The Philippines is again placed in the “grey list” of Paris-based Financial Action Task Force (FATF), one of 22 countries found with serious Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) deficiencies, which raises the risk of “dirty money” transactions on trade and remittances.
The FATF on Friday, June 25 (Paris time) released the list of countries under its “Jurisdictions with strategic deficiencies” that includes the Philippines. The last time the country was on the grey list was in 2013.
“Jurisdictions under increased monitoring” are found to have strategic deficiencies in efforts to counter money laundering, terrorist financing, and proliferation financing.
The FATF said that when a jurisdiction is under increased monitoring – “it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.”
The Philippines’ Anti-Money Laundering Council (AMLC), chaired by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno, said as first step to being removed from the increased monitoring list is to comply and submit the necessary progress reports to the FATF. The Philippines has to submit progress reports three times a year.
“Given the recent identification of the Philippines as ‘Jurisdiction under Increased Monitoring’ with serious AML/CTF deficiencies, the relevant government and law enforcement agencies’ sustained pledge to implement the 18 action plans within the prescribed timelines will be essential to the country’s removal from such list,” the AMLC said in a statement today (Saturday).
However, the AMLC said that the “mere identification of the Philippines as having ‘Jurisdiction under Increased Monitoring’ with serious AML/CTF deficiencies does not automatically mean imposition of countermeasures.”
“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,” said the AMLC.
The FATF said the Philippines has a “high-level political commitment to work with the FATF and APG (Asia Pacific Group) to strengthen the effectiveness of its AML/CFT regime.” It noted that since the completion of country’s mutual evaluation report (MER) in 2019, there were improvements in addressing “technical deficiencies on targeted financial sanctions.”
The Philippines is expected by the FATF to have these action plans: an effective risk-based supervision of Designated Non-Financial Business and Professions; and to demonstrate that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets. Other action plans include applying sanctions to unregistered and illegal remittance operators, increased use of financial intelligence and money laundering investigations and prosecutions, among others.
In its statement, the AMLC said the Philippines has committed for the timely implementation of the International Cooperation Review Group (ICRG) action plans to “sufficiently address all AML/CTF deficits of the country.”
ALMC said that this month, the FATF has already recognized its AML/CFT Strategy for 2018 to 2022 or the National Anti Corruption System or NACS and has considered all recommended actions indicated in the country’s MER. In the meantime the NACS is currently being updated to integrate the ICRG action plans to ensure a whole-of-government approach, said the AMLC.
The Philippine action plans currently being undertaken include the following: the amendment and passage of AML/CTF laws; enhancement of the AML/CTF supervisory framework; reinforcement of money laundering and terrorism financing investigation and prosecution; and campaigns to increase public awareness.
Last April this year, the International Monetary Fund (IMF) has already warned and even predicted that the FATF will likely put the Philippines back on its grey list because of the 2019 APG low/moderate grades assessment to the country’s AML/CFT regime’s overall effectiveness, including supervision, preventive measures, and entity transparency. Being included in the FATF list means the Philippines could “potentially face adverse effects on trade and remittances,” said the IMF.
The Philippines has been avoiding the FATF “dark list” or “black list” because an FATF black list are subjected to additional reporting requirements and more stringent inspections that delay remittances and raise service fees. In some cases, financial institutions stop transactions with countries in the FATF black list.