Will Philippines exit money-laundering “grey list” next month?
The Financial Action Task Force (FATF) will soon determine if it will remove the Philippines from its “grey list” of countries at higher risk for financial crimes, including money laundering.
The Philippines was put on the FATF grey list in June 2021. The Paris-based financial watchdog cited insufficient anti-money laundering (AML) and counter-terrorism financing (CTF) measures.
Grey-listing undermines a country’s global reputation and financial standing. It can discourage foreign investment, increase the cost of doing business internationally and delay transaction processing.
Eli M Remolona Jr, of the Philippines Central Bank, will attend the FATF meeting in February to lobby for the country’s absolution. “We won’t really know until the plenary in Paris,” he told the Philippines Business Mirror yesterday. “We are hopeful that we will hear good news.”
The Philippines has been on and off FATF lists a number of times over the years. In 2001, with virtually nonexistent AML/CTF laws, it landed on the notorious black list of countries at high risk for financial crimes. At the time, it shared the unfortunate distinction with just two other jurisdictions: Russia and Nauru, Micronesia.
In 2003, Philippine lawmakers established the first Anti-Money Laundering Act and the country was delisted. Then, in 2012, it was added to the grey list for failing to enact CTF legislation.
It was removed in 2013 and added again in 2021 when it did not fully comply with FATF’s 40+9 recommendations (40 recommendations to prevent money laundering and nine to counteract terrorism financing).
In 2023, President Ferdinand Marcos Jr reinforced the country’s financial controls with the establishment of the National Anti-Money Laundering, Counter-Terrorism Financing and Counter-Proliferation Financing Strategy (NACS).
In another plus, last July he banned Philippine Offshore Gaming Operations (POGOs), an industry that had become a haven for financial crimes.
But the taint of POGOs remains and some operations continue. This month, law enforcement raided two alleged scam centres and an illegal igaming facility, reports the Bureau of Immigration.
“There are still inherent risks and it’s not just the underground online gaming,” says Moody’s analyst Choon Hong Chua. He believes corporations as well as banks are at heightened risk for criminal infiltration.
“Across the region and in fact across the world, traditionally the corporate organisations are not as regulated as the financial institutions,” the analyst told Bloomberg. “A lot of these organisations are the ones serving some of the high-risk clients.”
For now, the Philippines remain in the lineup of “jurisdictions under increased monitoring” by the FATF, along with 20 other countries including Haiti, Lebanon, South Africa and Yemen.
However, the FATF acknowledges that the jurisdiction has “substantially completed” an 18-point action plan to restore its financial integrity.
So a reprieve may be in store when the FATF completes its review in February.
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