It will take as long as two years before the Philippines can be taken out of the “grey list” of dirty money watchdog Paris-based Financial Action Task Force (FATF), according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

Diokno said the Philippines’ delisting from the grey list will only happen “upon successful completion of all action plans — hopefully on or before January 2023.” Progress reports are submitted to the FATF three times a year, in January, May and September. “The first report will be this September,” said the BSP chief, who is also the chairman of the Anti-Money Laundering Council (AMLC).

Over the weekend, the FATF announced that it has placed the Philippines and other countries on its “Jurisdictions with strategic deficiencies” watch list, also known globally as the grey list. The last time the Philippines was on the grey list was in 2013.

“The Philippines has adopted compliant laws and regulations. But it is not sufficient,” said Diokno.

He said the country “need time to implement them to demonstrate EFFECTIVENESS (all caps for emphasis by Diokno) of anti-money laundering and counter-terrorism financing (AML/CTF) measures.”

“That said, the Philippines has been working relentlessly to address the deficiencies identified in the 2018 Mutual Evaluation (report or MER) even amidst the COVID-19 pandemic,” said Diokno. “We remain strongly committed to swiftly resolve the remaining strategic deficiencies (18 from the original 70) within agreed timeframes. In any case, there is no sanction for being a ‘Jurisdiction under increased monitoring’,” he said.

Diokno also noted that the Philippines and AMLC has “largely addressed” action plans contained in the 2018 MER which reduced the number from 70 to 18.

He reiterated that the National Anti-Money Laundering/Combating the Financing of Terrorism Committee or NACC is also addressing the remaining International Cooperation Review Group or ICRG action plans.

“Jurisdictions under increased monitoring” are found to have strategic deficiencies in efforts to counter money laundering, terrorist financing, and proliferation financing.

A grey-listed country has also made a commitment to “resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.”

The grey list is not as serious as the FATF’s “dark list” or “black list”. For decades, the Philippines has

been avoiding the FATF 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 that are black-listed by the FATF.

The AMLC said last Saturday 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 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.

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.