AML/KYC in the Philippines: Complete Guide 2025

Money laundering is a big problem in the Philippines due to a number of factors:

• Geographic location with its extensive coastline makes it vulnerable to various kinds of transnational crimes, including money laundering
• The country receives a significant amount of remittances from overseas workers (OFWs), and remittance channels can often be used for money laundering (ML) activities
• The country’s cash-intensive casino industry, which was one of the reasons why the FATF (an intergovernmental organization combatting money laundering and terrorist financing) added the country to its “grey list” of jurisdictions under increased monitoring in 2021.

As of October 2024, the FATF acknowledged that the Philippines had addressed all 18 action plan items required for removal from the “grey list.” An on-site visit scheduled between October 2024 and February 2025 will examine these improvements, which could lead to the Philippines exiting the “grey list.”

Philippine regulators are working hard to remove their country from the FATF “grey list”, taking steps to enhance their AML regulations and keep a close watch on regulated industries, especially fintech and gambling.

Let’s discuss how new and existing businesses must comply with AML laws in the Philippines.

Money laundering at a glance: The three stages

Money laundering (ML) involves disguising the source of funds derived from criminal activities, such as fraud or drug trafficking, with the aim of integrating illicit funds into the financial system as “clean” money. This allows criminals to utilize the funds without drawing unwanted attention from authorities.

There are three stages of money laundering introducing laundered funds into the financial system:

• Placement (placing the “dirty” money into a legitimate financial system)
• Layering (a sophisticated series of financial transactions, usually involving offshore techniques, to shift the funds into the legal financial system)
• Integration/extraction (reintegration of dirty money into the financial system, it is essentially legal tender for the criminals to use it as they like)

Suggested read: The Three Stages of Money Laundering and How Money Laundering Impacts Business

One common technique employed during the placement stage is to break down substantial amounts of cash into smaller, less conspicuous sums. These smaller sums can then be deposited into either a single bank account or distributed across multiple bank accounts, potentially utilizing the ‘smurfing’ technique.

Suggested read: What Is Smurfing?—The Full Guide (2025)

The biggest money laundering case in the Philippines

In 2016, the Philippine government probed the largest documented case of money laundering in the country’s history. 

On February 4, 2016, hackers broke into the Bangladesh Central Bank and generated 70 fake payment orders to the Federal Reserve Bank of New York amounting to $1.94 billion.

Although the New York bank’s security system flagged the payment orders, five of them succeeded, resulting in the release of $101 million. Of this sum, $81 million was transferred to Rizal Commercial Banking Corp. (RCBC) in Manila, while $20 million found its way to Sri Lanka.

Sri Lanka promptly returned the entire amount upon exposure of the heist. However, in the Philippines, the $81 million was subsequently withdrawn, converted to pesos, and wagered in local casinos before authorities could trace it.

Eventually, RCBC got a record fine of PHP 1 billion ($19.15 million). This scandal also prompted revisions to Philippine money laundering laws, which, until 2017, excluded casinos from oversight. 

In July 2017, President Rodrigo Duterte signed Republic Act No. 10927, extending the coverage of the country’s key anti-money laundering regulation (AMLA) to include casinos—both internet-based and “ship-based” ones. Cash transactions in casinos exceeding PHP 5,000,000 ($89,406) or any equivalent are now classified as covered transactions under the law, necessitating mandatory reporting to the Anti-Money Laundering Council (AMLC).

Regulations

The country’s key AML laws include:

• ​​Anti-Money Laundering Act of 2001 (AMLA)
• The Republic Act No. 9194
• Terrorism Financing Prevention and Suppression Act of 2012 (TFPSA)

The Anti-Money Laundering Act in the Philippines

The Anti-Money Laundering Act of 2001 (Republic Act No. 9160) is the Philippines’ primary AML law. It criminalizes money laundering activities and establishes the Anti-Money Laundering Council (AMLC) as the country’s financial intelligence unit.

According to the Act, financial institutions are required to: 

• Implement Customer Due Diligence (CDD) and Know Your Customer (KYC, or eKYC in the Philippines)
• Report suspicious transactions to the AMLC
• Train staff on AML regulations and suspicious transactions
• Keep records
• Cooperate with authorities in investigations
• Implement transaction monitoring
• Conduct regular audits
• Split clients into risk categories and monitor them accordingly
• Perform continuous monitoring.

