Main Reviewer for the AML Home Study Program

7/25/2019 Main Reviewer for the AML Home Study Program

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Continuing Education on

AML ComplianceA Home Study Training Program

AML REVIEWER

Global Compliance Groupv06302015


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Declaration of Policy

The State to protect the integrity and confidentiality of bank accounts and to ensure that the Philippines

in general and the covered institutions herein described in particular shall not be used respectively as a

money laundering site and conduit for the proceeds of an unlawful activity as defined under R.A. 10365 (

AN ACT FURTHER STRENGTHENING THE ANTI-MONEY LAUNDERING LAW, AMENDING FOR THE PURPOSEREPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE ANTI-MONEY LAUNDERING ACT OF 2001, AS

AMENDED).

Money Laundering

Money laundering is committed by any person who, knowing that any monetary instrument or property

represents, involves, or relates to the proceeds of any unlawful activity:

1. transacts said monetary instrument or property;

2. converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or

property;3. conceals or disguises the true nature, source, location, disposition, movement or ownership of

or rights with respect to said monetary instrument or property;

4. attempts or conspires to commit money laundering offenses referred to in paragraphs 1,2 or 3;

5. aids, abets, assists in or counsels the commission of the money laundering offenses referred to

in paragraphs 1, 2, or 3 above; and

6. performs or fails to perform any act as a result of which he facilitates the offense of money

laundering referred to in paragraphs 1,2, 3 above.

Money laundering is also committed by any covered person who, knowing that a covered or suspicious

transaction is required under the AMLA, as amended to be reported to the Anti-Money LaunderingCouncil (AMLC), fails to do so (R.A. 9160, as amended by R.A. 9194, R.A. 10167 and R.A. 10365).

Stages of Money Laundering

Money laundering is the criminal practice of processing ill-gotten gains, or dirty money, through a

series of transactions; in this way the funds are cleaned so that they appear to be proceeds from legal

activities. Money laundering generally does not involve currency at every stage of the laundering

process. Although money laundering is a diverse and often complex process, it basically involves three

independent stages, namely: placement, layering and integration that can occur simultaneously:

Placement. The first and most vulnerable stage of laundering money is placement. The goal is tointroduce the unlawful proceeds into the financial system without attracting the attention of financial

institutions or law enforcement. Placement techniques include structuring currency deposits in amounts

to evade reporting requirements or commingling currency deposits of legal and illegal enterprises. An

example may include: dividing large amounts of currency into less-conspicuous smaller sums that are

deposited directly into a bank account, depositing a refund check from a canceled vacation package or


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insurance policy, or purchasing a series of monetary instruments (e.g., cashiers checks or money orders)

that are then collected and deposited into accounts at another location or financial institution.

Layering.The second stage of the money laundering process is layering, which involves moving funds

around the financial system, often in a complex series of transactions to create confusion and

complicate the paper trail. Examples of layering include exchanging monetary instruments for larger orsmaller amounts, or wiring or transferring funds to and through numerous accounts in one or more

financial institutions.

Integration.The ultimate goal of the money laundering process is integration. Once the funds are in the

financial system and insulated through the layering stage, the integration stage is used to create the

appearance of legality through additional transactions. These transactions further shield the criminal

from a recorded connection to the funds by providing a believable explanation for the source of the

funds. Examples include the purchase and resale of real estate, investment securities, foreign trusts, or

other assets.

Unlawful activity - refers to any act or omission or series or combination thereof involving or having

direct relation to the following (RA 10365):

1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal

Code, as amended;

2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise known as

the Comprehensive Dangerous Drugs Act of 2002;

3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended, otherwise known

as the Anti-Graft and Corrupt Practices Act;

4) Plunder under Republic Act No. 7080, as amended;

5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal

Code, as amended;

6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;

7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential Decree No.

532;

8) Qualified theft under Article 310 of the Revised Penal Code, as amended;

9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of the Revised Penal

Code, as amended;

10)Smuggling under Republic Act Nos. 455 and 1937;

11)Violations of Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000;


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12)Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as

defined under the Revised Penal Code, as amended;

13)Terrorism and conspiracy to commit terrorism as defined and penalized under Sections 3 and 4

of Republic Act No. 9372;

14)Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6, 7 and 8 of

Republic Act No. 10168, otherwise known as the Terrorism Financing Prevention and

Suppression Act of 2012:

15)Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as amended, and

Corruption of Public Officers under Article 212 of the Revised Penal Code, as amended;

16)Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216 of the

Revised Penal Code, as amended;

17)Malversation of Public Funds and Property under Articles 217 and 222 of the Revised Penal

Code, as amended;

18)Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the Revised Penal

Code, as amended;

19)Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-Trafficking in

Persons Act of 2003;

20)Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705, otherwise known

as the Revised Forestry Code of the Philippines, as amended;

21)Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise known as the

Philippine Fisheries Code of 1998;

22)Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known as the

Philippine Mining Act of 1995;

23)Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147, otherwise known as the

Wildlife Resources Conservation and Protection Act;

24)Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National Caves and

Cave Resources Management Protection Act;

25)Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of 2002, as

amended;

26)Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended, otherwise known

as the decree Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing In,

Acquisition or Disposition of Firearms, Ammunition or Explosives;


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27)Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing Law;

28)Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant Workers and

Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022;

29)Violation of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the

Philippines;

30)Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo and Video

Voyeurism Act of 2009;

31)Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child Pornography

Act of 2009;

32)Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic Act No. 7610,

otherwise known as the Special Protection of Children Against Abuse, Exploitation and

Discrimination;

33)Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the

Securities Regulation Code of 2000; and

34)Felonies or offenses of a similar nature that are punishable under the penal laws of other

countries.

Terrorist Financing

The motivation behind terrorist financing is ideological as opposed to profit-seeking, which is generally

the motivation for most crimes associated with money laundering. Terrorism is intended to intimidate a

population or to compel a government or an international organization to do or abstain from doing any

specific act through the threat of violence. An effective financial infrastructure is critical to terrorist

operations.

Terrorist groups develop sources of funding that are relatively mobile to ensure that funds can be used

to obtain material and other logistical items needed to commit terrorist acts. Thus, money laundering is

often a vital component of terrorist financing.

Terrorists generally finance their activities through both unlawful and legitimate sources. Unlawful

activities, such as extortion, kidnapping, and narcotics trafficking, have been found to be a major source

of funding. Other observed activities include smuggling, fraud, theft, robbery, identity theft, use of

conflict diamonds, and improper use of charitable or relief funds. In the last case, donors may have no

knowledge that their donations have been diverted to support terrorist causes.

Other legitimate sources have also been found to provide terrorist organizations with funding; these

legitimate funding sources are a key difference between terrorist financiers and traditional criminal

organizations. In addition to charitable donations, legitimate sources include foreign government

sponsors, business ownership, and personal employment.


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Although the motivation differs between traditional money launderers and terrorist financiers, the

actual methods used to fund terrorist operations can be the same as or similar to those methods used

by other criminals that launder funds. For example, terrorist financiers use currency smuggling,

structured deposits or withdrawals from bank accounts; purchases of various types of monetary

instruments; credit, debit, or prepaid cards; and funds transfers. There is also evidence that some forms

of informal banking have played a role in moving terrorist funds. Transactions through informal banking

are difficult to detect given the lack of documentation, their size, and the nature of the transactions

involved. Funding for terrorist attacks does not always require large sums of money, and the associated

transactions may not be complex. (2014 FFIEC BSA/AML Examination Manual)

Your Protection Under the AMLA

When reporting covered or suspicious transactions to the Anti-Money Laundering Council (AMLC), the

Bank and its officers and employees shall not be deemed to have violated R.A. No. 1405, as amended,

(Bank Secrecy Law) R.A. No. 6426, as amended, (FCDU Law), R.A. No. 8791 (General Banking Law), and

other related laws. No administrative, criminal or civil proceedings shall be imposed against any person

for having made a covered or a suspicious transaction report in the regular performance of his duties

and in good faith, whether or not such reporting results in any criminal prosecution under this Act or any

other law.

