act accordance with this act:
(existence of probable cause in anti-terrorism cases ● Cash price or delivered price of property or service
and those involving persons charged with or to be acquired
suspected of the crime of terrorism or conspiracy to ● Amounts to be credited as down payment or trade-
commit terrorism, judicially declared and outlawed in
terrorist organization, association, or group of ● Difference between cash price and down payment
persons, or member of such organization, ● Individually itemized charges paid OR to be paid in
association, or group of persons) connection with the transaction
● Total amount to be financed
4. Examinations by the BSP, PDIC, PCGG and COA. ● Finance charge expressed in terms of peso and
Garnishment: Bank accounts may be garnished by centavo
the creditors of the depositor. In garnishment, there is ● Simple annual rate on the outstanding unpaid
no violation of the bank secrecy law since the balance of the obligation
amount of the deposit is not actually disclosed.
Comparison of Covered and Excluded Transactions
5. In Salvacion vs. Central Bank (Salvacion Case)- Covered Transactions
● Advances (incidental/temporary overdraft, cash
An American tourist found guilty of repeatedly raping item, “vale”)
a 12-year old child was held civilly liable to pay PHP1 ● Advances of unearned salary or compensation
Million. The court allowed the foreign deposit to be ● Advances by means of DAUDs
examined, garnished and then released to the rape ○ Drawn against uncollected deposits
victim. ■ Sufficient funds but not yet available to the
drawer because the deposit/check hasn’t
Deposits exempt from garnishment: been cleared.
1. Foreign currency deposits, Section 8 of RA 6426 ● Outstanding availments under established credit line
(except for transient foreigners) ● Drawings against an existing letter of credit
2. Those exempt under Rules of Court. ● Acquisition of any note, draft, or any other evidence
of indebtedness which the bank’s DOSRI may be
liable as makers, drawers, acceptors, endorsers,
As such, the following do not violate the secrecy of bank
guarantors, or sureties
deposits:
● Indirect lending
● Increase of an existing indebtedness, as well as,
1. Turn-over to the Commissioner of Internal Revenue of the
availments under a credit line OR additional
amount in bank accounts as may be sufficient to satisfy
drawings against a letter of credit
the writ of garnishment issued to collect delinquent taxes)
● Sale of assets on credit (share of stocks)
● Other transaction where bank’s DOSRIs became
2. Submission of report, and turn-over to the court officer obligated or may become obligated
or executing sheriff of garnished amounts pursuant to a
writ of garnishment in satisfaction of a judgment Transactions not covered
● Advances against accrued compensation for
Penalties for violation ○ Authorized travel
Foreign Currency ○ Legitimate expenses
Penalties Peso Deposits ○ Transactions for the account of bank
Deposits
○ Utilization of maternity leave and other leave credits

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 ● Increase in the amount of outstanding credit as a 1. Transaction in cash or other equivalent instrument
result of additional charges to protect its interest exceeding 500k within one banking day
(taxes, insurance, etc.) 2. Transaction exceeding 1M in case of jewelry dealers,
● Discount of bills of exchange drawn in good faith dealers in precious metals/stones.
against actually existing values Suspicious Transactions regardless of the amount
○ Discount of commercial or business paper 1. There is no underlying legal or trade obligation,
○ The transaction shall be subject to ceilings once the
DOSRI becomes directly liable to the bank purpose, or economic justification.
● Transactions with foreign bank which has 2. Client is not properly identified.
stockholdings in the local bank where the foreign 3. Amount involved is not commensurate with the
bank acts as a guarantor through issuance of letters business or financial capacity of the client.
of credit or assignment of deposit 4. Taking into account all known circumstances, it may
○ Foreign bank stockholder is subject to ceilings after its
contingent liability as guarantor becomes real liability. be perceived that all client’s transaction is structured
● Interbank call loans transactions in order to avoid being subject to reporting
requirements under AMLA.
Consequences of Non-compliance with the Obligation 5. Any circumstance relating to the transaction which is
● 100 pesos or in amount equal to twice the finance observed to deviate from the profile of the client
charged required by the creditor, whichever is
and/or the client’s past transactions with the covered
GREATER
○ EXCEPT: such liability shall not exceed 2,000 pesos person
on any credit transaction. 6. The transaction is anyway related to an unlawful
○ Action may be brought within one year from the activity or any money laundering activity or offense
date of occurrence of violation. that is about to be committed, is being, or has been
● If the debtor is entitled to a recovery, the creditor is committed.
liable for reasonable attorney’s fee and court cost as
7. Any transaction that is similar, analog, or identical to
determined by the court.
any of the foregoing Revised IRR of R.A 9160.
● No punishment or penalty shall apply to Philippine
government or any agency or political subdivision Unlawful Activities
1. Kidnapping for ransom
Anti-Money Laundering Act (AMLA) 2. Dangerous Drugs Act
- primary legislation addressing money laundering in the 3. Anti-Graft and Corrupt Practices Act
Philippines 4. Plunder
5. Robbery and extortion’
6. Jueteng and Masiao
Money Laundering - act of concealing or disguising the
origins of illegally obtained proceeds so that they appear 7. Piracy on the high seas
to have originated from legitimate sources 8. Qualified Theft
9. Swindling
Purpose of AMLA: 10. Electronic Commerce Act
● To protect and preserve the integrity and 11. Anti-Hijacking Law; Destructive Arson; and Murder, as
confidentiality of bank accounts
defined under the Revised Penal Code, as amended
● To ensure that the Philippines shall not be used as a
12. Terrorism and Conspiracy to Commit Terrorism
money laundering site for any unlawful activity
● Consistent with its foreign policy, the Philippines shall 13. Fraudulent Practices and other violences under
extend cooperation in transitional investigations and Securities Regulation Code of 2000 (RA 8799)
prosecutions of persons involved in money 14. Felonies or offenses of a similar nature that are
laundering activities wherever committed. punishable under the penal laws of other countries

