Anti-Money Laundering/Countering Terrorism and Proliferation Financing (AML/CTPF) Compliance Guide

Philippine Amusement and Gaming Corporation

PAGCOR

Supervision and Enforcement Department (PASED) PAGCOR Anti-Money Laundering

in collaboration with Offshore Gaming Licensing Department (OGLD)

Anti-Money Laundering/Countering Terrorism and Proliferation Financing (AML/CTPF)

Compliance Guide for Internet Gaming Licensees and Authorized Providers

Reminder: The following discussions are aimed at helping new/prospective Internet Gaming Licensees and Authorized Providers in their efforts to comply with The Anti- Money Laundering Act of 2001, as amended (AMLA) and The Terrorism Financing Prevention and Suppression Act (TFPSA). Please be reminded that these are non- exhaustive and are general in nature. It is highly recommended to keep abreast with relevant, up-to-date legislation and rules, and specific AML/CTPF guidance applicable.

In complying with AML/CTPF obligations, hereunder are the important elements to be considered among others:

Salient Points Discussion

N REGISTRATION Under Section 9(c) of the AMLA, covered persons (CPs) are obligated

LAUNDERING WITH THE ANTI- COUNCIL (AMLC) MONEY to report covered1 and suspicious2 transactions (CTRs/STRs) to the AMLC. To report CTs and STs, CPs need to register with the AMLC to be given access to the AMLC's Portal and transmit the same.

transaction is required to be reported to the AMLC, and fail to do so shall be guilty of money laundering (ML) under the last paragraph of Be reminded that CPs who knowing that a covered or suspicious Section 4 of the AMLA

Reference:Sections 49, 50,51, 52 of the 2021 AML/CTF Guidelines

(ARRG) for DNFBPs, and 2021 AMLC Registration and Reporting Guidelines

2. INSTITUTIONAL The licensee shall identify, assess, and understand its AML/CTF risks

RISK (IRA) ASSESSMENT and document its assessments and findings concerning the following: a. Customers: b. d. Geographical Exposures; C. e. Transactions; Business; Products and Services;

2 Suspicious Transaction - shall refer to suspicious transactions as defined under paragraph (b-1), Section 3 of the AMLA (Php500,000.00) or its equivalent in any other currency; 1 Covered Transaction - Refers to a single transaction involving an amount in excess of Five Hundred Thousand Pesos

5F New Coast Hotel Manila 1588 MH Del Pilar cor Pedro Gil Streets, Malate Manila, 1004 Philippines (632) 8242-01021 Website: www.pagcor.ph

f. Delivery Channels; and g. Size

implementing appropriate and sufficient controls to mitigate the identified risks. The result of the IRA will serve as the foundation for establishing and

The IRA shall be:

Kept up-to-date through periodic review and conducted at least once every two (2) years or as may be determined by PAGCOR

Submitted to PAGCOR and/or AMLC, as may be required. and/or AMLC; and

Reference: Section 5(a to f) of the 2021 AML/CTF Guidelines for DNFBPs

3. APPOINTMENT OF A COMPLIANCE officer of senior management status with the authority and mandate to The Licensee/Authorized Provider shall designate a compliance

OFFICE OFFICER ANDIOR direct line of communication to the Board of Directors (BOD) or other governing body, or the partners or the sole proprietor, as the case may ensure day-to-day (i.e., regular activities and processes) compliance with its AML/CTF obligations. The compliance officer shall have a

be.

Reference: Section 8 of the 2021 AML/CTF Guidelines for DNFBPs

4. DEVELOP AND IMPLEMENTATION OF A MONEY LAUNDERING FINANCING AND TERRORISM The Licensee/Authorized Provider's BOD, or other governing body. the partners, or the sole proprietor, as the case may be, shall approve, and the compliance officer shall implement, a comprehensive, risk-based MTPP geared towards the promotion of high ethical and professional standards and the prevention of ML and TF. The MTPP shall be in writing, consistent with the AMLA, and its

(MTPP)3 PREVENTION PROGRAM provisions shall reflect the DNFBP's corporate structure and risk profile. Further. the Licensee/Authorized Provider should refer to the

pertinent provisions of the 2021 AML/CTF Guidelines for DNFBPs critical areas among others: and establish appropriate policies and procedures on the following

a Customer Identification Process4, including acceptance

35, 36): policies and an ongoing monitoring process (Sections 21, 34,

b. Face-to-Face Contact (Section 30);

