SEC tightens watch on money laundering

    SEC Headquarters (Photo from NEDA)

    The Securities and Exchange Commission (SEC) said financing and lending companies are now required to register with the Anti-Money Laundering Council (AMLC) and report suspicious transactions and comply with other rules and standards.

    These measures are aimed at combating money laundering and terrorism financing in the country.

    The SEC has amended its 2018 guidelines on anti-money laundering and combating the financing of terrorism (CFT) for SEC-covered institutions (2018 AML/CFT Guidelines) as well as the 2020 guidelines on the submission and monitoring of the money laundering and terrorist prevention program (MTTP)

    “The amendment adds all financing and lending companies among the SEC-supervised covered persons, or those required to comply with the requirements and standards provided under the Anti-Money Laundering Act (AMLA) and the Terrorism Financing Prevention and Suppression Act (TFPSA),” the SEC said.

    Prior to the amendment, the SEC only required financing and lending companies with more than 40 percent foreign participation in their voting stocks and those with paid-up capital of at least P10 million to comply with the AMLA, the TFPSA and their implementing rules and regulations (IRR).

    “The amendment aims to protect financing and lending companies from abuse and misuse by money launders and terrorists, and more importantly the integrity of the financial system, the overall economy and the people who would ultimately suffer from such illicit activities,” said Emilio Aquino, SEC chairman.

    “As covered persons, all financing and lending companies shall comply with all the requirements under the AMLA, the TFPSA, their respective IRR, and other AMLC issuances,” he added.

    Aquino said as a result of the amendments, financing and lending companies “shall also have the duty to cooperate with the AMLC in the discharge of the latter’s mandate and in the execution of its lawful orders and issuances, to protect their businesses from being used for money laundering or terrorism financing, as mandated by the 2017 IRR of the AMLA.”

    “To this end, all financing and lending companies must register in the online reporting system of the AMLC and submit proof of such registration to the Anti-Money Laundering Division of the SEC Enforcement and Investor Protection Department (AMLD-EIPD) within two months from the effective date of the newly issued memorandum circular,” Aquino said.

    The SEC likewise directed all financing and lending companies to formulate and implement a comprehensive and risk-based MTTP, which must comply with the requirements of the AMLA, TFPSA, their respective IRR, the 2018 AML/CFT Guidelines and other AMLC issuances.

    The MTTPs must be designed in accordance with the company’s corporate structure and risk profile, and should be duly approved by the company’s board of directors or by the country, regional or area head or its equivalent for the local branches of foreign financing and lending companies, the SEC said.

    “Accordingly, all financing and lending companies shall identify, assess and understand the money laundering and terrorist financing risks to which they are exposed, in accordance with the guidelines in the implementation of a risk-based approach to anti-money laundering/combating the financing of terrorism and adoption and development of a risk rating system for SEC covered persons,” the SEC said.

    “Those financing and lending companies, which have not yet submitted their MTTPs, must submit both hard and soft copies to the AMLD-EIPD within two months from the effective date of the memorandum circular,” it added.

    The SEC said failure to comply will subject erring financing and lending companies “to the penalties provided under the 2018 AML/CFT Guidelines, which include a fine of P10,000 to P1 million, plus up to P2,000 for each day of continuing violation.”