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Friday, March 29, 2024

SEC drafts rules to protect firms vs money laundering

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The Securities and Exchange Commission issued draft guidelines to protect companies as well as foundations, non-stock and non-profit organizations from money laundering and terrorist financing abuse.

Non-profit organizations and foundations, under the draft guidelines, will be required to observe good governance and strong financial management by conducting a due diligence on individuals and groups that donate money or funds.

Non-profit organizations and foundations will also be required to maintain for at least five years detailed records of domestic and international transactions to ensure funds were received and spent consistent with the purpose and objectives of the organization.

Non-stock corporations, or those with no authorized capital stock and no part of income is distributable as dividends members, trustees, or officers, will be required to submit basic information, such as objectives of their activities, actual raising or disbursing of funds, fund balance, contribution and identity of the board members and officers of the group.

Non-profit organizations are primarily engaged in raising or disbursing funds for purposes, such as charitable, religious, cultural, educational, social or fraternal.

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The SEC said non-profit organization and non-stock corporations found to be violating the guidelines would be subject to penalties, including a fine of up to P1 million, revocation of registration and other penalties.

SEC-covered companies, including brokers and investment financing and lending firm, will be required to amend their respective Money Laundering and Terrorist Financing Prevention Program to conform with the 2018 guidelines.

Under the proposed guidelines, covered institutions must develop clear written client identification and graduated acceptance policies and procedures, including a set of criteria for customers that are likely to pose low, normal or high risk to their operations.

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