Notice to Clients for AMLA Requirements

In compliance with SEC Circular Memo No. 2 dated May 20, 2010, the following NOTICE TO CLIENTS FOR

AMLA REQUIREMENT ON THE SUBMISSION OF SUPPORTING DOCUMENTS shall be posted in the

conspicuous area of the branch, front-end office of Treasury, Trust, Special Assets Management Group

and the lending centers.

The notice shall be as follows:

To help the government fight money laundering activities, the Anti-Money Laundering Act, as

amended, requires all covered institutions to obtain, verify and record information that identifies each

person who opens an account.

In this regard, the Bank shall obtain information such as name, address, date of birth, business, TIN, SSS

or GSIS Nos. and presentation of your driver's license, passport or other competent evidence of identity

bearing your photograph and signature when you open an account or transact with us

Customer Acceptance Policy

It is the policy of the Bank that no account shall be opened or the transaction has to be conducted

where any of the following circumstances exists:

(a) New account to be opened or transaction to be conducted is under anonymous or fictitious

names.

(b) Where the branch, unit or office is unable to verify the identity of the customer


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(c) Where the branch, unit or office is unable to obtain the required information and/or

documents due to non-cooperation of the customer or non-reliability of the data or

information furnished to the Bank or to the accredited Service Provider. In all cases, decision

to close an account should be taken at the next higher level of authority.

(d) Positive match vs. OFAC/SDN/Internal Negative File or with any person with known criminal

background or with banned entities such as individual terrorists or terrorist organizations

available from BSP, AMLC Circulars, host country regulatory or enforcement agencies and

other reputable/reliable sources i.e. Dow Jones.

AML Customer Risk Rating Methodology

It is the policy of the Bank to conduct risk assessment of its customers during account opening and

banking relationship to properly identify, evaluate and estimate the levels of AML risk involved in a

banking transaction and determine acceptable level of risk and accordingly provide appropriate

monitoring control to detect and report suspicious transaction in a timely manner.

Customer Risk Rating is assigned to customers at account opening stage based on several components

considered including the documentary and non-documentary evidence in knowing/identifying the

customer and subject to periodic review pursuant to the provisions hereof.

Customer Risk Rating is assigned to customers at account opening stage based on several components

considered including the documentary and non-documentary evidence in knowing/identifying the

customer and subject to periodic review pursuant to the provisions hereof.

Risk Rating Classification

After identifying, evaluating and estimating the levels of risk that a customer is likely to engage in money

laundering or terrorist financing, customers are classified as follows:

Low Risk - customer pose a minor risk compared to known money laundering typologies that it can

engage knowingly or unknowingly in money laundering or terrorist financing activities and is an ideal

level of risk;

Normal Risk - customer does not pose a significant risk compared to known money laundering

typologies that it can engage knowingly or unknowingly in money laundering or terrorist financing

activities and is an acceptable level of risk;

High Risk - customer pose a major risk comparable to known money laundering typologies that it can

engage knowingly or unknowingly in money laundering or terrorist financing activities although within

tolerable level of risk, but subject to enhanced monitoring.

Basic Risk Parameters

The risk parameters are generally classified into 3 categories, namely:


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Account/Entity Risk- specific risk associated with the customer's type, nature of business, occupation or

declared/anticipated transaction activity.

Geographic Risk- specific risk associated with doing business in, opening accounts for customers from,

or facilitating transactions involving certain geographic locations.

Products and Services Risk- risk associated with the nature of specific products or services offered that

can facilitate a higher degree of anonymity, or involve the handling of high volume of currency or

currency equivalent.

Default Risk Classification of Selected Customers/Accounts

Regardless of the result of the Customer Risk Rating, the following are considered HIGH RISK and shall

be subject to Enhanced Due Diligence and require appropriate Senior Officer, Management Committee

or Board Committee approval:

1. Non-Governmental Organization (NGO); Non-Profit Organization (NPO), Foundation (amended

by Compliance Bulletin AMLDOM 016-2013 dtd Sep 9, 2013)

GENERAL AML POLICY FOR NGOs/NPOs/FOUNDATIONS:

Due to the recent developments involving abuse of government funds funneled to Non-Governmental

Organizations (NGOs); Non-Profit Organizations (NPOs) and/or Foundations, entering into business

relationship with NGOs/NPOs/Foundation shall require appropriate Senior Officer, Management

Committee or Board Committee approval.

Non-Governmental/Non-Profit Organization/Foundation shall refer to a legal person or arrangement or

organization that primarily engages in raising or disbursing funds for purposes such as charitable,

religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of

good works (FATF Best Practices to Recommendation 8)

Enhanced Due Diligence (EDD) is required to be conducted including background check of all

trustees/incorporators, senior management and authorized signatories to the account.

Quarterly review of transactions must be performed by the Branch AML Compliance Officer (in the case

of domestic branches) and/or Compliance Officer-Designate (for Head Office Unit) to ensure

transactions have legal purpose or economic reasons and account usage is consistent with its intended

purpose.

2. Money Changers/Foreign Currency Dealers

3. Remittance Companies/Agents

4. Casino and related gaming entities

5. Custom Brokerage

6. Jewels/Gem/Precious Metal Dealers

7. Gun Ammunition/Military Equipment Dealers


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8. Politically Exposed Persons, (amended by Compliance Bulletin AMLDOM-005-2013 dated March

25, 2013)

A. Natural PEP

i. Heads of state or of governmentPresident of the Republic of the Philippines

President of a foreign country

Prime Minister of a foreign country

ii. Senior national or local government officials

Vice-President

Cabinet members

Members of Senate (Senators) and Congress (Congressmen)

PNP Chief

Foreign ambassadorsGovernors

Vice-Governors

Mayors

Vice Mayors

iii. Judicial Officials

Supreme Court Justices

Court of Appeals Justices

Sandiganbayan Justices

OmbudsmanSolicitor General

Signatories to the accounts of the above

iv. Senior Military Officials

Chief of Staff

Heads of its 4 major branches (i.e. Army, Navy, Marines, Air Force)

Signatories to the accounts and/or related accounts of AFP

v. Senior executives of Government Owned or Controlled Corporations (GOCCs)

government agencies, instrumentalities and LGUs

Heads of government agencies

Signatories to the accounts of GOCCs, government agencies (including Philippine

National Police) and local government units (LGUs)

vi. Important political party officials

Secretary General


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vii. Other prominent public positions in the Philippines or in a foreign state

Foreign ambassadors

Consul-General

Signatories to the account(s) of an embassy

viii. Immediate family members (i.e, parents, children, spouse) and close associates ofPEPs

B. Juridical PEP

A private entity wherein a natural PEP sits as Chairman, Director, Senior Executive, signatory

to the account or owns at least 20% of the authorized capital stock of the said company shall

be considered Juridical PEP.

Note: For the purpose of this Manual, Senior Officer shall refer to the next higher

authority of the approving officer (i.e., Area Heads or Regional Heads of branches, Group

Heads or Sector Heads of Marketing Units).

Customer Risk RatingRisk Factors

Risk Factor Numeric Weight

Individual:

RISK FACTOR RATIONALE/REMARKS

Citizenship Used for identifying Account/Entity Risk and

Geographic Risk, classified as follows based

on numeric weights:

1 - Filipino Citizen, whether resident or

non-resident

2 - Resident Alien other than No. 1 above

3 - Non-resident alien

RISK FACTOR RATING NUMERIC WEIGHT

Low Risk 1

Normal Risk 2

High Risk 3


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Geographical Address Used in identifying Geographic Risk, classified as

follows based on numeric weights:

1 - Present or permanent address is within

the branch vicinity known to branch personnel

and properly identified thru KYC documents.

2 - Present or permanent address is not

falling under any of the High Risk Philippine

Areas or outside the branch vicinity.


the High Risk Philippine Areas and outside the

branch vicinity; or Non-Philippine address.

