POLICIES AND REGULATIONS TO IMPROVE TRANSPARENCY IN THE OWNERSHIP, CONTROL AND BENEFIT OF CORPORATE VEHICLES ALFONSO D. LANUZA, JR Officer-In-Charge Anti-Money Laundering Division Enforcement and Investor Protection Department SECURITIES AND EXCHANGE COMMISSION, PHILIPPINES 23-25 September 2019 JAKARTA, INDONESIA
RECENT LAWS AND RULES AIMED AT IMPROVING TRANSPARENCY OF OWNERSHIP AND CONTROL AND BENEFIT OF CORPORATE VEHICLES ANTI-MONEY LAUNDERING ACT, AS AMENDED (R.A. 9160 as amended by R.A. 9194, R.A. 10167, R.A.10365, R.A. 10927) 2018 IMPLEMENTING RULES AND REGULATIONS OF THE ANTI-MONEY LAUNDERING ACT, AS AMENDED (2018 IRR) SEC MEMORANDUM CIRCULAR NO. 16, SERIES OF 2018 SEC MEMORANDUM CIRCULAR NO. 15, SERIES OF 2019 – REVISION OF THE GIS TO INCLUDE BENEFICIAL OWNERSHIP INFORMATION REVISED CORPORATION CODE OF THE PHILIPPINES (RCC) EIPD-Anti-Money Laundering Division (AMLD)
ANTI-MONEY LAUNDERING ACT (AMLA), AS AMENDED • Signed into law on September 29, 2001 and took effect on October 17, 2001. • Defined and prescribed penalties for the offense of Money Laundering • Created the Anti-Money Laundering Council (AMLC), the financial intelligence unit of the Philippines. • Empowered the Anti-Money Laundering Council to implement such measures as may be necessary and justified to counteract money laundering.
Pursuant to its authority under the AMLA, the AMLC issued its 2018 Implementing Rules and Regulations • PROVIDES FOR THE SUPERVISION AND MONITORING OF COMPLIANCE OF COVERED PERSONS WITH THE AMLA AND ITS IRR BY THEIR RESPECTIVE SUPERVISING AUTHORITIES • REQUIRES COVERED PERSONS TO IMPLEMENT CUSTOMER DUE DILIGENCE (CDD) MEASURES INCLUDING BENEFICIAL OWNERSHIP VERIFICATION • DEFINES WHO IS A BENEFICIAL OWNER • REQUIRES THE SEC TO OBTAIN AND HOLD UP-TO-DATE INFORMATION ON THE COMPANIES’ BENEFICIAL OWNERSHIP TO REQUIRE COMPANIES AND CLIENTS WHICH ARE LEGAL PERSONS, RESPECTIVELY, TO TAKE REASONABLE MEASURES TO OBTAIN AND HOLD UP-TO-DATE INFORMATION ON THE COMPANIES’ BENEFICIAL OWNERSHIP AND TO SUBMIT ACCURATE AND REGULARLY UPDATED BENEFICIAL OWNERSHIP INFORMATION.
SUPERVISING AUTHORITIES (SAs) • Refers to the Bangko Sentral ng Pilipinas ( BSP), Securities and Exchange Commission (SEC), and the Insurance Commission (IC) or other government agencies designated by law to supervise or regulate a particular financial institution or DNFBP.
COVERED PERSONS • Persons supervised and/or regulated by the Bangko Sentral ng Pilipinas (BSP) such as Banks, Quasi-banks, Trust Entities, Pawnshops, Non-Stock Savings and Loan Associations, Other Non-Bank Financial Institutions which under special laws are subject to BSP supervision and/or regulation, Electronic Money Issuers, Foreign Exchange Dealers, Money Changers, and Remittance and Transfer Companies. • Persons supervised and regulated by the Insurance Commission (IC) such as Insurance Companies, Pre-Need Companies, Insurance Agents, Insurance Brokers, Professional Reinsurers, Reinsurance Brokers, Holding Companies, Holding Company Systems, Mutual Benefit Systems, and all other persons and their subsidiaries and affiliates, supervised or regulated by the IC.
SECURITIES AND EXCHANGE COMMISSION (SEC) AS SUPERVISING AUTHORITY (2018 IRR OF THE AMLA, AS AMENDED) The following are the institutions/persons under the supervision of the SEC Securities Dealers, Brokers, Salesmen, Investment Houses, and other similar persons managing securities or rendering services, such as investment agents, advisors, or consultants; Mutual Funds or Open End Investment Companies, Close-End Investment Companies or Issuers, and other similar entities; and Other entities administering or otherwise dealing in commodities, or financial derivatives based thereon, valuable objects, cash substitutes, and other similar monetary instruments or properties supervised or regulated by the SEC.
