A. On the anti-money laundering laws:
1. What is the distinction between a “covered transaction report” and a “suspicious transaction report”? (2%)
2. Does the Anti-Money Laundering Council have the authority to freeze deposits? Explain. (2%)
B. On foreign investments:
1. A foreign company has a distributor in the Philippines. The latter acts in his own name and account. Will this distributorship be considered as doing business by the foreign company in the Philippines? (3%)
2. ABC Corporation was organized in Malaysia but has a branch in the Philippines. It is entirely owned by Filipino citizens. Can you consider ABC Corporation a Philippine national? (2%)
Suggested answer only. Not an official answer and not legal advice.
CTR covers cash over P500,000, while STR covers suspicious transactions. AMLC cannot freeze deposits. Distributorship in one's own name is not doing business, while 100% Filipino foreign firms registered locally are Philippine nationals. Under RA 9160, CTR requires
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Quick check
What distinguishes a covered transaction from a suspicious transaction under Republic Act Number 9160?
Covered transactions depend on cash thresholds over P500,000, whereas suspicious transactions depend on suspicious circumstances regardless of amount.
Which judicial body possesses exclusive authority to issue a freeze order on bank deposits under the Anti-Money Laundering Act?
Under Section 10 of RA 9160, the Court of Appeals possesses exclusive authority to issue freeze orders over bank deposits.
When does an independent distributor's local commercial activity constitute 'doing business' by a foreign corporation under RA 7042?
A foreign corporation is doing business if the local distributor acts as a commercial agent in the name and for the account of the foreign principal.
Under Section 3 of the Foreign Investments Act of 1991, can a corporation organized under foreign laws be considered a Philippine national?
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Which primary statutes govern anti-money laundering reporting, deposit freeze orders, and foreign investment definitions in the Philippines?
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Learn more about these topics
1. Covered Versus Suspicious
Under Section 3 of the Anti-Money Laundering Act (Republic Act Number 9160), a covered transaction report involves a transaction in cash or other equivalent monetary instrument exceeding Five Hundred Thousand Pesos within one banking day. Conversely, a suspicious transaction report applies regardless of the amount involved whenever there is no underlying economic justification, the client is not properly identified, or the transaction deviates from the client's profile.
2. Bank Deposit Freeze
Under Section 10 of Republic Act Number 9160, as amended, the Anti-Money Laundering Council does not possess the direct statutory authority to issue freeze orders against bank deposits. The authority to issue a freeze order rests exclusively with the Court of Appeals upon verified ex parte application by the Council. The Court of Appeals may issue a freeze order effective immediately for twenty days when probable cause exists that deposit accounts are related to unlawful activities.
3. Foreign Investments Act
Under Section 3 of the Foreign Investments Act of 1991 (Republic Act Number 7042), an independent distributor purchasing and selling goods in their own name and account does not constitute doing business by the foreign manufacturer. Furthermore, a corporation organized under foreign laws that registers a branch in the Philippines and is wholly owned by Filipino citizens qualifies as a Philippine national under the law.