FRAUD AND ELECTRONIC MONEY LAUNDERING

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FRAUD ANDELECTRONIC MONEY LAUNDERING

• Presented by
• ATTY. RICHARD DAVID C. FUNK II

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WHAT IS MONEY LAUNDERING

• Under the AMLA, money laundering is a crime
  whereby the proceeds of an unlawful activity are
  transacted, thereby making them appear to have
  originated from legitimate sources.
• Money Laundering as a crime is committed in three
  (3) different ways under the AMLA

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HOW COMMITTED

• Any person knowing that any monetary instrument
  or property represents, involves, or relates to,
  the proceeds of any unlawful activity, transacts
  or attempts to transact said monetary instrument
  or property.
• Imprisonment of 7 to 14 years and a fine of not
  less than P 3 Million but not more than twice the
  value of the monetary instrument or property
  involved in the transaction.

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HOW COMMITTED

• Any person knowing that any monetary instrument
  or property involves the proceeds of an unlawful
  activity, performs or fails to perform any act as
  a result of which he facilitates the offense of
  money laundering referred to in paragraph (a)
  above.
• Imprisonment of 4 to 7 years and a fine of not
  less than P 1 Million but not more than P 3
  Million.

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HOW COMMITTED

• Any person knowing that any monetary instrument
  or property is required under this Act to be
  disclosed and filed with the Anti-Money
  Laundering Council (AMLC), fails to do so.
• Imprisonment of 6 months to 4 years or a fine of
  not less than P100,000 or P 500, 000 or both.

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UNLAWFUL ACTIVITIES OR PREDICATE CRIMES

• Unlawful Activity refers to any act or omission
  or series or combination thereof involving or
  having DIRECT relation to any of the following
• Kidnapping for ransom
• Drug related offenses, e.g., trafficking
• Graft and corrupt practices/acts
• Robbery and extortion

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UNLAWFUL ACTIVITIES OR PREDICATE CRIMES

• Jueteng and Masiao
• Piracy on the high seas
• Qualified Theft
• Swindling
• Offenses punishable under the E-Commerce Act
• Hijacking, destructive arson, murder, even when
  committed against non-combatant persons

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UNLAWFUL ACTIVITIES OR PREDICATE CRIMES

• Violation of the Securities Regulation Code
• Felonies or offenses of a similar nature under
  penal laws of other countries

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WHY ELECTRONICALLY MONEY LAUNDER
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ELECTRONIC MONEY

• Electronic money (also known as e-currency,
  e-money, electronic cash, electronic currency,
  digital money, digital cash or digital currency)
  refers to money or scrip which is only exchanged
  electronically.

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ELECTRONICALLY LAUNDERING MONEY

• Typically, this involves the use of computer
  networks, the internet and digital stored value
  systems. Electronic Funds Transfer (EFT) and
  direct deposit are all examples of electronic
  money. Also, it is a collective term for
  financial cryptography and technologies enabling
  it
• Ecash- when abused/misused for criminal purposes

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SUSPICIOUS ACTIVITY INDICATORS IN GENERAL

• Suspicious transactions are transactions with
  covered institutions, regardless of the amounts
  involved, where any of the following
  circumstances exist
• 1. There is no underlying legal or trade
  obligation, purpose or economic justification
• 2. The client is not properly identified

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SUSPICIOUS ACTIVITY INDICATORS IN GENERAL

• 3. The amount involved is not commensurate with
  the business or financial capacity of the client
• 4. Taking into account all known circumstances,
  it may be perceived that the clients transaction
  is structured in order to avoid being the subject
  of reporting requirements

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SUSPICIOUS ACTIVITY INDICATORS IN GENERAL

• 5. Any circumstance relating to the transaction
  which is observed to deviate from the profile of
  the client and/or the clients past transactions
  from the covered institution
• 6. The transaction is in any way related to an
  unlawful activity or offense under this Act that
  is about to be, is being or has been committed

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SUSPICIOUS ACTIVITY INDICATORS IN GENERAL

• 7. Any transaction that is similar or analogous
  to any of the foregoing

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Suspicious Activity Indicators related to
Financing of Terrorism

• AMLC RESOLUTION NO.59 s. 2005
• Wire transfers between accounts, without visible
  economic or business purpose, especially if the
  wire transfers are effected through countries
  which are identified or connected with terrorist
  activities. 

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• Sources and/or beneficiaries or wire transfers
  are citizens of countries which are identified or
  connected with terrorist activities.
• Repetitive deposits or withdrawals that cannot be
  explained or do not make sense.
•  
• Value of the transaction is over and above what
  the client is capable of earning.
• Client is conducting a transaction that is out of
  the ordinary for his known business interest.
• Deposits being made by individuals who have no
  known connection or relation with the account
  holder.

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• An individual receiving remittances, but has no
  family members working in the country from which
  the remittance is made.
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• Client was reported and/or mentioned in the news
  to be involved in terrorist activities.
• Client is under investigation by law enforcement
  agencies for possible involvement in terrorist
  activities.

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• Transactions of individuals, companies, or
  non-governmental organizations (NGOs) that are
  affiliated or related to people suspected of
  being connected to a terrorist group or a group
  that advocates violent overthrow of a government.
•  
• Transactions of individuals, companies, or NGOs
  that are suspected as being used to pay or
  receive funds from revolutionary taxes.

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• The NGO does not appear to have expenses normally
  related to relief or humanitarian efforts.
• The absence of contributions from donors located
  within the country of origin of the NGO.
• A mismatch between the pattern and size of
  financial transactions on the one hand and the
  stated purpose and activity of the NGO on the
  other.
•  

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• Incongruities between apparent sources and amount
  of funds raised or moved by the NGO
•  
• Any other transaction that is similar, identical
  or analogous to any of the foregoing.

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CASE STUDY

• OPERATION
• PEP AND FAMILY

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CASE STUDY OUTLINE

• BRIEF OVERVIEW
• INTERNATIONAL COOPERATION
• REPORTS BY FINANCIAL INSTITUTIONS
• (38STRs/169CTRs)

• ENFORCEMENT ACTION-PROSECUTION FOR PLUNDER

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OTHER CURRENT AND EMERGING ML/FT TYPOLOGIES

• FRAUD- dishonestly obtaining a benefit usually by
  deception/use of insidious words and machinations
• Phishing- type of fraud to gain personal
  information for the purpose of identity theft
  using deceptive email messages that appear to
  come from legitimate businesses

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• Smishing- rather than the victim being contacted
  by email ( Phishing ) the victim is contacted via
  SMS ( text ) on a mobile phone
• Vishing-a new method like phishing but using the
  telephone to defraud the person and collect
  information about their identity
• ATM/Credit Card Skimming-illegal copying of
  information from the magnetic strip of an
  ATM/credit/debit card

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