Individual identification Used for identifying Account/Entity Risk

classified as follows based on numeric weights:

1 - Use of primary and secondary photo-

bearing Philippine Government issued IDs

2 - Use of primary or secondary photo-

bearing Philippine Government issued IDs:

3 - Use of Foreign government photo-

bearing issued ID

Occupation/Nature of work orself-employment

Used for identifying Account/Entity Risk,classified as follows based on numeric weights:

1 - Employed locally; retired employee;

pensioner, OFW; beneficiary of an OFW

2 - Student; self-employed or unemployed

but with spouse income

3 - Expatriates, Consular/ambassadorial

staff; UN staff, unemployed but income is not

derived from spouse or immediate familymember father,mother,son,daughter,brother or

sister).

Account Opening Method Used for identifying Account/Entity Risk,


1 - Face-to-face with (all) account


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owner/s/signatory/ies and/or authenticated by

PNB domestic/overseas branch personnel

2 - Face-to-face with some account

owners/signatories but authenticated by a PNB

domestic/overseas branch personnel

3 - Face to face with some account

owners/signatories but authenticated by third

parties not PNB branch personnel.

High Risk Persons Used for identifying Account/Entity Risk,


1 - Individual/s with Declared Monthly

Transaction Volume of less than P100,000.00

2 - Individual/s with Declared Monthly

Transaction Volume of over P100,000.00;

Designated Professional/s (FATF definition)

Designated Professionals:

Real estate agents

Lawyers, notaries, other independent

legal professionals and accountants

(this refers to sole practitioners,

partners or employed professionalswithin professional firms. It is not

meant to refer to internal

professionals that are employees of

other type of businesses, nor to

professionals working for government

agencies, who may already be subject

to measures that would combat money

laundering).

3 - Politically Exposed Persons and

associates; Jewel/Gem/precious metal dealers

or Designated Professionals or Individuals with

Declared Monthly Transactions Volume of over

P500,000.00

Opening Deposit Used for identifying Account/Entity Risk and

Products and Services Risk classified as follows


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based on numeric weights:

1 - Cash, other bank draft, managers

check, payroll check or other government

agency check up to P100,000.00;

2 - Cash and other bank draft of more than

P100,000.00 and up to P500,000.00

3 - Cash and other bank draft of over

P500,000.00

Gross Monthly Volume of

Transaction (GMVT)

Used for identifying Products and Services Risk

during re-assessment based on actual gross

account movements (credits only) classified as


1 - Gross Monthly Volume of Transaction

up to P100,000.00;

2 - Gross Monthly Volume of Transaction is

over P100,000 and up to P500,000;


over P500,000;

Length of Relationship Used for Account/Entity Risk and Products and

Services Risk classified as follows based on

numeric weights:

1 - Existing customer with relationship of at

least 1 year

2 - Existing customer with relationship of

less than 1 year

3 - No prior relationship

Products and Services Used for identifying Products and Services Risk


Products and Services Numeric

Weight

a. Currency deposits or

withdrawals

1

b. Check deposits/ 1


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encashment

c. Purchase of MC/DD 1

d. Internet banking 2

e. Local fund transfer

(PDDTS/RTGS)

2

f. Dollar savings account to

be used for sole proprietary

business

3

g. Foreign Remittance 3

h. Sale/Purchase of Foreign

Exchanges

3

Non-individual (Corporations, Partnerships, Associations, Charitable Institutions)

RISK FACTOR RATIONALE/REMARKS

Place of Incorporation/ Registration Used for identifying Account/Entity Risk


1 - Incorporated/registered in the

Philippines

2 - Incorporated/registered outside the

Philippines but country is not listed in FATF list .

3 - Incorporated/registered outside the

Philippines and country is listed in the FATF list

(ANNEX A)

Corporate address/Principal

Headquarters/Head office

Used in identifying Geographic Risk, classified as



the branch vicinity known to branch personnel

and properly identified thru KYC documents

2 - Present or permanent address is not

falling under any of the High Risk Philippine


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Areas and outside the branch vicinity


the High Risk Philippine Areas (ANNEX B) and

outside the branch vicinity; or Non-Philippine

address

Corporate/Organization Documents Used for identifying Account/Entity Risk


1 - Use of Philippine issued registration/

incorporation documents;

2 - Use of non-Philippine incorporation/

registration papers duly authenticated by

Philippine Consulate Office/s

3 - Use of registration documents as a

Remittance Agent, Money Changer, Money

Exchange Dealer or Money Service Business.

Nature/Type of Industry Business Used of identifying Account/Entity Risk


1 - Government owned and controlledcorporations; publicly listed companies; banking

institutions; trust entities and quasi-banks

authorized by the BSP; government agencies;

LGUs not listed under the High Risk Philippine

Areas

2 - Businesses not listed numeric weight 1

or 3

3 - Newly organized charitable

institutions/foundations; money changers;

foreign currency dealers; remittance

companies/agents; casino and related gambling

entities; custom brokerage; dealers of

jewels/gem/precious metals; gun/

ammunition/military equipment dealers; LGUs


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listed under the High Risk Philippine Areas

Account Opening Method Used for identifying Account/Entity Risk


1 - Face-to-face with all signatories/account

owners by domestic/overseas branch personnel;


owners/signatories but authenticated by a PNB

overseas branch/office Officer


owners/signatories authenticated by third

parties not PNB branch personnel

Designated Authorized Signatories Used for identifying Account/Entity Riskclassified as follows based on numeric weights:

1 - Persons not listed as designated

professionals

2 - Designated professional

3 - Politically Exposed Person; PEP

associate; non-resident alien

Actual/Declared Gross Monthly

Volume of Transaction (GMVT)

Used for identifying Products and Services Risk

during re-assessment based on actual gross

account movements (credits only)classified

based on numeric weights:

1 - Gross Monthly Volume of Transaction of

less than and up to P5 Million or its equivalent


over P5 Million and up to P10 Million or its

equivalent

3 - Gross Monthly Volume of Transactions is

over P10 Million

Length of Relationship Used for Account/Entity Risk and Products and

Services Risk classified as follows based on

numeric weights:


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1 - Existing customer with relationship of at

least one year

2 - Existing customer with relationship of

less than 1 year

3 - No prior relationship

Products and Services Used for identifying Products and Services Risk


Products and Services Numeric

Weight

a. Currency deposits or withdrawals 1

b. Purchase of MC/DD 1

c. Internet banking 2

d. Local fund transfer

(PDDTS/RTGS)

2

e. Check deposits(2nd

Endorsed) 3

f. Dollar savings account (if

business is not related to import-

export or currency

exchange/trading)

3

g. Foreign Remittance 3

h. Sale/Purchase of Foreign

Exchange

3

Customer Risk Rating Process

Customer Risk Rating Range

Customer Risk Rating Total (CRRT) refers to the overall result when all the Risk Factors are summed up

according to each of their relative numeric weights. The risk rating range is as follows:

Risk Rating Numeric Range

Low Risk 14 or less


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Normal Risk 15-25

High Risk 26 or higher

Customer Risk Rating Tools (CRR)

There are 2 CRR tools to be used by the branch:

a. Individual this CRR tool is used for individuals when opening and during periodic risk

assessment of Current/Checking Account, Savings Account or Time Deposit Account

b. Non-Individualthis CRR tool is used to non-individuals when opening and during periodic risk

assessment of Current/Checking Account, Savings Account or Time Deposit Account

Tagging of Customers in Appropriate Systems

All customers must be tagged in the various CIS and support systems with the following customer riskrating code:

Customer Type HIGH NORMAL LOW HIGH NORMAL LOW

Individual A B C 300 500 400

Corporate/Juridical Entity A B C 300 500 400

Politically Exposed Person (PEP) D 200

PNB Employee's Account EA E 120 100

US Person FA F 360 600

Government Account GA G 320 800

NGOs/NPOs/Foundation HA H 370 700

CUSTOMER RISK RATING CODE

FLEXCUBE SYSTEMATICS

Tagging shall be performed by the designated bank personnel and must be approved by the authorized

bank officer/s only. Day 2 validation of customer information encoded in the system vis-a-vis properly

accomplished forms and identification documents is necessary to ensure customer data integrity in the

system

The bank has customer risk rating score models used to assign the appropriate initial customer risk

rating at account opening. The customer risk ratings are subject to periodic reviews based on defined

"cycles" for high risk, normal risk and low risk customers.

