The Philippines’ Anti-Money Laundering Council has published enforcement rules for AML violations. That’s kind of rare – you tend to see these more for sanctions violations. In addition to having tables for the fines that can be administered, they also describe the factors considered when assessing AML program failures (always my favorite part):
a. Asset Size. – the financial capability of covered persons to comply with the requirements of the AMLA, its RIRR and all AMLC issuances in relation to: (1) the money laundering and terrorism financing risks the covered persons face or their financial capability poses; or (2) the covered persons’ impact on public interest.
For juridical persons, the total assets, as indicated in the audited financial statement or its equivalent, as of the year the violation was committed, shall be the basis for determining the asset size. In case of natural persons, asset size shall be the gross income as indicated in the income tax return for the year the violation was committed.
For this purpose, covered persons shall be classified as follows:
Micro – Php3,000,000.00 and below
Small – Php3,000,000.01 to Php15,000,000.00
Medium – Php15,000,000.01 to Php100,000,000.00
Large A – Php100,000,000.01 to Php500,000,000.00
Large B – Php500,000,000.01 and above
b. Gravity of Violations. – the importance or significance of the specific provision of the AMLA, its RIRR and all AMLC issuances, in relation to its effect on the AMLC’s discharge of its mandate.
For this purpose, gravity of violations is classified as follows:
i. Grave violations – these are violations of the specific remedies available to the AMLC in the pursuit of its mandate and, requirements under the AMLA that are essential to pending money laundering investigation and prosecution of cases (Rule V, Section 3.A).
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Major violations – these are violations involving total disregard of customer due diligence, record-keeping, or transaction reporting requirements (Rule V, Section 3.B).
Serious violations – these are violations of specific core provisions of the AMLA and its RIRR that have a great impact on the AMLC’s ability to prevent or counter money laundering and terrorism financing (Rule V, Section 3.C).
Less serious violations – these are violations of the AMLA and its RIRR that hamper or delay the exercise of AMLC’s compliance and investigation functions (Rule V, Section 3.D).
Light violations – these are violations of specific provisions of the AMLA and its RIRR that are necessary for the effective implementation of the AMLA and its RIRR, but have no immediate impact in the discharge of AMLC’s mandate (Rule V, Section 3.E).
c. Nature of Violation. – Violations of similar nature which a covered person has been previously sanctioned within the two (2)-year period immediately preceding the examination or investigation under consideration, shall be considered as an aggravating circumstance.
For this purpose, the nature of violations shall be classified as follows:
Customer Due Diligence [Rule V, Sections 3.B(1), and 3.C(1-9, 11, 12), 3.D (1)];
Record Keeping [Rule V, Section 3.B(2), 3.C (13), and 3.E (3)];
Transaction Reporting [Rule V, Sections 3.B(3), 3.C (14), and 3.D(2
Compliance on freeze, bank inquiry and asset preservation orders;
and orders relating to AMLC investigation [Rule V, Sections 3.A(1-
3), 3.C (15-17), 3.D(4), and 3.E (1 &2)];
Money Laundering Prevention Program [Rule V, Sections 3.C(10 &
18), 3.D(5)]; and
Violations of orders, resolutions and other issuances of the AMLC
[Rule V, Section 3.C(19)].
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d. Concealment or Deliberate Effort to Hide the Violation. – The deliberate effort to hide the violation with the intention to deceive shall be considered as an aggravating circumstance.
Concealment is presumed in cases when the officers or employees of the covered person complicate the transaction to make it difficult to uncover, which may also include refusal to provide information/documents that would support a finding of liability, or employment of any other means to cover up any violation.
e. Material Misrepresentation. – The act of misstating a fact, knowing or believing that: (i) what he is saying is not true or (ii) is not sure whether or not his statement is true, but passes it off as true anyway; and is likely to induce a reasonable person to assent or that the maker knows is likely to induce the recipient to assent, is an aggravating circumstance.
f. Voluntary Disclosure. – Voluntary disclosure by the respondent of the offense or violation committed before it is discovered by the Compliance Unit or the Supervising Authorities shall be considered a mitigating circumstance.
g. Corrective Measures. – Actions taken by covered persons to correct the findings of the Compliance Unit or Supervising Authorities prior to the referral of the ROC or ROE to the Litigation and Evaluation Unit shall be considered a mitigating circumstance.
Section 2. Effects of Attendant Circumstances. – An aggravating circumstance shall increase, while a mitigating circumstance shall decrease, the imposable fine by twenty-five percent (25%). Provided, the 25% increase or decrease shall be applied on the fine for specific violation committed, not on the total amount of fine after considering all violations.