Philippines lands on dreaded dirty money list anew

MANILA, Philippines — Global money laundering and terrorist financing watchdog Financial Action Task Force (FATF) has placed anew the Philippines and three more countries on a gray list, or those under increased monitoring  after failing to address strategic deficiencies to counter money laundering as well as terrorist and proliferation financing.

The Paris-based watchdog said the Philippines, Malta, Haiti and South Sudan were added to the watchlist, while Ghana had been removed after the country had made progress.

The Philippines failed to satisfy the FATF-International Cooperation Review Group (ICRG) in addressing the technical deficiencies raised by the Asia Pacific Group (APG) on Money Laundering under its mutual evaluation review in October 2019.

The FATF, however, noted the Philippines has made progress on a number of its mutual evaluation review recommended actions to improve technical compliance and effectiveness, including addressing technical deficiencies on targeted financial sanctions.

The country was included in the gray list even with the passage of Republic Act 11479 or the Anti-Terrorism Act of 2020, while amendments to RA 9160 or the Anti-Money Laundering Act (AMLA) of 2001 and RA 1405 or the Secrecy of Bank Deposits Law are still pending.

The FATF blacklisted the Philippines in 2000 based on its assessment that the country lacked the power to thwart money laundering and to pin down individuals involved in terrorist financing. The country was subsequently removed from the list in February 2005 after the enactment of the AMLA.

In June 2012, the Philippines was included in the gray list as it failed once again to address AML/CFT deficiencies including criminalizing money laundering and extending the coverage of reporting entities, but was subsequently removed from the watchlist in June 2013.

The Anti-Money Laundering Council (AMLC) chaired by Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Philippines has made a high-level political commitment to work with the FATF and APG for the timely implementation of the action plans to strengthen the effectiveness of its anti-money laundering and counter terrorism financing (AML/CFT) regime.

The country’s sole financial intelligence unit said the mere identification of the Philippines as having jurisdiction under increased monitoring with series AML/CFT deficiencies does not automatically mean imposition of sanctions.

“It is only when the country fails to meet the deadlines will the FATF call on countries to impose countermeasures against the Philippines. Hence, all government agencies involved should deliver expected outputs on the action plans pertaining to them,” the AMLC said in a statement.

With its inclusion in the gray list, the Philippines is now required to submit progress reports to the FATF thrice a year.

The AMLC said it was able to largely address the recommendations under the mutual evaluation review down to 18 concerns from 70 through the cooperation of all relevant government and law enforcement agencies.

For the Philippines to be removed from the gray list, the AMLC said the government and law enforcement agencies need to implement 18 action plans to address the serious AML/CFT deficiencies within the prescribed timelines.

Mel Georgie Racela, executive director of the AMLC Secretariat, earlier said inclusion in the gray list would publicly identify the Philippines and its citizens as a risk to international financial system for having strategic deficiencies in AML/CFT framework.

“Consequently, the Philippines’ inclusion will result in an additional layer of scrutiny from regulators and financial institutions, thereby increasing the cost of doing business with Filipinos, delay the processing of transactions and blocking the country’s road to an A credit rating,” Racela said.

The FATF said the Philippines need to demonstrate that effective risk-based supervision of designated non-financial business and professions (DNFBPs) is occurring and that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets.

The dirty money watchdog said the country should also implement the new registration requirements for money or value transfer services (MVTS) and apply sanctions to unregistered and illegal remittance operators.

Aside from enhancing and streamlining law enforcement agencies’ access to beneficial ownership information and taking steps to ensure that information is accurate and up-to-date, the FATF said the Philippines need to demonstrate an increase in the use of financial intelligence and an increase in money laundering investigations and prosecutions in line with risk.

According to FATF, the country should also demonstrate an increase in the identification, investigation and prosecution of terrorist financing cases and show that appropriate measures are taken with respect to the non-profit organizations (NPOs) sector including unregistered NPOs.

Furthermore, the FATF said the Philippines should enhance the effectiveness of the targeted financial sanctions framework for both terrorist and proliferation financing.

The Philippines is now updating its National Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Strategy for 2018 to 2022 (NACS) to integrate the ICRG action plans to ensure a whole-of-government approach.