PNB Employees

All new and existing employees of the bank. Normally tagged Eor 100. However, if employee has

been a subject of investigation related to internal fraud or AML related financial crimes, account should

be tagged EAor 120


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US Persons1should be tagged FAor 360 (HIGH RISK) shall be assigned if CRR total is 26 or HIGHER.

For 600shall be assigned if US Person CRR total is less than 26.

A US person is one who is:

US Individual

US Citizen (by birth or naturalization)

a. A dual citizen where one country of citizenship is the US

b. Non-US citizen that is a US permanent resident (i.e. green card holder)

c. Non-US citizen with substantial presence in US (greater than 183 days)

d. Holds a U.S. passport

e. Is a resident of the U.S.

U.S. Partnership

U.S. Corporation, Company or Association created or organized in the U.S. or under laws of the

U.S.

U.S. Trust or Estate

U.S. Indicia:

Any of the following which may indicate U.S. status:

has a U.S. address (resident or correspondence)

has U.S. telephone number

has a care of address, a hold mail address, or a U.S. Post Office address that is the sole

address on file with respect to the account holder

has granted Power of Attorney to a person with a U.S. address

has provided Standing Instructions to transfer funds to an account maintained in the U.S. or

directions received from a U.S. address

Government

GAor 320(HIGH RISK) shall be assigned if CRR total is 26 or HIGHER. Gor 800shall be assigned if

CRR total is less than 26.2 Hence, there is a need to re-assess the CRR of Government agencies with the

following types transactions, viz:

Disbursements of government agencies that passed through the Modified

Disbursement Scheme (MDS), which disbursements are payable to private

entities; non-governmental organizations (NGOs) non-profit, charitable or

religious foundations; or to individual persons. (Modified Disbursement

Scheme is mostly used where disbursements of national government

agencies chargeable against the Treasury are made through government

servicing banks.); and


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Disbursements of government agencies coursed through other depository

banks, other than the MDS accounts, that are payable to private entities;

non-governmental organizations (NGOs) non-profit, charitable or religious

foundations; or to individual persons.

An account has indications of Government if:

Government Owned and Controlled Corporations of the Republic of the

Philippines;

Local Government Units;

Philippine Government Agencies and Instrumentalities including Police

and Military; or

Philippine Consulate

The accounts of the following government agencies should be immediately tagged GAor 320in

Flexcube and Systematics Systems:

National Agribusiness Corporation (NABCOR)

Livelihood Corporation (LIVECOR)

ZNAC Rubber Estate

NGOs/NPOs/Foundation

Non-Governmental/Non-Profit Organization/Foundation shall refer to a legal person or arrangement or

organization that primarily engages in raising or disbursing funds for purposes such as charitable,

religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of

good works (FATF Best Practices to Recommendation 8)

NGOs/NPOs/Foundations are generally HIGH RISK and should be tagged HA or 370 except for the

following NGOs/NPOs/Foundations which shall be tagged as H or 700 (Normal Risk)3

ABS-CBN Lingkod Kapamilya Foundation

ABS-CBN Foundation

Bantay Bata 163

Gawad Kalinga

GMA Kapuso Foundation

Habitat for Humanity, International

Philippine National Red Cross

Salvation ArmyTan Yan Kee Foundation, Inc

The YMCA

UNICEF World Vison


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Enhanced Due Diligence (EDD)

EDD for High Risk customers is especially critical in understanding their transactions and implementing a

suspicious transaction monitoring system that reduces the banks reputation, compliance and

transaction risks. High Risk customers and their transactions should be reviewed more closely at account

opening and more frequently throughout the term of their relationship with the Bank.

When to Conduct EDD

Branches/Offices/Operating Units shall apply EDD when any of the following circumstance exists/occurs:

Raises doubt as to the accuracy of any information or document provided or the ownership of

the entity;

Justifies re-classification of the customer from low or normal risk to high-risk pursuant to AMLC,

BSP rules and regulations or the Banks policy or when there is knowledge in the activity changes

(e. g, low risk rate upon opening but later subject of suspicious transaction reporting; change

from regular to Politically Exposed Person account or vice versa and the like). Should there be aneed to maintain and change customer risk rating (e.g., expected account activity, change in

employment or business relations), approval of a Senior Officer is required. (See Section 9.4 for

the definition of Senior Officer)

Any of the circumstance for the filing of suspicious transaction exists but not limited to the

following:

a. Transacting without any underlying legal trade, purpose or economic

justification

b. Transacting an amount that is not commensurate with the business or

financial capacity of the customer or deviates from his profile;

c. Structuring transactions in order to avoid being the subject of coveredtransaction reporting; or\

d. Knowing that a customer was or is engaged or engaging in any unlawful

activity defined under the AMLA

Additional Measures When Conducting EDD

Whenever enhanced due diligence is applied as required by BSP Circular 706, the Branch AML

Compliance Officer/Operating Unit shall in addition to profiling of customers and monitoring of

customerstransactions do the following:

1. Obtain additional information other than the minimum information and/or documents.

For individuals:

List of banks where the individual has maintained or maintaining an account

List of companies where he is a director, officer or stockholder

Banking services to be availed of


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For corporate or juridical entities:

List of prior or existing bank references

Name, present address, date and place of birth, nature of work, nationality and source of

funds of each of the primary officers (President, Treasurer and authorized signatory/ies),

stockholders owning at least 20% of the voting stock, and directors/trustees/parties as

well as their respective identification documents

2. Conduct validation procedures on any or all the information provided

3. Obtain senior management approval for establishing business relationship

Customer Verification Procedures

Verification of procedures for individual customers shall include but not limited to the following:

Confirming the date of birth from a duly authenticated official document

Verifying the permanent address through evaluation of utility bills, bank credit card statement,

or other documents showing permanent address or through on-site visitationContacting the customer by phone, email or letter (such as sending of thank you letters); and

Determining the authenticity of the identification documents through validation of its issuance

by requesting a certification from the issuing authority or by any other means.

Validation procedures for corporate or juridical entities shall include but not limited to the following:

Require the submission of audited financial statements conducted by a reputable

accounting/auditing firm;

Inquiring from the supervising authority the status of the entity

Obtaining bank references;

On-site visitation of the company; andContacting the entity by phone, email or letter (such as thank you letters).

IMPORTANT: Where additional information cannot be obtained, or any information or document

provided is false or falsified, or result of the validation process is unsatisfactory, the

Branch/Office/Operating Unit shall not allow account opening or initiate termination of the banking

relationship with the individual or entity without prejudice to the reporting of a suspicious transaction

to the AMLC when circumstances warrant.

Customer Identification

Customer Identification Process has to be carried out at different stages:

While establishing a business relationship

While carrying out a financial transaction


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When the Branch/Office has doubt about the veracity or the adequacy of the previously

obtained customer information or identification data.

Customer identification4shall mean establishing and recording the true identity of the customer based

on valid identification documents (Section 11.3 of 2014 MLPP). Branch/Offices need to obtain sufficient

information necessary to establish, the identity of each customer and the purpose of the intended

nature of banking relationship. The following shall be taken into account during the customer

identification stage.

Background and source of funds

Country of origin and place of operations

Public or high profile position of the customer or its directors/trustees, stockholders, officers

and/or authorized signatories

Linked accounts/Other accounts maintained

Watchlist of individuals and entities engaged in illegal activities or terrorist financing related

activities as circularized by BSP, AMLC and other international entities or organizations such asthe OFAC and UN Sanctions List

Business activities

Types of services/products and transactions to be entered with the Bank

In all instances, approving Officers must ensure the KYC process for a specific customer was

documented; the required information and documents were complied with.

Minimum Information and Documents Required for Individual Customers and Authorized

Signatory/ies of Corporate/Juridical Entities

Individual customers shall open and maintain the account only in the true and full name of the account

owner or owners, their true and full identity fully established. For sole proprietorship entities, the bank

must establish the relationship of the trade name with the registered owner and the customer account.

The following minimum information shall be required to be obtained from individual customers or

authorized signatory(ies) of corporate or juridical entities classified as Low Risk or Normal Risk

customers. This information shall be confirmed with the valid identification documents mentioned

under Section 11.3 of the Banks MLPP.