Timeline of the Anti-Money Laundering Act (AMLA) and its significant amendments

• 2001: Enactment of Republic Act No. 9160. The Anti-Money Laundering Act of 2001 (AMLA) was enacted to protect and preserve the integrity of the Philippine financial system by criminalizing money laundering and establishing the Anti-Money Laundering Council (AMLC) as the primary implementing agency.
• 2003: Republic Act No. 9194. This amendment expanded the definition of “covered institutions” to include non-bank financial institutions and mandated stricter customer identification and record-keeping requirements.
• 2012: Republic Act No. 10167. This amendment further strengthened the AMLA by enhancing the AMLC’s investigative powers, particularly in terms of ex parte applications for bank inquiry and the freezing of assets related to suspicious transactions.
• 2013: Republic Act No. 10365. This amendment expanded the list of covered persons to include real estate agents, precious metals and stones dealers, and other designated non-financial businesses and professions. It also improved the framework for international cooperation in combating money laundering.
• 2017: Republic Act No. 10927. Recognizing the vulnerabilities in the casino sector, this amendment designated casinos, including internet and ship-based casinos, as covered persons under the AMLA, subjecting them to reporting and compliance obligations.
• 2018: Implementing Rules and Regulations (IRR). The AMLC issued the 2018 IRR to provide detailed guidelines for effectively implementing the AMLA and its amendments, ensuring that covered persons understand and comply with their legal obligations.
• 2021: Amendments to the 2018 IRR. In January 2021, the AMLC approved further amendments to the 2018 IRR to align with international standards and address emerging money laundering and terrorist financing risks.

Who’s affected?

The following entities should register in the AMLC reporting procedure to get the AMLC certification:

• Banks
• Offshore banking units
• Quasi-banks
• Trust entities
• Non-stock savings and loan associations
• Pawnshops
• Foreign exchange dealers
• Money changers
• Money remittance or transfer companies
• Electronic money issuers
• All other persons and their subsidiaries and affiliates supervised or regulated by the BSP (Bangko Sentral ng Pilipinas).

Check the full list on the AMLC website.

The registration guidelines are also available here.

What are “covered transactions” under the AMLA?

A covered transaction refers to a financial transaction that meets certain criteria (amounts, thresholds) set by AML regulations. Covered transactions require financial institutions to submit reports to relevant authorities, in efforts to monitor and detect potentially suspicious or illicit activities. 

A covered transaction differs from a suspicious transaction. A suspicious transaction is a subset of covered transactions that arouses suspicion due to its characteristics, prompting further investigation and reporting by financial institutions to regulatory authorities. 

Under the AMLA law, covered transactions are specifically defined as follows: 

• Cash transactions surpassing PHP 500,000 ($8,940)
• Casino transactions exceeding PHP 5,000,000 ($89,406)
• Engagements with dealers in jewelry, precious metals, or stones exceeding PHP 1,000,000 ($17,883)
• Electronic funds transfers beyond specified thresholds
• Investment-related transactions surpassing defined monetary limits. 

Each case requires specific reporting and compliance measures to mitigate the risks associated with money laundering in the Philippines.

Check further details on the AMLC website.

Suggested read: The APAC Sentinel: Effective Transaction Monitoring Tactics

Regulators

The following organizations are responsible for regulating the financial system and preventing crime in the Philippines:

• The Anti-Money Laundering Council (AMLA): the Philippines’ Financial Intelligence Unit (FIU). The Council is composed of the Governor of the Bangko Sentral ng Pilipinas (BSP) as Chairperson, along with the Commissioner of the Insurance Commission (IC) and the Chairperson of the Securities and Exchange Commission (SEC) as members. The AMLC is responsible for receiving and analyzing covered and suspicious transaction reports, investigating potential money laundering activities, and prosecuting such offenses.
• The Bangko Sentral ng Pilipinas (BSP):  the central bank of the Philippines. It supervises financial institutions to ensure compliance with AML regulations. This includes banks, insurance companies, and other entities. The BSP issues guidelines and circulars to strengthen the financial system’s defenses against money laundering and terrorist financing.
• Securities and Exchange Commission (SEC): The SEC oversees the corporate sector, capital market participants, and securities and investment instruments. Within AMLA, it ensures that entities under its jurisdiction implement adequate measures to prevent money laundering. This includes enforcing compliance among brokers, dealers, investment houses, and other covered institutions.

Compliance requirements in the Philippines

The Anti-Money Laundering Act (AMLA) and its implementing rules impose stringent compliance requirements on covered entities in the Philippines. Businesses must follow a structured approach to ensure adherence to regulatory standards. Here’s a breakdown of the key compliance elements:

Customer Due Diligence (CDD)

Customer Due Diligence is a cornerstone of anti-money laundering compliance. Covered entities must conduct CDD to identify and verify the identity of their clients. The key steps include:

• Identification: Collecting valid identification documents from customers, such as government-issued IDs.
• Verification: Confirming the authenticity of the provided information and documents.
• Ongoing Monitoring: Regularly reviewing and updating customer information, especially for high-risk clients or large transactions.

Enhanced Due Diligence (EDD): Applying more rigorous checks for high-risk clients, such as politically exposed persons (PEPs).

Suggested read: Politically Exposed Person (PEP)—All You Need to Know

Risk-based approach

A risk-based approach allows institutions to allocate resources efficiently while targeting the highest risks of money laundering and terrorist financing. Steps include:

• Risk assessment: Evaluating clients’ profiles, nature transactions, industry, corporation, or professional profile, as well as geographic locations for potential risks.
• Classification: Assigning risk levels (low, medium, or high) to customers based on the assessment.
• Mitigation measures: Tailoring monitoring and reporting efforts to the identified risk levels, with greater scrutiny applied to high-risk activities.

