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The know your customer or know your client (KYC) guidelines and regulations for financial services require that professionals try to verify the identity, suitability, and risks involved with maintaining a business relationship.
Legal affairs
National regulatory framework regarding AML and effective date of the regulations
Republic Act No. 9160 or the Anti-Money Laundering Act of 2001 (AMLA), which took effect on 17 October 2001, is the primary anti-money laundering law in the Philippines. There were several laws which introduced amendments to the AMLA, the latest being Republic Act No. 11521 which took effect on 8 February 2021.
The 2018 Implementing Rules and Regulations of the AMLA (AMLA IRR) is the latest set of rules and regulations promulgated to provide the details of implementation of the AMLA, as well as to assist all covered persons, supervising authorities, law enforcement and other government agencies, and other stakeholders by prescribing the rules and regulations to combat money laundering, terrorism financing being a predicate offense to money laundering, and other associated unlawful activities.
National regulator or relevant authority for AML controls
The Anti-Money Laundering Council (AMLC) is the Philippines’ central AML authority and financial intelligence unit, which is the government instrumentality mandated to implement the AMLA. It is the primary policy-making body and lead agency with respect to the implementation of the AML controls in the Philippines and is also tasked to investigate and assist in the prosecution of money laundering offenses.
The AMLC is composed of the Governor of the Philippine Central Bank or the BSP as the Chairman, the Commissioner of the Insurance Commission (IC) and the Chairperson of the SEC as members.
Customer Due Diligence
Conduct of a typical KYC identification process
Under the AMLA IRR, customer identification process refers to the process of determining the identity of the of the customer vis-à-vis the valid and acceptable identification document submitted to, and/or presented before, the covered person. Covered persons must identify and record the true identity of their customers, whether permanent or occasional, and whether natural or juridical person, or legal arrangement, as a general requirement.
A typical KYC identification process involves (i) gathering of identification information (e.g. full name, date of birth, sex, citizenship, address, contact details and specimen signatures or biometric information, and (ii) presentation/submission by the customers of original and clear copy of at least one (1) identification document (ID), which refers to any evidence of identity specifically enumerated in the AMLA IRR (e.g. IDs issued by the Philippine government, including its political subdivisions, agencies and instrumentalities).
As a general requirement, covered persons must implement and maintain a system of verifying the true identity of their clients, including validating the truthfulness of the information and confirming the authenticity of the identification documents presented, submitted, and provided by the customer, using reliable and independent sources, documents, data, or information. Accordingly, covered persons are required to conduct face-to-face contact and/or personal interview at the commencement of customer relationship, as part of the customer verification process. Use of ICT in the conduct of face-to-face contact and/or personal interview is allowed.
Possibility to meet customer due diligence requirements by relying on third parties who are obliged by law themselves to comply with AML regulations
Yes, a covered person may rely on a third party in