Name

Present address

Date and place of birthNature of work, name of employer or nature of self-employment/business;

Contact details

Specimen signature

Source of funds

Permanent address;


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Nationality;

Tax identification number, SSS or GSIS number, if any; and

Name, present and permanent address, date and place of birth, nature of work and source

of funds of beneficial owner or beneficiary, whenever applicable.

An individual account that is eventually used for business or trade related transactions must be replaced

with the account name of the register name of the business enterprise.

Business or trade related transactions shall mean transactions of covered persons natural or juridical

referred to below:

1. Banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,

pawnshops, money changers, remittance and transfer companies and other

similar entities and all other persons and their subsidiaries and affiliates

supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

2. Insurance companies, pre-need companies and all other persons supervised or

regulated by the Insurance Commission (IC);

3. Securities dealers, brokers, salesmen, investment houses and all other similar

persons managing securities or rendering services as investment agent, advisor

or consultant, (ii) mutual funds, close-end investment companies, common trust

funds, and other similar persons, and (iii) other entities administering or

otherwise dealing in currency, commodities or financial derivatives based

thereon, valuable objects, cash substitutes and other similar monetary

instruments or property supervised or regulated by the Securities and Exchange

Commission (SEC);

4. Jewelry dealers in precious metals, who, as a business, trade in precious metals;

5. Jewelry dealers in precious stones, who, as a business, trade in precious stones;

6. Company service providers which, as a business, provide any of the following

services to third parties: (i) acting as a formation agent of juridical persons; (ii)

acting as (or arranging for another person to act as) a director or corporate

secretary of a company, a partner of a partnership, or a similar position in

relation to other juridical persons; (iii) providing a registered office, business

address or accommodation, correspondence or administrative address for a

company, a partnership or any other legal person or arrangement; and (iv)

acting as (or arranging for another person to act as) a nominee shareholder for

another person; and

7. Persons who provide any of the following services:


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a) Managing of client money, securities or other assets;

b) Management of bank, savings or securities accounts;

c) Organization of contributions for the creation, operation or

management of companies; and

d) Creation, operation or management of juridical persons or

arrangements, and buying and selling business entities.

Notwithstanding the foregoing, the term covered persons shall exclude lawyers and accountants

acting as independent legal professionals in relation to information concerning their clients or where

disclosure of information would compromise client confidences or the attorney-client relationship.

Provided, that these lawyers and accountants are authorized to practice in the Philippines and shall

continue to be subject to the provisions of their respective codes of conduct and/or professional

responsibility or any of its amendments.

Minimum Required Information/Documents Required for Corporate and Juridical Entities

The following minimum information shall be required to be obtained from corporate or juridical entities

classified as Low Risk or Normal Risk customers.

Certificates of Registration issued by the Department of Trade and Industry for single

proprietorships or Securities and Exchange Commission for corporations and partnerships

and by the BSP for money changers, foreign exchange dealers and remittance agents;

Articles of incorporation or Association and by-lawsPrincipal business address

Board or Partners Resolution duly certified by the Corporate/Partners Secretary

authorizing the signatory to sign on behalf of the entity;

Latest General Information Sheet which lists the names of directors/trustees/partners,

principal stockholders owning at least twenty (20%) of the outstanding capital stock and

primary officers such as the President and Treasurer;

Contact numbers of entity and authorized signatory/ies

Source of funds and nature of business

Name, present and permanent address, date and place of birth, nature of work and

source of funds of beneficial owner or beneficiary; if applicable; andFor entities registered outside the Philippines, similar documents and/or information shall

be obtained duly authenticated by the banks branch officer or authorized bank

representative or Philippine Consulate where said entities are registered.


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Approving Officers shall have the primary responsibility of requesting credit investigation on the

business activity and validation of business registration documents to ensure that the entity has not

been or in the process of being, dissolved, struck-off, wound up, terminated, or otherwise placed under

receivership or liquidation. In instances wherein the bank officer is not comfortable and/or fully

satisfied with the information provided, additional verification may be conducted by requesting credit

investigation on business operations and authorized signatories of the company. Credit investigation is

optional for companies listed in the Philippine Stock Exchange or in the Top 1000 Corporations in the

Philippines.

Valid IDs

The following guidelines govern the acceptance of valid ID cards for all types of financial transaction by a

customer and the authorized signatory/ies of a corporate or juridical entity, including financial

transactions involving Overseas Filipino Workers (OFWs), in order to promote access of Filipinos to

services offered by formal financial institutions, particularly those residing in areas wherein bank

branches are not accessible, as well as to encourage and facilitate remittances of OFWs through the

banking system.

a. Customers and authorized signatory/ies of a corporate or juridical entity who

engage in a financial transaction with the Bank for the first time shall be

required to present the original copy and submit clear copy of valid photo-

bearing IDs with signature issued by an official authority5.

LOW/NORMAL RISK HIGH RISK

Any 1 of the valid IDs

(primary or secondary ID)

2 valid IDs- 1 primary and 1 secondary;

or 2 primary IDs AND

Submission of any 1 of the following:

- Latest bank/brokers/ insurance

statements

- Latest telephone bills

- Latest utility/cable bills

- Latest credit card bills

- Latest club membership bills

- Latest GIS submitted to SEC as proof of


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being a Director/ Officer of an entity

FOREIGN NATIONALS

2 valid IDsPassport WITH ACR issued by Bureau of Immigration AND

- National ID; or

- Internal Revenue Service (IRS) ID or;

- Social Security System (SSS) ID; or

- Work permit issued by DOLE (mandatory requirement) if employed in

the Philippines

Valid IDs include the following:

Primary:

Valid Passport

Drivers license with Official Receipt

Unified Multi-Purpose ID

SSS ID

GSIS e-Card

PRC ID

IBP Lifetime Membership ID

NBI Clearance

Work permit issued by DOLE for foreign nationals

Secondary:

Police Clearance

Postal ID

Voters ID

Tax Identification Number Card

Barangay Certification

Senior Citizen Card

OWWA ID

OFW ID

Seamans book

Alien Certification of Registration/Immigrant Certificate of Registration

Government Office and GOCC ID (e.g. AFP, HDMF IDs)

Certification from NCWDP

DSWD Certification

IBP ID

Phil-Health ID Health Insurance Card ng Bayan


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Company IDs issued by private entities or institutions registered with or

supervised or regulated either by the BSP, SEC or IC

Foreign Government Issued IDs

Valid Passport

Drivers License

National ID

Internal Revenue Service (IRS) ID

Social Security System (SSS) ID

b. Students who are beneficiaries of remittances/fund transfers and who are not

yet of voting age, may be allowed to present the original and submit a clear

copy of one (1) valid photo-bearing school ID duly signed by the principal or

head of the school.

c. Where the customer or authorized signatory is a non-Philippine resident, similar

IDs duly issued by the foreign government where the customer is a resident or a

citizen may be presented.

d. The bank shall require their customers or authorized signatory to submit a clear

copy of one (1) valid ID on a one-time basis only at the commencement of

business relationship. They shall require their clients to submit an updated

photo and other relevant information on the basis of risk and materiality.

e. The bank may classify identification documents based on its reliability and

ability to validate the information indicated in the identification document withthat provided by the customer.

f. Whenever it deems necessary, the bank may accept other IDs not enumerated

above provided that it shall not be the sole means of identification.

g. In case the identification documents mentioned above or other identification

documents acceptable to the covered institution do not bear any photo of the

customer or authorized signatory, or the photo bearing ID or a copy thereof

does not clearly show the face of the customer or authorized signatory, a

covered institution may utilize its own technology to take the photo of the

customer or authorized signatory.

It is encouraged that the customer submits at least two valid IDs, one of which must be photo bearing

and with signature.


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Conducting the Initial Interview and Establishing Identity

SALES AND SERVICE ASSOCIATE - NEW ACCOUNTS/ ACCOUNT OFFICER OF TRUST/TREASURY/SAMS/

LENDING UNITS:

1. Briefs the prospective client on the requirements and features of the account being opened

and/or transaction being conducted.