3 "Money Laundering/Terrorism Financing Prevention Program" (MTPP) refers to a covered person's comprehensive, risk-based and written internal policies, controls and procedures to implement the relevant laws, rules and regulations, and best practices to prevent and combat ML/TF and associated unlawful activities in the operational level. "Customer Identification Process"(CIP)refers to the process of determining the identity of the customer vis-a-vis the valid and acceptable identification document submitted to,and/or presented before,the covered person. 2IAML/CTPF CompIianceGuide

c. Risk-Based Customer Due Diligence5 (CDD) (Sections 11, 17, 18, 19, 20, 23, 24, 25, 26, 27, 29, 31, 32, 37, 38);

d. Politically Exposed Persons (PEPs) (Section 33);

e. Minimum Customer Information and Identification Documents

when Conducting CDD (Section 22);

f. Record keeping and retention (Sections 8, 13, 39, 40, 41, 42);

g. Covered transaction reporting (Section 43, 44, and 2021 ARRG)

h. Suspicious transaction reporting, including the adoption of a flag" for purposes of future reporting of such transactions to the system, electronic or manual, of flagging, monitoring, and transactions, regardless of the amount or that will raise a "red AMLC reporting of transactions that qualify as suspicious

designation of a senior officer who will ultimately decide Suspicious transaction reporting shall include a reporting chain under which a suspicious transaction will be processed and the designation of a Board-Level or approved Committee or whether or not the covered institution should file a report to the AMLC (Section 12, 28, 45, 46, 47, and 2021 ARRG)

Effective and continuous AML/CTF training program for all directors, and responsible officers, and employees (Section 14)

j. An adequate risk-based screening and recruitment process to ensure that only qualified and competent personnel with no criminal record or integrity-related issues are employed or contracted by the Licensee (Section 14);

k. An internal audit system and an independent audit program (Section 10);

A mechanism that ensures all deficiencies noted during the onsite or offsite compliance checking are immediately corrected and acted upon

m. Cooperation with the AMLC (Section 15);

n. Designation of a Compliance Officer, who shall, at least, be of

senior management level, as the lead implementer of the Licensee's compliance program (Section 8);

5 Customer Due Diligence (CDD) refers to the procedure of identifying and verifying the true identity, of customers, and their agents and beneficial owners, including understanding and monitoring of their transactions and activities. 6 "Politically-Exposed Person" (PEP) refers to an individual who is or has been entrusted with prominent public position in (a) the Philippines with substantial authority over policy, operations or the use or allocation of government-owned resources; (b) a foreign State;or (c) an international organization 3IAML/CTPF ComplianceGuide

o. The identification, assessment, and mitigation of ML/TF risks that may arise from new business practices, services, technologies, and products (Section 16);

p. Notification Requirements (Section 53); and

q. Targeted Financial Sanctions (TFS)7 (Section 58 and the AMLC 2021 Sanctions Guidelines)

5. DESIGNATION OF A RECORD. KEEPING be responsible and accountable for all record-keeping requirements under the AMLA, as amended, and its rules and regulations. The Licensee/Authorized Provider shall designate another officer to

OFFICER readily available to the AMLC/PAGCOR upon request. These officers will also be responsible for making these records

Reference: Section 8 of the 2021 AML/CTF Guidelines for DNFBPs

funds or other assets from being made available, directly or indirectly, for the benefit of designated persons and entities (AMLc 2021 Sanctions Guidelines) Targeted Financial Sanctions (TFS) - The term targeted financial sanctions means both asset freezing and prohibitions to prevent

4|AML/CTPF CompIiance Guide

AEY

[COVER PAGE]

name oF InStitution

Money Laundering and terrorism Financing Prevention Program (mtpp)

VERSioN NO.:

Part 1 -- Overview

I I. Company Profile and Organizational Structure Introduction

IV V. I V VI. Policy Scope Legal Framework Definition of Terms Policy Statement Policy Objectives

Part 2 - Governance and Oversight

I Institutional Risk Assessment and Management I Corporate Governance I IV V. Internal Controls and Audit Compliance Management Hiring Policies and Procedures

Part 3 - ] Policies and Procedures

I Customer Acceptance and Due Diligence

1. Customer Identification/ Know-Your Customer 2. Customer Risk Profiling/Assessment 3. Customer Verification 4. Identification and Verification of Agents

6. Determination of the Purpose of Relationship 7. Ongoing Monitoring of 5. Beneficial Ownership Verification Customer's Information and

Accounts/Transactions

I Preventive Measures for Specific Transactions and Activities

IV. I Transaction reporting: Politically Exposed Persons

1. Covered transactions 2. Suspicious transactions

V VI. Confidentiality and Tipping-Off Training and Continuing Education Program VII. Record-Keeping and Retention

X IX. VIII. Third-Party Reliance Outsourcing of Conduct of Customer Identification and Due Diligence Customer Refusal XI Prohibited Accounts XI Targeted Financial Sanctions (TFS) and TFS Related to Proliferation

XIII. Cooperation with the AMLC and Supervising Authorities (SAs) Financing (PF)

Part 4 -- Forms and Templates

Part 5 -- Approving Authority Part 6 - Updating

Date of Approval