Illegal investment schemes

on nas

MAYNILA, PILIPINAS

CIRCULAR-LETTER

TO all BanKS

Recent cases of illegal investment schemes which victimized innocent investors of several billions of pesos underscore the need for banks to be vigilant in dealing with their customers since, in most of these cases, the use of checks had facilitated the accomplishment of the illegal activities by unscrupulous persons.

To attract investors, the perpetrators of these illegai investment schemes used post-dated checks as guarantee which provided the investor-victims with the false assurance that their investments, including the income accruing thereon will be recovered/paid. To meet their post-dated check reguirements, the perpetrators of these pseudo investment schemes wouid have to requisition large volumes of check booklets from their depository banks.

Laundering regulations, banks are required, among other things, to prevent the use of their facilities for illegal activities and to adopt the "know-your-customer In this connection, please be reminded that under existing Anti-Money

their clients but also to have background knowledge of their normal business transactions to be able to identify activities or transactions which are not (KYC) policy. The KYC policy requires banks not only to establish the identity of

consistent therewith.

Sec. 3 (b-1) of R.A. No. 9160, otherwise known as the "Anti-Money

things, that the presence of any circumstance relating to the transaction which is transactions with the covered institution would render the transaction as a Laundering Law of 2001", as amended by R.A. No. 9194 provides, among other observed to deviate from the profie of the client and/or the client's past

booklets already fails within the above definition of a suspicious transaction suspicious one. Therefore, requisitioning of unusually iarge volume of check

subject to reporting.

although not necessarily unusual, should already raise the red flag for further On the other hand, any requisition of large voiume of check booklets,

investigation. By applying the KYC programs, banks shouid be able to determine

MAG-IMPOK SA BANGKO

whether or not said requisition of large volume of check bookiets is consistent with the known iegitimate business activities of the client and should also be able to report those considered suspicious transactions.

For your guidance

ALBERTOV. RYES

Deputy Governor

2003