2. Conducts an initial Interview and performs exploratory questioning to establish information

pertaining to:

Personal circumstances

Purpose of opening the account and/or transaction applied for

Nature of Business

Source of funds

Identification of Beneficial Owner(s)

Expected Transaction Amount

Expected Transaction Volume/CountReason for choosing PNB particularly when the residence of client is outside

the territorial jurisdiction of the concerned branch

3. Observes unusual behavior of client during the conduct of interview and looks for the following

warning signs:

Customer has unusual or nervous demeanor

Customer discusses Banks record keeping or reporting responsibilities

Customer uses unusual or suspicious identification documents that cannot

be readily verified.

Customer is reluctant when establishing a new account, to provide

complete information about the nature and purpose of its business,

anticipated account activity, prior banking relationships, names of its

officers and directors, or information on its business location.

Customers home/business telephone is disconnected.

Customer uses a temporary address, like a hotel room or a pension house.

Customer is a national of a country which belongs among the List of

Jurisdictions with Strategic AML/CFT Deficiencies. The list is prepared by the

Financial Action Task Force (FATF) and enumerates all countries that are

viewed as not being cooperative in the fight against money laundering and

terrorist financing.

Customers background differs from that which would be expected based on

his or her business activities.

A business or new customer asks to be exempted from reporting or record-

keeping requirements.


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4. Requests client to produce the original of documents of identity issued by an official authority

bearing his photograph such as passport, drivers license, company identification cards, SSS card,

GSIS card and other valid IDs enumerated under Section 11.3 of the Banks MLPP.

5. Examines carefully the documents of identity presented looking for any sign of erasures,

alterations and tampering.

6. Interviews client to validate information/data elicited during the initial interview and

exploratory questioning against the presented identity documents.

7. Observes the following steps if the customer lacks the proper documents and/or results of the

interview and exploratory questioning are poor.

8. Requests the client to submit acceptable IDs before allowing the opening of account or

processing the transaction/service applied for if he lacks the proper documents.

9. Courteously decline the application for account opening and/or transaction

if the customer fails to satisfactorily explain discrepancies between the information

elicited during the preliminary interview/questioning and documents presented

There are signs of erasures and tampering of documents presented.Displayed suspicious and questionable behavior.

10.Requests client to fill out account opening forms and Customer Profile Form for

deposit/investment accounts of Trust Division and Treasury Division, and provide the Bank

with a photocopy of documents of identity presented if he/she satisfactorily meet our

requirements and passed the initial interview and questions. Ensures that the account opening

forms and customer profile form are properly accomplished.

11.Accomplish Customer Risk Rating sheet to determine the customer AML risk rating (i.e. Low

Risk, Normal Risk, High Risk, PEP, PNB Employee, Government, NGO/NPO/Foundation, FATCA,

etc)

12.Forwards all documents to Sales and Service Head (SSH)/ Trust/Treasury Marketing/SAMS Sales

Division/Lending Units Head for review and approval.

Encoding AML CIF Mandatory Information

1. The Sales and Service Associate should ensure that the following mandatory information

and its corresponding Flexcube Fast Paths are encoded immediately upon account

opening.

Minimum Information Fast Path (FP)

FULL NAME 7101 - IC Short Name Change

PRESENT ADDRESS CIM09Mailing Address


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PERMANENT ADDRESS CIM09Permanent Address

DATE OF BIRTH CIM09Individual Customer Info

PLACE OF BIRTH CIM09User Defined Fields

NATURE OF WORK CIM09Individual Customer Info

CONTACT NUMBERS CIM09Mailing Address

MOBILE NUMBER CIM09Permanent Registration

TIN, SSS, GSIS (other IDS presented TIN CIM09 Basic Information/SSS, GSIS

CIM09User Defined Fields

Valid IDs presented by client CIM09

User Defined Fields

CLIENT RISK CLASSIFICATION CIM09User Defined Fields

SOURCE OF FUNDS CIM09User Defined Fields

Other Relevant Information (if applicable)

Customer Detail Maintenance CIM11 (Name of Employer and Spouse

Name)

Corporate Customer Details CIM17 (Business Commencement Date,

Business License Nature of Business,

Major Shareholder Names)

Face-to-face Contact

No new account shall be opened and created without face-to-face contact and personal interview

between the Banks duly authorized personnel.

No Business Arrangement with Shell Banks

A shell bank is a shell company incorporated as a bank or made to appear to be incorporated as a bank

but has no physical presence and no affiliation with a regulated financial group. It can also be a bank

that:

Does not conduct business at a fixed address in a jurisdiction in

which the shell bank is authorized to engage;

Does not employ one or more individuals on a full time business at

this fixed address;


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Does not maintain operating records at this address;

Does not subject to inspection by the banking authority that

licensed it to conduct banking activities.

The bank should refuse to enter into, or continue a correspondent relationship with shell banks. The CBC

should not use the banks product and services to engage in business with the shell banks.

Electronic Monitoring Systems for Money Laundering

Electronic Monitoring Systems of the Bank are being utilized by the Domestic AML Compliance and

Overseas AML Compliance Departments of the Global Compliance Group primarily in detecting,

monitoring and reporting covered and suspicious transactions. Enhancements, modifications and system

upgrades are handled by the Compliance Systems Support Department also of the Global Compliance

Group in close coordination with the Infrastructure Technology Group and affected business units.

Giftsweb EDD

The Bank acquired the Giftsweb EDD System in 2005, the electronic AML monitoring system compliant

with the requirements of BSP Circular 495 issued in 2006. The system has undergone series of system

enhancements and system interfaces from Flexcube Corporate and Retail System, TAPS Trust System,

OPICS Treasury System, Remittance Systems (IRS, GSR, ARS) and the AML Data Capture System. These

system enhancements resulted to the roll-out of the Giftsweb EDD System to other foreign branches like

PNB New York, PNB Singapore, PNB Tokyo, PNB Hong Kong and PNB London.

The Giftsweb EDD System adopted by the Bank can detect suspicious activity that may ultimately link to

money laundering and terrorist financing activity.

Dow Jones Risk and Compliance Software

The Bank subscribed to Dow Jones Risk and Compliance Software for accurate, complete and up-to-date

risk data for robust compliance with anti-money laundering and Know Your Customer regulation. Dow

Jones Watchlist contains data on the relatives and close associates of Politically Exposed Persons,

helping to alert organizations to individuals who may require closer scrutiny. Dow Jones's team of

researchers and analysts update a global collection of law enforcement, government sanction lists and

other information on a daily basis.

AML Data Capture/Entry System (ADCS/AMLADES)

ADCS is an internally developed system primarily to ensure transactions not supported by the front-end

applications are captured and uploaded to Giftsweb EDD System for transaction monitoring and analysis

and covered transactions are processed by the ACGS for reporting to the AMLC.


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Centralized Watchlist System (CWS)

The CWS, an internally developed system designed to help the Bank minimize its exposure to risk of

financial crime and to comply with Philippine and international AML-CFT rules and regulations. The CWS

contains the following lists:

1. OFAC-SDN

2. United Nations (UN) Sanction Lists

3. Her Majesty Treasury-Bank of England

4. Philippine National Senior Government Officials

5. Internal Watchlist

When to use CWS:

Branches, Offices and Operating Units are required to screen the clients name, purchaser, payee,

remitter or beneficiary (depending on the type of transaction) against CWS when:

1. Establishing business relationship/opening an account

2. Sale of bank drafts3. Over the counter payment of remittances

4. FXOTT, RTGS or PDDTS

5. Conducting enhanced due diligence

What to do in case of a name-match

In the event of a name-match, please refer to Branch Head or Division Head for guidance and subject

to EDD. If upon further verification of the Branch Head or Division Head confirmed positive match, the

transaction should not proceed. Responsible Unit must submit a STR within 48 hours to Global AML

Compliance DivisionDomestic AML Regulations and MIS Department. In case of positive-match vs UNSanction List involving over-the-counter payment of remittance, payment of remittance must not

proceed.