Anti-Money Laundering Council The Philippine Anti-Money Laundering Act covers the
- A specific body where covered persons report the following:
occurrence of suspicious transactions 1. Banks and Financial Institutions
- Responsible for the Implementation of AMLA 2. Non-Financial Businesses and Professions (NFBPs):
- May inquire about or examine particular deposits or Casinos, real estate developers, jewelry dealers,
investment, including related accounts dealers in precious metals and stones, and other
- Composed of: designated non-financial businesses and professions.
- Governor of BSP as Chairman 3. Individuals and Entities Involved in Suspicious
- Commissioner of the Insurance Commission (CIC) Transactions
- and the Chairman of the Securities and 4. Politically Exposed Persons (PEPs)
Exchange Commission (SEC) as Members 5. Beneficial Owners

Covered Transactions Key Provisions of AMLA:

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a. The requirement for covered institutions, such as banks ○ Covered persons should establish internal controls
and financial institutions, to implement anti-money and compliance measures to ensure the
laundering programs, conduct customer due effectiveness of their AML and CTF programs. This
diligence (CDD), and report suspicious transactions to may involve appointing a compliance officer and
the AMLC. conducting periodic audits
b. The establishment of mechanisms for the freezing and
● Sanctions Screening:
forfeiture of assets related to money laundering
○ Covered persons are expected to screen
Terrorism Financing Prevention and Suppression Act customers and transactions against sanctions lists
(TFPSA): specifically targets the prevention and to ensure that they are not engaging with
suppression of terrorism financing. It criminalizes the individuals or entities subject to sanctions.
provision of funds for terrorism-related activities and
mandates the reporting of suspicious transactions related ● Information Sharing:
to terrorism financing. ○ Covered persons may share information related to
● Asset Forfeiture: Both AMLA and TFPSA provide suspicious activities or money laundering with law
mechanisms for the freezing and forfeiture of assets. enforcement agencies and regulatory authorities
These laws empower the government to confiscate when required or permitted by law.
assets that are determined to be the proceeds of ● Whistleblower Protection:
unlawful activities. ○ Some jurisdictions have provisions to protect
whistleblowers who report money laundering or
● International Cooperation: The Philippines is a member
terrorism financing activities within their
of various international organizations and initiatives
organizations.
aimed at combating money laundering and terrorism
financing, including the Financial Action Task Force Beneficial Owner
(FATF). As a member, the Philippines is obligated to - Any natural person(s) who owns a customer or on
comply with international standards and cooperate
whose behalf a transaction is being conducted; or
with other countries in these efforts.
those who has control over a juridical person or legal
PREVENTIVE MEASURES AND OBLIGATIONS OF COVERED arrangement.
PERSONS
● Customer Due Diligence (CDD): Beneficial Owner shall be:
○ Covered persons must conduct CDD on their 1. The natural persons, if any, who ultimately have
customers to verify their identities and assess the risk controlling ownership interest in a juridical person.
associated with each customer. This includes
a. Ownership of interest of shares of at least 20% in
obtaining information about the customer's
identity, the purpose and nature of the business the customer held by a natural person shall
relationship, and the source of funds or wealth indicate a direct ownership.
b. Ownership of interest of shares of at least 20% in
● Enhanced Due Diligence (EDD): the customer held by a corporate entity, which is
○ required for high-risk customers, politically exposed controlled by a natural person, or by multiple
persons (PEPs), and complex or unusual corporate entity, which are under the control of
transactions. This involves obtaining additional
the same natural person, shall indicate an indirect
information and conducting more thorough
scrutiny of these relationships. ownership.

● Suspicious Transaction Reporting: 2. The natural persons exercising control over the
○ If there are reasonable grounds to believe that a
juridical person through other means, to the extent
transaction is related to money laundering or
terrorism financing, it must be reported promptly to that there is a doubt under item no. (1), whether the
the AMLC. persons w/ the controlling ownership interest are the
beneficial owners, or where no natural person exerts
● Record Keeping: control through ownership interests.
○ Covered persons are required to maintain records a. Control through other means includes control
of customer identification, account records, and exerted by means of:
transaction records for a specified period. These
i. Trusts
records should be available for examination by
regulatory authorities. ii. Agreements
iii. Arrangements
● Training and Awareness:
iv. Understandings
○ Covered persons must provide training to their
v. Power to govern financial and operating
employees to ensure that they are knowledgeable
about AML and CTF requirements and are capable policies of the enterprise
of recognizing and reporting suspicious activities. vi. Power to appoint or remove majority of the
members of the BOD
● Internal Controls and Compliance Measures:
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 vii. Power to cast majority votes at a meeting of
the BOD
3. The natural persons who hold positions of senior
managing officials or equivalent ranks.

Record Keeping Requirements

Covered persons shall maintain and safely store all
records of customer identification, and transactions
documents, including the results of any analysis
undertaken, for at least five (5) years following the closure
of the account, termination of the business relationship or
after the date of the occasional transaction.

Safe Harbor Provision

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