SEC toughens regulations against money laundering


The Securities and Exchange Commission reinforced its rules against money laundering activities and terrorist financing in the Philippines to keep the country off the gray list of global watchdog Financial Action Task Force

It issued a new circular providing the guidelines to prevent the misuse of corporations for illicit activities by promoting transparency.

The new guidelines require the mandatory disclosure of the identity of the beneficial owners, or persons who ultimately own or effectively control corporations.

“Arrangements that allow shareholders or members to hide their identity expose corporations to the risk of being misused for illicit activities such as money laundering and terrorist financing,” said SEC chairperson Emilio Aquino.

“The newly-issued guidelines will provide the commission with adequate, accurate and timely information to combat such unlawful activities, while cementing our commitment to international standards and best practices against money laundering and terrorist financing,” he said.

The guidelines provide that no corporation or entity should issue, sell or offer for sale or distribution bearer shares and bearer share warrants, where the name of owners are neither reflected on the physical stock certificate nor recorded in the stock and transfer book of the issuing corporation.

The guidelines further require corporations other than publicly listed companies to disclose and record in their stock and transfer book the alienation, sale or transfer of shares of stock, the date thereof, by whom and to whom made within 30 days. Otherwise, the transaction will not be binding on the issuer.

Meanwhile, nominee directors/trustees and shareholders of existing corporations are required to disclose their nominators and principals within 30 days after the effectivity of the guidelines or 30 days from the time they became or assumed their roles of, or started acting as nominee directors/trustees or shareholders.

The SEC said non-compliance would be sanctioned with a fine of P5,000 to P2 million, plus up to P1,000 for each day of continuing violation but not exceeding P2 million; suspension or revocation of the certificate of incorporation; and other penalties the commission may impose.

It said the new measures adopted the recommendations in the Mutual Evaluation Report issued by Financial Action Task Force in October 2019. This move is expected to keep the country off the gray list of FATF, the global financial watchdog.

The FATF recommended that the Philippines introduce measures to ensure that bearer share warrants, nominee directors and nominee shareholders were not misused for money laundering and terrorist financing.  

The watchdog also urged the Philippines to ensure that mechanisms operate to ensure that information on the beneficial ownership of a company can be determined on time.

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