Responsible Unit/Branch must inform without delay or call immediately Global AML Compliance Division

for appropriate disposition and guidance. (added by Compliance Bulletin AMLDOM-010-2014).

Reporting of Covered Transactions

Covered transaction is a single transaction in cash or other equivalent monetary instrument involving an

amount exceeding FIVE HUNDRED THOUSAND PESOS (P500,000) within one banking day.

All covered transactions generated by the Banks electronic AML System shall be reported to AMLC in

electronic form within ten (10) working days from occurrence.

REPORTABLE TRANSACTIONS (BRANCH)-

FOR AMLDCS:


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1. Sale/Issuance of Managers Check, Demand, Bank Draft (Peso/Dollar/3rd

Currency) funded by cash or processed vs. GL accounts. No data entry is

needed if transaction is funded by a debit from clients savings or current

account using the following Flexcube Fast Paths (FP):

FP 1010Bank Check (BC) Sale Against Account

FP 1014Demand Draft (DD) Sales Against Account

FP 8318Telegraphic Transfer (TT) Sale Against Account

2. Encashment of Managers Check, Demand Draft (Peso/Dollar)

3. Outgoing Remittances

Outgoing Telegraphic Transfer (OTT)Peso/FX

Philippine Dollar Domestic Transfer System (PDDTS)

4. Purchase/Sale of FX notes

5. Cancelled/Stale Managers, Cashiers, Travellers Check, Demand Draft (if

already posted)

FOR AMLADES:

1. Sale/Issuance of Managers, Gift Check, Demand Draft

2. Purchase/Sale of FX Notes and Third currency transactions

3. Outgoing Remittances

Outgoing Telegraphic Transfer (OTT)Peso/FX

Philippine Dollar Domestic Transfer System (PDDTS)

4. Inward RemittancesTelegraphic Transfer (TT) and Pay-out arrangements

5. Transactions processed using DM-Ordinary and CM-Ordinary Transaction

Codes (TCs)

6. Cancelled/Stale Managers, Cashiers, Travelers Check, Demand Draft (if

already posted)

Note: Supervisors must ensure that remitter and beneficiary, purchaser and/or payee of checks or

telegraphic transfer transactions are validated against the CWS before approving the transaction.


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A positive match of the name of the purchaser/payee and or remitter/beneficiary vs. the CWS list will

require the branch personnel to conduct enhanced due diligence to reject transaction and refer the

transaction to AML Compliance immediately for possible suspicious transaction reporting. While a

negative match of the name vs. CWS list should allow the branch to proceed with the sale or issuance of

the bank drafts and telegraphic transfers.

To comply with the regulatory requirements on aggregation/structuring, transactions shall be reported

regardless of amount and currency. For Purchase/Sale of FX notes, only transaction amount of above Php

500,000.00 or its equivalent in other currency shall be reported.

The amount to be encoded via AMLDCS/AMLADES shall include all fees and charges incidental to the

execution of the transaction.

Checker shall ensure all transactions required to report are posted by the Maker within the prescribed

reporting period and the information is complete and accurate.

Reporting Suspicious Transactions

Suspicious Transaction is a transaction, regardless of amount, where any of the following circumstance

exists:

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

b) the client is not properly identified;

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

d) taking into account all known circumstances, it may be perceived that the clientstransaction is

structured in order to avoid being the subject of reporting requirements under the act;

e) any circumstance relating to the transaction which is observed to deviate from the profile of the

client and/or the clients past transactions with the covered institution;

f) the transaction is in any way related to an unlawful activity or any money laundering activity or

offense under the AMLA, as amended, is being or has been committed;

g) any transaction that is similar, analogous or identical to any of the foregoing.

Reporting of suspicious transactions to the Anti-Money Laundering Council (AMLC) shall be the

responsibility of the branch/office maintaining the account.

Transactions which, in the judgment of branches/offices other than the maintaining branch, are deemed

suspicious shall document and submit their findings to the branch maintaining the account for additional

verification measures and/or reporting to the AMLC.

Further STR filing is required for the following cases covered in Report on Crimes and Losses (RCL):

Case Unit to File STR

a. Internal fraud arising from qualified theft

and/or estafa charges vs erring bank

employees

Unit where erring bank employee

is assigned


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b. ATM Skimming ATM Center

c. Credit card skimming Credit Card Division

d. Negotiation of spurious or fraudulent check

detected/intercepted by Central Clearing

Division

Central Clearing Division

e. Negotiation of spurious or fraudulent check

detected/intercepted thru local clearing

Branch maintaining the account

The Philippine AML Review Committee

The Philippine AML Review Committee is tasked primarily to evaluate and approve the filing of

Suspicious Transaction Report (STR) to the Anti-Money Laundering Council (AMLC). Furthermore, the

AML Review Committee may recommend changes to existing operational policies and procedures as

well as formulate new policies and procedures to ensure sustained compliance by the bank to anti-

money laundering and CFT laws, regulations and implementing guidelines.

The Philippine AML Review Committee shall be composed of the following:

Chief Compliance Officer Chairman

Global AML Compliance Division Head

& Deputy Compliance Officer

Vice Chairman

Designated AML Legal Counsel Member

Designated Representative of

the Business/Support Group*

Member

Domestic AML Regulations and MIS Dept. Head Member & Secretariat

*The designated representative of the Business Group or Support Group must have a minimum rank of

Vice President.

AML Training and Countering of Terrorist Financing Training Program

It is the policy of the bank to ensure that all its directors, officers and employees wherever located, are

informed and adequately trained in matters covered by the Banks Money Laundering and Terrorist

Financing Prevention Program to enable them to fully comply with their obligations and responsibilities


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under the AMLA as amended, its Revised Implementing Rules and Regulations, TF Suppression Act and

its Implementing Rules and Regulations, BSP Circulars, Letters, Memoranda and AMLC Resolutions.

Global Compliance Group in close coordination with the Human Resource Group is required to conduct

Anti-Money Laundering (AML) training to all its Employees. Ongoing education of bank personnel is an

important element in the compliance function to maintain a sound compliance program. The purposeof the training is to make all personnel aware of the banking laws and regulations as well as the Banks

policies and procedures that affect their areas of responsibilities. The number of AML trainings and

frequency will depend on the business needs and priorities of the Bank. All new hires must undergo

compliance and AML awareness training prior assumption of duties while existing employees are

required to participate in refresher courses within a period of 18 to 24 months. AML trainings shall be in

the form of classroom trainings, modular workshops, on-site trainings, branch / unit meetings,

compliance reviews and surveys.

5 components of AML Compliance Risk:

1. Board and Senior Management Oversightreflects the efficiency and capability

of the unit/entity to escalate to Board/Senior Management money

laundering/terrorist financing issues and concerns as well as resolution of

findings/exceptions noted by the internal/external auditors and regulators.

2. Policies and Procedures reflects the units/entitys adequacy of AML/CFT

policies and procedures vis--vis Philippine/host-country laws and regulations

and adequacy of access to Cybermag-Knowledge Base and I-comply/Homepage

or similar sites where the policies and procedures, MLPP, AMLCFT Policy

Guidelines and Compliance Bulletins are electronically accessed.

3. Internal control and MIS reflects adequacy and soundness of the monitoring

and compliance testing conducted by the AML Compliance Officer/Compliance

Officer-Designate to identify, measure, monitor and control money laundering

risks as well as compliance with the Philippine and/or host-country AML laws

and regulations.

4. Implementation reflects the level of effectiveness in the implementation of

the MLPP which include customer acceptance and identification, covered and

suspicious transaction reporting, transaction monitoring, record-keeping and

retention.

5. Training reflects the level of awareness and understanding of Units/entitys

personnel to AML laws, rules, regulations, policies and procedures.


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Likewise, the 4-level composite rating shall be implemented as follows:

Overall

Rating

Description

4 Sound. High level of effectiveness. All of mostly 4 with no

sub-component rating less than 3

3 Adequately sound. Acceptable level of effectiveness. All or

mostly 3 but no sub-component rating of 2

2 Vulnerable. Implementation needs improvement. All 2 or no

subcomponent rating of 1

1 Grossly inadequate. Poor implementation. All or mostly 1

AML Compliance Certification Process

The AML Compliance Certification is aligned with the BSP-AML Risk Rating System (ARRS) issued on April

4, 2012 under BSP Memorandum No. M-2012-017 and intended to maintain a thorough understanding

of the Banks operating units level of AML compliance thru self-assessment.

