Clean up act
The Philippines was placed on the FATF’s blacklist in 2000 due to its inability to prevent money laundering and to track down individuals implicated in terrorism financing.
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Daily TribuneThe Philippines was placed on the FATF’s blacklist in 2000 due to its inability to prevent money laundering and to track down individuals implicated in terrorism financing.
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While indicating bright economic prospects next year, the International Monetary Fund, or IMF, has warned against what may be considered the country's backsliding into the dirty money regime.
For years, the country had enjoyed exclusion from the so-called gray list of the powerful Financial Action Task Force, or FATF, which has the authority to make financial transactions between monitored and rich countries difficult.
The FATF is an arm of the powerful Organization for Economic Cooperation and Development, comprising the 38 wealthiest countries.
Recently, the IMF advised the Philippines to take measures to be taken off the FATF alert list since it may slow the respectable momentum of its economy.
In its recent assessment of the Marcos administration's fiscal thrust, it said efforts to "progress on outstanding anti-money laundering and countering the financing of terrorism, or AML/CFT, issues needed to be stepped up swiftly."
The Philippines was placed on the list of jurisdictions under increased monitoring in June 2021, and it missed the deadline to complete the full action plan by January 2023.
In 2000, the Philippines was placed on the FATF's blacklist due to its inability to prevent money laundering and track down individuals implicated in terrorism financing.
Following the implementation of the Anti-Money Laundering Act, the FATF removed the Philippines from the blacklist in February 2005.
After failing to address flaws, including prohibiting money laundering and criminalizing the coverage of reporting organizations, the FATF placed the Philippines on the gray list again in June 2012.
In June 2013, the country was again removed from the gray list.
Now that it is back on the list, it must submit progress reports to the FATF three times a year. Malta, Pakistan, Haiti, and South Sudan are among the countries on the FATF gray list. According to a Reuters report, Ghana was withdrawn after its government demonstrated progress.
For the IMF, the Philippine government has demonstrated a commitment to implement an "action plan, and some progress has been made since then."
However, it noted that the FATF had determined at the June 2023 plenary that there were still deficiencies.
Among the remaining gaps identified by the FATF were in the supervision of designated non-financial businesses and professions associated with casino junkets; law enforcement agencies' access to beneficial ownership information; investigating and prosecuting complex money laundering cases, and increasing the identification, investigation, and prosecution of terrorism financing cases.
Also on the table is the reforming of the bank secrecy law that will enhance the Bangko Sentral ng Pilipinas' supervisory powers and strengthen AML/CFT effectiveness.
"Vulnerabilities" were also cited in the conglomerate and real estate sector. The BSP emphasized that real estate loan growth has recently slowed, and non-performing loans were slightly lower than last year.
The Marcos administration's economic managers have committed to completing all required FATF action items and expressed optimism that substantial progress could be made by early 2024.
Failure to address the deficiencies based on the FATF standards would mean that the powerful body can call on other countries to apply countermeasures against the Philippines.
Being on the gray list would publicly identify the Philippines and its inhabitants as a threat to the international financial system, according to Mel Georgie Racela, executive director of the AMLC Secretariat.
The backlash will mostly be on overseas Filipino workers' remittances since these will face increased scrutiny from regulators and financial institutions, raising the cost of doing business with Filipinos, delaying transaction processing, and impeding the country's path to an A credit rating.
Since the country is also heavily reliant on trade and investments, the Philippines being on the gray list would punish the economy.
