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SEC sets tougher rules to fight money laundering

The Securities and Exchange Commission is instituting new transparency measures as part of its efforts in combating money laundering and terrorist financing.

This, as the national government is working to keep the country off the gray list of the Financial Action Task Force.

In a statement, the SEC Cebu Extension Office said the new anti-money laundering rules are included in Memorandum Circular No. 1, series of 2021 which set the guidelines in preventing the misuse of corporations for illicit activities through measures designed to promote transparency of beneficial ownership.

The measure includes the disclosure of the identity of the beneficial owner or the person or persons who ultimately own or have ultimate effective control of the corporation.

SEC-CEO legal officer Giness Marie Teves said some arrangements allow individuals to assume a management or ownership position on behalf of their principals and in turn, hide the identity of the beneficial owner.

She said the scheme “is not ideal because it exposes the corporations to the risk of being misused for illegal activities”.

Teves said the guidelines provide that no corporation or entity shall issue, sell, or offer for sale or distribution bearer shares, as well as bearer share warrants, where the name of owners are not reflected on the physical stock certificate or recorded in the stock and transfer book of the issuing corporation.

“This is to ensure greater transparency in the ownership of corporations and also consistent with the country’s commitment to implement international standards and best practices in combating money laundering and terrorist financing,” she added.

The guidelines require corporations other than publicly-listed companies to disclose and record in their stock and transfer book the alienation, sale, or transfer of shares of stock.

The recording includes the date and by whom and to whom made within 30 days from the time of alienation, sale, or transfer. The transaction will not be binding to the issuer if the procedure is not followed, the statement said.

It said no dividends would be paid to any person or entity unless his or her name appears in the records of the corporation as the owners of the shares of stocks, except for dividend payments made by publicly listed companies to the PCD nominee, or any similar entity authorized to act as depository and custodian of shares for purposes of trading in the stock exchange and operating under the same rules.

The circular also clearly stipulated the mandatory disclosure of the person on whose behalf the corporation is registered as well as the nominators or principals of nominee incorporators, first directors, trustees and shareholders within 30 days from receipt of their certificates of registration.*PNA

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