Under the revised AML Compliance Certification, each branch, business and/or operating unit is

assigned a Composite Rating based on their self-assessment on the 5 components of AML Compliance

Risk. The component factors are as follows:

1.

Board and Senior Management Oversight the rating reflects the efficiency and capabilityof the unit to escalate to Senior Management money laundering/terrorist financing issues

and concerns as well as resolution of findings/exceptions noted by the internal/external

auditors and regulators.

2.

Policies and Procedures - the rating reflects the units adequacy of access to Cybermag-

Knowledge Base and I-Comply sites where Banks policies and procedures, MLPP, AMLCFT

Policy Guidelines and Compliance Bulletins are electronically accessed

3.

Internal Control and MISthe rating reflects the adequacy and soundness of the monitoring

and compliance testing conducted by the Branch AML Compliance Officer/Compliance

Officer-Designate to identify, measure, monitor and control money laundering risks as well

as compliance with the AMLA, its IRR and BSP rules and regulations;

4.

Implementationthe rating reflects the level of effectiveness in the implementation of the

MLPP which include customer acceptance and identification, covered and suspicious

transaction reporting, record-keeping and retention and updating of customer records,

among others;


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5.

Trainingthe rating reflects the level of awareness and understanding of branch/operating

units personnel to AML laws, rules, regulations, policies and procedures.

Composite rating is assigned based on a 1 to 4 numerical scale. The highest rating of 4 indicates the

strongest risk management system and most effective operational practices that entail the least degree

of GCG supervision. The lowest rating of 1 on the other hand signifies the weakest risk managementsystem and defective implementation which requires the highest degree of GCG concern

The Composite Ratings are defined as follows:

OVERALL

Rating

Description

4 Sound. High level of effectiveness. All or mostly 4 with no sub-component rating

less than 3

3 Adequately Sound. Acceptable level of effectiveness. All or mostly 3 but no sub-component rating of 2.

2 Vulnerable. Implementation needs improvement. All 2 and no sub-component

rating of 1

1 Grossly inadequate. Poor implementation. All or mostly 1

The AML Compliance Quarterly Certification shall be submitted to Global AML Compliance Division

every 10th

day of the month after the reference quarter by the following:

Compliance Officer-Designates of Head Office Units

Trust Compliance Officer

In the case of Domestic Branches, Branch Operations Review Department (BORD) Head as Compliance

Officer-Designate shall submit a consolidated report to Global AML Compliance Division.

Record Keeping and Retention Period

As required by the AMLA as amended, closed accounts (KYC documents and business correspondences)

shall be preserved and safely stored for at least 5 years from date of closure. If a money laundering casehas been file in Court, records must be retained beyond the 5 year retention period and until it is

confirmed that the case has been finally resolved or terminated by the court.


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Customer records and documents

a) Group Heads shall designate at least two (2) officers who will be jointly responsible and

accountable in the safekeeping of all records and documents required to be retained by

the AMLA as amended.

b) The designated officers shall have the obligation to make the customer records and

documents available without delay during BSP regular or special examinations and/or

AMLC requests for customer records.

Designation of Officers shall be:

Domestic Branches: Branch Head and 1 Officer

Business Units and Support Departments: Department head and 1 Officer

c) Group Heads must ensure the designation in the safekeeping of records is reviewed

annually (every March)

ENTERPRISE MANAGEMENT OF FREEZE ORDER /ASSET PRESERVATION ORDER (MERGED BANK)

1.

All Freeze Orders/Asset Preservation Orders (Provisional or otherwise) issued by the Court of

Appeals (CA) or the Regional Trial Courts (RTC) shall be immediately referred to Legal Group;

2. Legal Group shall notify and coordinate with the following units for immediate implementation of

and compliance with the Freeze/Asset Preservation Order;

a. Branch Operations Division Headfor domestic branches

b. Treasury Operations Services Division Headc. Trust Banking Group thru TBG Compliance Officer

d. Overseas Offices Operations Division Headfor overseas branches, offices, and subsidiaries

e. Domestic Subsidiaries and Affiliates Group Headfor domestic subsidiaries and affiliates

3.

Branches/Units shall immediately implement the effects of the Freeze/Asset Preservation Order

and immediately submit a written return to Legal Group and enable the handling lawyer to file

within the 24-hour period (mandated by law), the Banks return-compliance with the CA/RTC.

Branches/Units must, when necessary, resort to previously conducted KYC measures, to

determine whether or not an account is a MATERIALLY-LINKED.

Materially linked accounts include but are not limited to the following:

1. All accounts or monetary instruments belonging to the same person whose accounts, monetary

instruments or properties are the subject of the freeze order;

2. All accounts or monetary instruments held, owned or controlled by the owner or holder of the

accounts, monetary instruments or properties subject of the freeze order, whether such

accounts are held, owned or controlled singly or jointly with another person;


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3. All accounts or monetary instruments the funds of which are transferred to the accounts,

monetary instruments or properties subject of the freeze order without any legal or trade

obligation, purpose or economic justification;

4. All In Trust For (ITF) accounts where the person whose accounts, monetary instruments or

properties are the subject of the freeze order is either the trustee or the trustor;

5. All accounts held for the benefit or in the interest of the person whose accounts, monetary

instruments or properties are the subject of the freeze order;

6. All accounts or monetary instruments under the name of the immediate family or household

members of the person whose accounts, monetary instruments or properties are the subject of

the freeze order if the amount or value involved is not commensurate with the business or

financial capacity of the said family or household member;

7. All accounts of corporate and juridical entities that are substantially owned, controlled or

effectively controlled by the person whose accounts, monetary instruments or properties are

subject of the freeze order;

8. All shares or units in any investment accounts and/or pooled funds of the person whose

accounts, monetary instruments or properties are subject of the freeze order; and

9. All other accounts, shares, units or monetary instruments that are similar, analogous or

identical to any of the foregoing.

4.

The Legal Group shall submit, within 24-hours from receipt of the Freeze or Preservation Order, a

written-return to Court of Appeals/Regional Trial Court, Anti-Money Laundering Council and

furnish Global AML Compliance Division Head and Chief Compliance Officer copy of the duly filed

return-compliance.

5.

Legal Group is expected to maintain an enterprise database of Freeze Order/Asset Preservation

Order and must be updated regularly to reflect status/actions taken on specific court order.

Glossary of Anti-Money Laundering Terms

Money laundering, in general, is the name given to the process by which the origin of illicit funds is

disguised. The need to indulge in money laundering is primarily to cover up the means by which such

funds have been acquired with the aim of legitimizing them. According to the United Nations, the term

Money Laundering is defined as Any act or attempted act to disguise the source of money or assets

derived from criminal activity. It is the process whereby dirty money produced through criminal

activity- is transformed into clean money. The terms given below are arranged here to for information

purpose only and might not have any standing for legal purposes etc.

Covered Institution - shall refer to Banks, Offshore banking units, quasi-banks, trust entities, non-stock

savings and loan associations, pawnshops, foreign exchange dealers, money changers, remittance

agents, electronic money issuers and other financial institutions which under special laws are subject toBSP supervision and/or regulation, including their subsidiaries and affiliates as herein defined wherever

they may be located:

Subsidiary - means an entity more than fifty percent (50%) of the outstanding voting stock of which is

owned by a bank, quasi-bank, trust entity or any other institution supervised and/or regulated by the

BSP.


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Money Services Business (MSB). -This include non-bank financial institutions, currency dealers,

exchange companies and travelers cheque issuers.

OFAC - The Office of Foreign Assets Control of the United States

PEP Politically Exposed Persons:- Individuals who are prominent public functionaries.

Predicate Offences Crimes - underlying money laundering or terrorist financing activity.

These may include drug trafficking, gambling and prostitution rings, arms trade, smuggling