Bank teller Loris submitted a Suspicious Transaction Report (STR) on Marychelle, a politically exposed person (PEP), who, when asked about her deposit of Php 2,000,000.00 in cash, winked and replied “Sikreto teh”. The Anti-Money Laundering Council did not find probable cause which could support the belief that Marychelle had committed an unlawful activity or was otherwise involved in money laundering. Marychelle now wants to sue the bank and Loris for allegedly discriminating against her. Discuss whether or not Loris and the bank are liable. (5 points)
Suggested answer only. Not an official answer and not legal advice.
No, Loris and the bank are not liable. Under Section 9(c) of the Anti-Money Laundering Act (R.A. No. 9160, as amended), known as the Safe Harbor Provision, no administrative, criminal, or civil proceedings shall lie against any person for
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Quick check
Under Section 9(c) of the Anti-Money Laundering Act, what is the legal effect of the Safe Harbor Provision?
The Safe Harbor Provision protects reporting persons acting in good faith from civil, criminal, or administrative liability.
Does the Anti-Money Laundering Council's finding of no probable cause make a bank teller liable for filing an STR?
Safe harbor protection applies regardless of whether the suspicious transaction report leads to criminal prosecution.
What constitutes a suspicious transaction under the Anti-Money Laundering Act regardless of amount?
A transaction lacking legal obligation, purpose, or economic justification is classified as a suspicious transaction.
Why is a bank teller protected when submitting a suspicious transaction report on a uncooperative depositor?
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Which statute contains the Safe Harbor Provision protecting financial institutions and employees reporting STRs?
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Learn more about these topics
1. Safe Harbor Provision
Under Section 9(c) of the Anti-Money Laundering Act (Republic Act Number 9160, as amended), no administrative, criminal, or civil proceedings shall lie against any person for having made a covered or suspicious transaction report in the regular performance of duties and in good faith, whether or not such reporting results in criminal prosecution. The Safe Harbor Provision insulates reporting institutions and their officers from civil damage suits, preventing retaliatory litigation by depositors when financial institutions fulfill their statutory reporting obligations in good faith.
2. Suspicious Transaction Reporting
Under the Anti-Money Laundering Act, a suspicious transaction is any transaction with a covered institution, regardless of the amount involved, where there is no underlying legal or trade obligation, purpose, or economic justification. Circumstances such as a client refusing to disclose the source of funds or making evasive evasions give rise to a mandatory reporting obligation for covered institutions. Reporting a transaction based on suspicious circumstances constitutes compliance with statutory duties rather than unlawful discrimination against a depositor.
3. Politically Exposed Persons
Under anti-money laundering regulations, a Politically Exposed Person (PEP) is an individual entrusted with prominent public functions, whether domestic or foreign. Financial institutions are required to conduct enhanced due diligence when dealing with Politically Exposed Persons due to heightened financial risks. When a Politically Exposed Person makes a substantial cash deposit and refuses to provide legitimate source-of-funds information, bank employees are legally mandated to file a suspicious transaction report without incurring personal liability.