Know Your Customer (KYC)

KYC policies help ensure that institutions only engage with legitimate clients. In the Philippines, KYC requirements include:

• Basic KYC: Collecting and validating personal or corporate data such as full name and country of residence for all customers before establishing a relationship.
• Ongoing monitoring: Updating records periodically, tracking transactions for unusual activity, checking submitted KYC documents, and ensuring receiving alerts for document update requests.
• Record-keeping: Maintaining records of customer transactions and identification documents for at least five years, as the AMLA law mandates.

Reporting obligations

As per the Republic Act No. 9160, covered entities are required to submit reports for:

• Covered Transactions (CTRs): Transactions exceeding PHP 500,000.
• Suspicious Transactions (STRs): Transactions with no clear economic purpose or those deviating from the customer’s profile.

The Philippines’ role in international AML efforts

The Philippines plays an active role in international efforts to combat money laundering and terrorist financing. The country continues to enhance its anti-money laundering framework and strengthen its reputation on the global stage. Here’s how the Philippines contributes:

Membership in the Financial Action Task Force (FATF)

The Philippines is a member of the Asia/Pacific Group on Money Laundering (APG), a regional affiliate of the Financial Action Task Force (FATF). Despite being placed on the FATF’s grey list due to identified strategic deficiencies, the Philippines has taken significant steps to address these issues. This includes improving risk-based supervision, enhancing beneficial ownership transparency, and increasing the effectiveness of financial intelligence.

Cooperation with international organizations

The Philippines collaborates with global organizations to strengthen its AML capabilities:

• Egmont Group: The Anti-Money Laundering Council (AMLC) is an active member of this international network of financial intelligence units (FIUs). The membership facilitates the exchange of financial intelligence to combat transnational crimes.
• United Nations (UN): The Philippines contributes to UN initiatives against money laundering and terrorist financing, aligning its policies with relevant UN Security Council Resolutions.

Addressing cross-border financial crimes

The Philippines has demonstrated its commitment to tackling international financial crimes through high-profile cases like the 2016 Bangladesh Bank heist.

Ongoing reforms to meet global standards

The Philippines continues implementing reforms to address gaps identified by the FATF and the APG. These include:

• Strengthening the regulation of designated non-financial businesses and professions (DNFBPs), such as real estate agents and casinosEnhancing the implementation of the risk-based approach in supervision and enforcement
• Improving the transparency of beneficial ownership information

Penalties

According to Section 21 of AMLA, the crime of money laundering is punishable by “imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than PHP 3,000,000.00 (or $53,600) but not more than twice the value of the monetary instrument or property involved in the offense.”

A notable example is the 2016 Bangladesh Bank heist, in which $81 million was illicitly transferred to accounts in the Philippines. The Bangko Sentral ng Pilipinas (BSP) imposed a record fine of one billion pesos (Php1,000,000,000.00) on the Rizal Commercial Banking Corporation (RCBC) for its non-compliance with banking laws related to this incident.

The penalty for failure to keep records may be imprisonment from six (6) months to one (1) year or a fine of not less than PHP 100,000.00 (or $1,800), but not more than PHP 500,000.00 ($9,000), or both.

The high-profile Alice Guo case exemplifies the Philippines’ effort to crack down on such offenses. In 2024, Guo, a former town mayor, was charged with laundering over PHP 100 million ($1.8 million) linked to fraudulent activities, human trafficking, and securities violations. Philippine authorities are pursuing the forfeiture of PHP 6 billion in assets tied to her crimes. Her arrest and extradition highlight the government’s robust efforts to enforce anti-money laundering laws and prosecute offenders.

The penalty for malicious reporting, or false information in a report related to money laundering, may be six (6) months to four (4) years imprisonment, and a fine of not less than PHP 100,000.00 ($1,800), but not more than PHP 500,000.00, or ($9,000).

Challenges

The first challenge is a common belief among Philippine banks and fintechs that, once users pass the onboarding stage, fraud won’t happen. However, Sumsub’s internal statistics reveal that 70% of fraud occurs after the onboarding stage. Ongoing monitoring is therefore crucial for all regulated businesses, including financial institutions and gambling platforms, which attract the most regulatory attention in the country. Consequently, many regulated businesses will need to adapt and adopt an all-in-one platform for KYC and continuous monitoring.

On an international level, the FATF included the Philippines in the “grey list” of jurisdictions under increased monitoring in June 2021, citing concerns such as the risk of money laundering from casino junkets and the absence of prosecution in terrorism funding cases.

This year, the Philippines aspires to secure removal from the FATF “grey list”, but authorities face numerous challenges, with terrorism financing prosecution being a primary concern.

While not as severe as the FATF’s “black list”, the “grey list” has significant implications for a country’s financial and economic standing, including:

• Increased scrutiny from international financial institutions and regulatory bodies
• Stricter due diligence from financial institutions dealing with entities from grey-listed countries
• Challenges in accessing international financial markets, as investors and financial institutions may become more cautious about engaging in transactions with entities from grey-listed jurisdictions
• Overall negative impact on the economic growth
• Potential sanctions.

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