To disclose or not to disclose

Section 9 of the AMLA further provides that ‘[n]either may such reporting be published or aired in any manner or form by the mass media, electronic mail or other similar devices.’
To disclose or not to disclose

In its 11 April 2023 Resolution in A.M. No. 22-09-01-SC, the Supreme Court en banc resolved to approve the "Code of Professional Responsibility and Accountability" or CPRA as an update of the 34-year-old Code of Professional Responsibility. It took effect on 29 May 2023, after its publication in newspapers of general circulation.

The CPRA is designed to be a modern guide for a lawyer's conduct. Among the salient points of the CPRA are the provisions relating to the obligation of lawyers to comply with the Anti-Money Laundering Act or AMLA (RA No. 9160 as amended). The CPRA directed lawyers to report covered and suspicious transactions under AMLA and clarified that reporting such transactions in compliance with the AMLA does not violate the lawyer-client privilege communication.

The AMLA provides the acts considered to be constituting the crime of "money laundering." Significantly, it provides that money laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under AMLA to be reported to the AMLC, fails to do so.

To recall, covered transactions are single transactions in cash or other equivalent monetary instruments involving a total amount in excess of P500,000 within one banking day.

Suspicious transactions are transactions with covered institutions, regardless of the amounts involved, where any of the following circumstances exist:

  • There is no underlying legal/trade obligation, purpose, or economic justification;
  • The client is not properly identified;
  • The amount involved is not commensurate with the business or financial capacity of the client;
  • The transaction is structured to avoid being the subject of reporting requirements under the AMLA;
  • There is a deviation from the client's profile/past transactions;
  • The transaction is related to an unlawful activity/offense under the AMLA; and
  • Transactions similar or analogous to the above.

Pertinently, Section 12, Canon 2 of the CPRA provides the duty of lawyers to report dishonest, deceitful, or misleading conduct. Relevant to the AMLA, the Section mandates lawyers to "report any transaction or unlawful activity that is required to be reported under relevant laws, including covered and suspicious transactions under regulatory laws, such as those concerning anti-money laundering."

Section 12 clarifies that the lawyer shall not be deemed to have violated the lawyer's duty of confidentiality when disclosing or reporting this information to the appropriate court, tribunal, or other government agency.

However, Section 12 reminds that any such information shall be treated with strict confidentiality. This applies to Section 9 of the AMLA, which provides that "[w]hen reporting covered or suspicious transactions to the AMLC, covered persons and their officers and employees are prohibited from communicating, directly or indirectly, in any manner or by any means, to any person or entity, the media, the fact that a covered or suspicious transaction has been reported or is about to be reported, the contents of the report, or any other information in relation thereto.

Section 9 of the AMLA further provides that "[n]either may such reporting be published or aired in any manner or form by the mass media, electronic mail or other similar devices."

It bears stressing that Section 27, Canon 3 of the CPRA provides the lawyer's duty to ensure confidentiality of privileged communication. It provides that "a lawyer shall maintain the confidences of the client and shall respect data privacy laws."

However, Section 28, Canon 3 of the CPRA provides the exceptions of the lawyer's duty to protect client confidence. One of the exceptions is when required by law, such as anti-money laundering statutes.

A lawyer who reports in good faith can find sanctuary under Section 9 (c)(5) of the Revised Rules and Regulations implementing AMLA. It provides a "safe harbor" provision which states that "[n]o administrative, criminal or civil proceedings shall lie against any person for having made a covered transaction report or a suspicious transaction report in the regular performance of his duties and in good faith, whether or not such reporting results in any criminal prosecution."

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For more of Dean Nilo Divina's legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cabdo@divinalaw.com.

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