New Anti-Money Laundering Requirements for Financing and Lending Companies

The SEC has released a new Memorandum which requires all Financing and Lending Companies in the Philippines to register with the Anti-Money Laundering Council (AMLC), comply with anti-money laundering guidelines and in general, play a more active role in the reporting of potential money laundering and terrorist financing activity in the country.

If you run or manage a Financing or Lending Company in the Philippines, you will need to be aware of this recent SEC Memorandum!

Background

The Securities and Exchange Commission, or the SEC, is mandated to help the AMLC in monitoring the implementation of various anti-money laundering and terrorist financing legislation and regulations in the Philippines. In particular, this includes:

• The Anti-Money Laundering Act, or AMLA; and
• The Terrorist Financing Prevention and Suppression Act, or TFPSA.

Two main sets of Guidelines have previously been issued to help guide SEC covered persons and entities to comply with anti-money laundering and terrorist financing regulations and requirements in the country. These two Guidelines are also designed to help protect the Philippine financial system and ensure it is not used as a location for illegal/unlawful financial activity.

These two main Guidelines are:

• The 2018 AML/CFT Guidelines; and
• The 2020 Guidelines on the Submission and Monitoring of the Money Laundering and Terrorist Financing Prevention Program (MTPP)

What is the Effect of SEC Memorandum Circular No. 4, Series of 2021?

M.C. No. 04 s. 2021. is implemented by the SEC by virtue of various amendments to certain sections of the 2018 and 2020 Guidelines (see above).

Before the introduction of M.C. No. 04 s. 2021, only Financing and Lending Companies that had more than 40% foreign equity and such companies that had paid-up capital of PHP10,000,000 or more were required to comply with the above two sets of Guidelines.

With the implementation of M.C. No. 04 s. 2021, now all Financing and Lending Companies in the Philippines will be considered as SEC “covered persons” for the purposes of the 2018 and 2020 Guidelines.

This means that all Financing and Lending Companies must now comply with the requirements and standards outlined and mandated under the 2018 and 2020 Guidelines.

What Does This Mean for Financing And Lending Companies in the Philippines?

As mentioned above, all Financing and Lending Companies in the Philippines will now be subject to the already existing Guidelines.

Financing and Lending Companies are now required to become more proactive in monitoring and reporting any suspicious transactions or activity that might be or might have a connection to money laundering or the financing of terrorism in the Philippines.

In particular, M.C. No. 04 s. 2021 requires the following:

• All Financing and Lending Companies under the supervision of the SEC are now required to comply with Section 2, Rule 4 of the 2018 IRR of the AMLA and must register with the AMLC’s online reporting system (as required under the AMLC Registration and Reporting Guidelines).
• Financing and Lending Companies who are not yet registered with the AMLC have 2 months from the effective date of M.C. No. 04 s. 2021 (see below) to register and submit proof of registration to the SEC.
• All Financing and Lending Companies must generate and implement a “comprehensive and risk-based” Money Laundering and Terrorist Financing Prevention Program (MTPP), which complies with both the AMLA and TFPSA. This Program must be designed for and aligned with the corporate structure and risk profile of the company.
• Again, Financing and Lending Companies will have 2 months from the effective date of M.C. No. 04 s. 2021 (see below) to submit the MTPP to the SEC.
• All Financing and Lending Companies are now subject to the AML/CFT supervision of the SEC in accordance with M.C. No. 26, s. 2020. Such companies must adopt and implement a “risk-based approach” to AML/CFT.

When Does M.C. No. 04 s. 2021 Take Effect?

M.C. No. 04 s. 2021 is dated 30 March 2021.

Section 9 states that it will take effect 15 days after its publication in two national newspapers of general circulation in the Philippines and its posting on the SEC website.

M.C. No. 04 s. 2021 was already published on the SEC website and was published in the Manila Standard and Manila Times newspapers on 5 April, 2021.

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