Proper Interpretation of Sections 3 (a) and 11 of R.A. No. 9160 (Anti-Money Laundering Act) in Relation to BSP's Authority over Remittance and Transfer Companies, Money Changers and Foreign Exchange Dealers

DOJ OPINION NO. 020, s. 2017 June 16, 2017 Atty. Elmore O. Capule General Counsel Bangko Sentral ng Pilipinas A. Mabini St., Malate 1004 Manila Dear General Counsel Capule : This refers to your 18 October 2016 letter-request for an opinion regarding the proper interpretation of Sections 3 (a) and 11 of Republic Act (RA) No. 9160, otherwise known as the Anti-Money Laundering Act (AMLA), as amended, in relation to Bangko Sentral ng Pilipinas (BSP)'s authority over remittance and transfer companies (RTCs), money changers (MCs) and foreign exchange dealers (FXDs). You mention that the latest amendment to RA No. 9160 as embodied in RA No. 10365, which was approved on 15 February 2013, incorporated in the enumeration of covered institutions RTCs, MCs and FXDs. Specifically, RA No. 10365 amended Section 3 (a) of RA 9160, as follows: SECTION 1. Section 3(a) of Republic Act No. 9160, as amended, is hereby amended to read as follows: "(a) 'Covered persons,' natural or juridical, refer to: "(1) banks, non-banks, quasi-banks, trust entities, foreign exchange dealers , pawnshops, money changers, remittance and transfer companies and other similar entities and all other persons and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP)." [Emphasis supplied] You further mention that the wording of the above provision has the connotation that RTCs, MCs and FXDs are covered institutions within the purview of the BSP's regulatory or supervisory power. In support of this view, you refer to Section 11 of RA No. 9160: SEC. 11. Authority to Inquire into Bank Deposits. xxx xxx xxx To ensure compliance with this Act, the Bangko Sentral ng Pilipinas may, in the course of a periodic or special examination, check the compliance of a covered institution with the requirements of the AMLA and its implementing rules and regulations. You maintain that the BSP's power to conduct "periodic or special examination" applies to institutions that are supervised or regulated by the BSP. Necessarily, Section 3 (a) of RA 9160, as amended, in relation to Section 11 thereof, may be interpreted as an implied authority for the BSP to supervise or regulate the RTCs, MCs and FXDs, for purposes of ensuring compliance with the provisions of RA 9160 or the AMLA. This interpretation, it appears, stems from the doctrine of necessary implication. In sum, you request this Department to confirm your position that the BSP has supervisory or regulatory authority over RTCs, MCs and FXDs for purposes of the AMLA and its IRR, including the authority to issue and implement such regulations as it may deem necessary to ensure compliance therewith. We agree. We note that the Anti-Money Laundering Council (AMLC) has already issued the 2016 Revised Implementing Rules n (RIRR) of RA 9160, as amended, which became effective on 7 January 2017. Rule 3 (E) (1) of the RIRR states: For purposes of this RIRR, foreign exchange dealers, money changers, and remittance and transfer companies are covered persons under the regulation of the BSP . As the RIRR assumes a clarificatory function, we stress that RTCs, MCs and FXDs are now covered persons supervised or regulated by BSP. Indeed, the adoption of such implementing rules is necessary to guide the supervising authorities as well as the public towards the effective implementation of RA 9160, as amended. The RIRR is the means and method on how the BSP, Securities and Exchange Commission, Insurance Commission, and other regulatory bodies, will execute the law. Assuming arguendo that no RIRR has been issued yet, and no law currently vests the BSP with explicit power to supervise or regulate RTCs, MCs and FXDs, this Department opines that such authority is deemed possessed by BSP under the principle of implication, a basic postulate that what is implied in a statute is as much a part of it as that which is expressed . In a line of cases, the Court has explained that every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms. 1 In Chua v. Civil Service Commission , 2 the Court had the occasion to rule that: No statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation. What is thought, at the time of enactment, to be an all-embracing legislation may be inadequate to provide for the unfolding events of the future. So-called gaps in the law develop as the law is enforced. One of the rules of statutory construction used to fill in the gap is the doctrine of necessary implication. The doctrine states that what is implied in a statute is as much a part thereof as that which is expressed. Every statute is understood, by implication, to contain all such provisions as may be necessary to effectuate its object and purpose, or to make effective rights, powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary consequences as may be fairly and logically inferred from its terms . 3 In this sense, at the time of the enactment of RA No. 9160, and perhaps RA No. 7653, otherwise known as the New Central Bank Act, the lawmakers could not have possibly foreseen developments or advancements in financial markets, particularly the proliferation of remittance and transfer companies, money changers, foreign exchange dealers and other non-bank institutions, which could be used or, as it is now, being used for money laundering or as conduit for the proceeds of criminal activities. By applying the doctrine of necessary implication, these gaps in current legal framework can be addressed. Ex necessitate legis . Besides, every statutory grant of power, right or privilege is deemed to include all incidental power, right or privilege. This is so because the greater includes the lesser, expressed in the maxim, in eo plus sit, simper inest et minus . 4 The foregoing interpretation resonates well with the mandate of the BSP to maintain price stability conducive to a balanced and sustainable growth of the economy, as well as to promote and maintain monetary stability and the convertibility of the peso. 5 Please be guided accordingly. CAIHTE Very truly yours, (SGD.) VITALIANO N. AGUIRRE II Secretary Footnotes 1. Atienza v. Villarosa , G.R. No. 161081, May 10, 2005, 458 SCRA 385, 403; citing Chua v. Civil Services Commission , G.R. No. 88979, February 7, 1992, 206 SCRA 65. 2. G.R. No. 88979, February 7, 1992, 206 SCRA 65. 3. Ibid ., page 77. 4. Ibid ., page 77. 5. Section 3, RA No. 7653. n Note from the Publisher: Copied verbatim from the official copy.