WASHINGTON – Instead of being blacklisted by the Financial Action Task Force (FATF) for failure to approve amendments to the Anti-Money Laundering Act as feared by financial experts in Manila, the Philippines merely received what seemed to be a mild rebuke.
At the end of a three-day plenary meeting in Paris, FATF said in a statement that since June the Philippines has taken steps to improve its anti-money laundering (AML) system and its “combating the financing of terrorism (CFT)” drive, through the issuance of the implementing rules and regulations for the recently enacted CFT law.
However, it said certain strategic AML/CFT deficiencies remain.
“We were informed that because of the efforts of our Anti-Money Laundering Council, the FATF (spared the Philippines from being blacklisted),” deputy presidential spokesperson Abigail Valte said over radio dzRB.
Valte said Philippine officials briefed FATF officials on current efforts to pass the third piece of legislation required for the country “to avoid being downgraded.”
In recognition of such efforts, FATF “kept us in the gray list, but urged us also to adopt the third measure for us to be compliant with international standards,” Valte said.
The third amendment, according to Valte, has something to do with increasing the number of covered predicate crimes and improving reporting mechanisms to ensure that the country’s systems are at par with international standards.
“Our delegates were able to convince FATF to give us more time to pass the bill. We remain on the gray list. Whew,” Senate committee on banks, currencies and financial institutions chairman Sergio Osmeña III said in a text message.
Being on the gray list means a country is considered “making sufficient progress” in fighting money laundering.
Getting included in the blacklist also means transactions with Filipino individuals and companies might be scrutinized more strictly, on suspicion these could involve laundered money.
Such scrutiny is seen to affect remittances of overseas Filipino workers but Senate President Juan Ponce Enrile said the FATF should not be allowed to dictate on a sovereign country like the Philippines or threaten it with sanctions.
Several senators have raised concerns over the expansion of coverage of the AMLA, particularly the inclusion of tax evasion as a predicate crime. They said the inclusion of tax evasion could be used as a tool for harassment.
Senate Majority Leader Vicente Sotto III earlier said tax evasion should only be applicable if it is related to the other predicate crimes listed in the AMLA.
Osmeña and Sen. Teofisto Guingona III, chairman of the Senate sub-committee on AMLA amendments, consider Sotto’s proposal acceptable.
Other senators, particularly Joker Arroyo and Minority Leader Alan Peter Cayetano, said the bill may need fine-tuning. Guingona said some of his colleagues apparently did not take the FATF blacklist threat seriously.
President Aquino is urging the Senate to pass the proposed amendments to the AMLA to avoid the FATF blacklist.
“Will it pass given the tightness of the schedule? I think there is sufficient time to really thresh out all of the details and come up with something that they can fully support,” Aquino said during the Annual Presidential Forum of the Foreign Correspondents’ Association of the Philippines last Wednesday.
Presidential spokesman Edwin Lacierda also said earlier they were hopeful that the AMLA amendments would be passed and that the Presidential Legislative Liaison Office would coordinate with the Senate regarding the matter.
The FATF said the Philippines should continue to work on implementing its action plan to address these deficiencies, including taking additional measures to adequately criminalize money laundering; and extending coverage of reporting entities to include designated non-financial businesses and professions.
“FATF encourages the Philippines to address its remaining deficiencies and continue the process of implementing its action plan. In particular, the FATF strongly encourages the Philippines to enact the pending legislative amendment on AML,” the statement said.
Officials in Manila had feared FATF might put the Philippines in a blacklist of nations not complying with AML/CFT after the Senate failed to approve amendments to the AMLA.
Aquino had certified the AMLA amendment bill as urgent and the House of Representatives approved its version. But the Senate failed to approve a counterpart measure before Congress adjourned for a two-week break on Wednesday, the same day the FATF plenary began in Paris.
The statement on Friday identified the Philippines as one of 23 countries with “strategic AML/CFT deficiencies for which they have developed an action plan with the FATF.”
It said FATF would continue to work with these countries and to report on the progress made in addressing the identified deficiencies.
Indonesia, Myanmar, Thailand and Vietnam were among 17 other countries with “strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies.” The FATF urged its members to consider risks associated with these countries. – With Aurea Calica, Marvin Sy, Prinz Magtulis