SEC sets guidelines on anti-money laundering rules for capital marts

The Securities and Exchange Commission (SEC) has drafted a new set of guidelines that would assist regulated intermediaries in the preparation of their anti-money laundering operating manuals.

The new guidelines include changes in the anti-money laundering act of 2001, international best practices and other securities rules.

Institutions covered by the guidelines are stockbrokerage houses, investment houses, mutual funds, common trust fund companies and pre-need companies.

Jose P. Aquino, head of the SEC’s Markets Regulation Department, said the capital market players must implement specific procedures for customer identification, record keeping and retention of transaction documents and reporting of covered and suspicious transactions.

Regulated intermediaries shall also ensure that they have effective procedures for verifying the bonafide identity of new customers and accordingly, shall keep current and accurate all material information with respect to their customers by regularly conducting verification and update.

The customer identification program must also include procedures for providing customers with adequate notice that the regulated intermediary is requesting information to verify their identities.

Under the new guidelines, transactions involving a total amount in excess of the threshold of P500,000 within one banking day should be reported to the Anti-Money Laundering Council (AMLC).

Suspicious transaction reporting must be done by the regulated intermediary within five working days from its occurrence.

Regulated intermediaries, however, shall file a suspicious transaction report before the AMLC regardless of the amount of the transaction where any of the following circumstances exist:

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

• the client is not properly identified;

• the amount involved is not commensurate with the business or financial capacity of the client;

• taking into account all known circumstances, it may be perceived that the client’s transaction is structured in order to avoid being the subject of reporting requirements;

• any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the client‘s past transactions; and

• the transaction is in any way related to an unlawful activity or offense.

Regulated intities shall ensure that business is conducted in conformity which high ethical standards, that laws and regulations are adhered to, and that service is not provided where there is good reason to believe that transactions are associated with money laundering activities.

Failure of a regulated intermediary to submit its statement of policies and procedures and its revised operating manual shall result to the imposition of a penalty of P500 per day of delay and which shall continue until said statement and operating manual has been submitted.