By LEE C. CHIPONGIAN
The Bangko Sentral ng Pilipinas (BSP)-led Anti-Money Laundering Council (AMLC) said signing the Anti-Terror Bill (ATB) into law will avoid a gray-listing from the Financial Action Task Force (FATF), a policy-making body that protects against money laundering and terrorism financing.
The ATB is just a signature away from becoming the Anti-Terrorism Act of 2020. It replaced and repealed the Human Security Act (HSA) of 2007. But President Duterte’s signature is the subject of a lot of protests and warnings of the new law’s implications and its propensity to be misinterpreted or misconstrued.
According to the AMLC, the ATB is going to address the gaps in the HS and the Anti-Money Laundering Act of 2001 (AMLA). These gasps are the so-called “non-negotiables” such as: the definition of a designated person; on the unlawful acts of foreign terrorists; on the designation of terrorist individuals, groups of persons, organizations, or associations; on the AMLC’s authority to investigate, inquire into, and examine bank deposits; on the AMLC’s authority to freeze; on safe harbor for any person acting on good faith when implementing targeted financial sanctions; and on the function of the Anti-Terrorism Council to take action on relevant resolutions issued by the UN Security Council.
“If we fail to pass these provisions into law, the Philippines may be included in the list of countries with strategic deficiencies in its AML/CTF (anti-money laundering/counter-terrorism financing) framework,” said the AMLC.
As to why the country needs the ATB now in the middle of a virus pandemic, the AMLC has this to say: “Fighting terrorism is just as urgent because it also concerns protecting life, as stated in the ATB. If there is anything that this pandemic has taught us, it is the importance of being prepared. Just as we don’t know when pandemics will hit, so too when terrorist acts will occur and take away life.”
Since October 2019, the Philippines is under a 12-month observation period by the FATF or until October this year, after the country adopted the Mutual Evaluation Report (MER) which contains evaluations, actions, and assessment measures to fight money laundering, terrorism financing, and proliferation of weapons of mass destruction.
But because of the global health crisis, the Philippines’ observation period is extended until February 2021. Still, AMLC said observation period “is the last opportunity for the Philippine competent authorities to address identified deficiencies in the MER to avoid gray-listing.”
“Among these deficiencies are the gaps in the HSA and the AMLA, as amended. So passing amendments to both the HSA and AMLA, as amended, is among the conditions to avoid the country’s inclusion in the gray list,” it added.
“But it is not enough to just pass these amendments into law, since the Philippines is being assessed both on technical and effectiveness compliance,” the AMLC added. “The country must also demonstrate effective implementation of these amendments before the observation period ends in February 2021. With the early passage of the Anti-Terrorism Act of 2020, the Philippines will be given a very good opportunity to implement the same and demonstrate progress in fulfilling our international commitments. So, we hope that the same attention and commitment would be given to amendments to the AMLA, as amended, so that the country may finally avoid inclusion in the FATF gray list.”
The Philippines was removed from the FATF’s International Cooperation Review Group’s “gray list” in 2013.
Since the FATF analyzes high-risk jurisdictions and recommends specific actions to deal with the money laundering/terrorist financing risks, AMLC said the government must avoid any tagging.
“If any or all of the proposed amendments are not passed and not implemented within the observation period, the country will be included in the FATF ICRG gray list, which will publicly identify the Philippines as a risk to the international financial system for having strategic deficiencies in its AML/CTF framework,” warned the AMLC.
Inclusion in the gray list will result to the following: an additional layer of scrutiny from regulators and financial institutions, thereby increasing the cost of doing business; and delaying the processing of transactions; and blocking the country’s road to an “A” credit rating.
“The pandemic is already adversely affecting our economy. It would be prudent to mitigate other risks and avoid problems gray-listing would further bring to our economy,” said the AMLC.