SC Approves Rule on Asset Preservation, Seizure, and Forfeiture in Anti-Money Laundering Cases

May 30, 2021

Recognizing the benefit of the preservation, seizure, and forfeiture of assets in preventing and restraining the commission of crimes or offenses penalized under the Anti-Money Laundering Act of 2001, as amended, and other penal laws, the Supreme Court recently approved A.M. No. 21-03- 13-SC, or the Rule on Asset Preservation, Seizure, and Forfeiture in Criminal Cases Under Republic Act No. 9160 as Amended.

The Rule, which takes effect on May 31, 2021, shall apply to all criminal actions before any court involving crimes or offenses defined as “unlawful activity” under Section 3(i), or “money laundering offenses” under Section 4, of RA 9160.

Under the Rule, the prosecution may pursue the remedy of asset forfeiture by an allegation in the criminal information that it will proceed against the subject of the crime or offense, proceeds or fruits of the crime of offense, or any property used as the means of committing a crime or offense.

In this regard, the prosecution may amend a criminal information, with leave of court, if during trial, other property not subject of the original information is shown to be the subject of, the proceeds or fruits of, or the means used of committing the crime or offense charged.

The term “property” includes any thing or item of value, real or personal, tangible or intangible, or any interest therein or any benefit, privilege, claim or right with respect thereto. On the other hand, “proceeds or fruits of the crime or offense” may include all the assets and properties of the accused either owned or held by him or her or in the name of some other persons if the same shall be found to be manifestly out of proportion to his or her lawful income.

The Rule provides that the State or prosecution may pursue the remedy of asset preservation for the court to issue and order an ex parte provisional asset preservation order, effective immediately for a period of twenty (20) calendar days, upon determining the existence of probable cause to hold and conserve specific property and forbid any transaction, withdrawal, deposit, transfer, removal, conversion, concealment or other disposition thereof.

This shall be done through a verified motion after the filing of the criminal information alleging asset forfeiture, or where the information has not yet been filed but properties have already been seized by virtue of a search warrant or a warrantless arrest.

The court shall also furnish a copy of the asset preservation order to the Anti-Money Laundering Council (AMLC) within five (5) calendar days from its issuance.

When the property preserved is perishable or is disproportionately expensive to keep or store, it may be released from preservation upon deposit of an equivalent cash bond or sold in public auction, the proceeds of which shall be deposited with the clerk of court to be disposed of according to the final judgment of the court.

Real estate property ordered preserved shall not be physically seized before a final order of forfeiture, nor shall its owners and occupants be evicted or deprived of its use and enjoyment.

An asset preservation order may be discharged on any the following grounds: (a) the order was improperly or irregularly issued or enforced; the material allegation in the motion or contents of its attachments or its verification is false; (b) the property is not owned by the accused; and (c) the property is not in any manner connected with the alleged unlawful activity. A bond to discharge the asset preservation order may be required by the court.

The Rule also states that properties may be seized before or after the filing of a criminal information by virtue of a search warrant or warrantless arrest, and shall be disposed of in accordance with the Rules on Criminal Procedure.

The accessory penalty of asset forfeiture may be imposed upon a person convicted with finality of a crime or offense, which divests him or her of properties which are the subject, proceeds or fruits, or used as the means of committing the crime or offense, in favor of the State without compensation.

The prosecution may pursue asset forfeiture by so alleging in the criminal information, while the court shall include in its decision the forfeiture of the property. A summary hearing shall be held should the convicted person or registered owner or possessor oppose the order of the court for the forfeiture of his or her property.

The Rule incorporates the provisions under Sections 12 (b) and (c) of Anti-Money Laundering Act of 2001, as amended, on third-party claims on forfeited assets, and the payment of an equal amount corresponding to value of the property in lieu of forfeiture in cases where the order of forfeiture cannot be enforced due to the condition of the property.

Prior to the approval of the Rule, there were no clear-cut rules regarding the forfeiture or preservation of property that is the subject, proceeds or fruits, or the means used to facilitate the commission of an unlawful activity or money laundering under RA 9160, as amended. The Supreme Court had only promulgated A.M. No. 05-11-04-SC, or the Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing of

Monetary Instrument, Property, or Proceeds Involving, or Relating to an Unlawful Activity or Money Laundering Offense Under RA 9160, effective December 15, 2005.

Following the findings of the Asia/Pacific Group on Money Laundering in its October 2019 Mutual Evaluation Report on the Philippines that neither prosecutors nor law enforcement agencies have a policy or practice of seeking confiscation orders at the point of conviction, the Supreme Court created the Special Committee on the Proposed Rule on Criminal Confiscation and Forfeiture to make a report and recommendation for the issuance of rules on criminal confiscation and forfeiture, to address the said 2019 Mutual Evaluation Report. ###

READ FULL TEXT OF A.M. No. 21-03-13-SC at https://sc.judiciary.gov.ph/18731/