SEC COVERED PERSONS PER SEC MC NO. 16, SERIES OF 2018 (2018 GUIDELINES ON AML/CFT FOR SEC COVERED INSTITUTIONS Securities Brokers, Dealers and Salesmen, Associated Person of a Broker or Dealer, • . Investment Houses and other similar entities managing securities or rendering similar services; Investment Company Advisers/Fund Managers, Mutual Fund Distributors, Mutual Fund • Companies, Closed-End Investment Companies; Investment Advisor/Agent/Consultant; • Financing Companies and Lending Companies, both with more than 40% foreign • participation in its voting stock or with paid-up capital of Php10 Million or more; Other entities administering or otherwise dealing in currency, commodities or financial • derivatives based thereon, cash substitutes and other similar monetary instruments or property, supervised or regulated by the Commission. . EIPD-Anti-Money Laundering Division (AMLD)
SECURITIES AND EXCHANGE COMMISSION • ADMINISTRATIVE AGENCY HAVING SUPERVISION AND JURISDICTION OVER ALL CORPORATIONS GRANTED A PRIMARY AND/OR SECONDARY FRANCHISE • ENFORCES AND ADMINISTERS, AMONG OTHERS, THE FOLLOWING LAWS: 1. Securities Regulation Code – law which provides for investor protection, regulation of the capital market 2. Revised Corporation Code – provides for the creation, operation and regulation of corporations EIPD-Anti-Money Laundering Division (AMLD)
OTHER LAWS ENFORCED BY THE SEC AS A REGULATORY AGENCY • INVESTMENT COMPANY ACT • INVESTMENT HOUSES LAW • CREDIT INFORMATION SYSTEM ACT • LENDING COMPANY REGULATION ACT • THE FINANCING COMPANY ACT
• Rule 23, Sections 1 and 3 of the 2018 IRR of the AMLA, as amended � Section 1: SEC is enlisted to develop mechanisms for identification of juridical persons including the processes for obtaining and recording basic and beneficial ownership information. � Section 3: SEC shall obtain and hold up-to-date information on the companies’ beneficial ownership; require companies and clients that are legal persons to take reasonable measures to obtain hold up-to- date information on the companies’ beneficial ownership; and require companies and corporate clients, respectively, to submit accurate and regularly updated beneficial ownership information for ML/TF. EIPD-Anti-Money Laundering Division (AMLD)
DEFINITION OF BENEFICIAL OWNER UNDER THE 2018 IRR OF THE AMLA Beneficial Owner refers to a natural person who: • (1) Ultimately owns or controls the customer and/or on whose behalf a transaction or activity is being conducted; • (2) Has ultimate effective control over a juridical person or legal arrangement; or • (3) Owns, at least, twenty percent (20%) shares, contributions or equity interest in a juridical person or legal arrangement.
DEFINITION OF BENEFICIAL OWNER UNDER SEC MEMORANDUM CIRCULAR NO. 16, SERIES OF 2018 Refers to a natural person who: 1) ultimately owns or controls the customer or on whose behalf the transaction is being conducted; or 2) 2) has ultimate effective control over a customer that is a legal person or arrangement.
ULTIMATE EFFECTIVE CONTROL Refers to any situation in which ownership/control is exercised through actual or a chain of ownership or by means other than direct control. This may be achieved through, but not limited to any of the following: a)Direct or indirect ownership of at least 25% of any category of voting shares or capital of a legal person, understanding, relationship or otherwise has or shares voting power, which includes the power to vote, or to direct the voting of such security; and/or investment returns or power which includes the power to dispose of, or to direct the disposition of such security; xxx
THE REVISED CORPORATION CODE OF THE PHILIPPINES (RCCP) • The RCCP is the law providing for the incorporation, registration, classification, organization, ownership structure, management, control, operation, rights and obligations and the regulation and supervision of private corporations in the Philippines. Under the law, registration with the SEC of the Articles of Incorporation of an organization gives it a juridical personality. • CLASSES OF CORPORATIONS UNDER PHILIPPINE LAW A. STOCK CORPORATIONS – those which have capital stock divided into shares and are authorized to distribute to the holders of such shares, dividends, or allotments of the surplus profits on the basis of the shares held B. NON-STOCK – all other corporations. EIPD-Anti-Money Laundering Division (AMLD)
REVISED CORPORATION CODE OF THE PHILIPPINES (RCCP) • SEC. 73. Books to be Kept; Stock Transfer Agent. – Every corporation shall keep and carefully preserve at its principal office all information relating to the corporation including, but not limited to: (a) The articles of incorporation and bylaws of the corporation and all their amendments; (b) The current ownership structure and voting rights of the corporation, including lists of stockholders or members, group structures, intra-group relations, ownership data, and beneficial ownership ; xxx. EIPD-Anti-Money Laundering Division (AMLD)
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