The Paris-based Financial Action Task Force (FATF), a global organization on anti-money laundering, is encouraging the Philippine government to continue enforcing strict rules to effectively curb, if not entirely remove, money laundering and terrorist financing in the country.
Based on its latest Oct. 21 update on jurisdictions under increased monitoring, which the Bangko Sentral ng Pilipinas (BSP) also released to banks on Friday, Oct. 28 in a circular letter, FATF noted that since June 2021 when the Philippines was again placed under its “grey list”, the government has “made a high-level political commitment to work with the FATF and APG (Asia/Pacific Group) to strengthen the effectiveness” of its anti-money laundering and combatting the financing of terrorism and proliferation (AML/CFT) action plans.
“The Philippines has taken steps towards improving its AML/CFT regime, including by demonstrating that appropriate measures are being taken with respect to the NPO (non-profit organization) sector and implementing supervision for targeted financial sanctions,” said the FATF.
The anti-money laundering watchdog said the country “should continue to work on implementing its action plan to address its strategic deficiencies” which were six items it listed in the FATF update.
These are, as recommended, the government should do by: demonstrating that effective risk-based supervision of Designated Non-Financial Businesses and Professions or DNFBPs is occurring; demonstrating that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets; and enhancing and streamlining law enforcement authorities access to beneficial ownership (BO) information and taking steps to ensure that BO information is accurate and up-to-date.
The FATF also encouraged continued cooperation with the organization for: demonstrating an increase in the use of financial intelligence and an increase in ML or money laundering investigations and prosecutions in line with risk; demonstrating an increase in the identification, investigation and prosecution of TF or terrorist financing cases; and enhancing the effectiveness of the targeted financial sanctions framework for both TF and PF by demonstrating that DNFBPs understand their obligations.
As of Oct. 21, the Philippines is included in the 23 list of countries identified as jurisdictions with strategic deficiencies.
As explained by FATF, jurisdictions under increased monitoring “are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.”
“When the FATF places a jurisdiction 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,” it said.
The FATF is calling on all grey-listed countries such as the Philippines to complete their action plans “expeditiously and within the agreed timeframes.”
Meantime on Friday, BSP Deputy Governor Chuchi G. Fonacier released a circular letter reminding all of its supervised financial institutions to take note of the high-risk and other-monitored jurisdictions of the FATF, namely North Korea and Myanmar.
Last August, the FATF released its review of the Philippines’ progress report since being placed on the grey list last year.
FATF has taken note of the Philippines' progress in adopting stronger measures against AML/CFT in the latest mutual evaluation report (MER). Based on the country’s third follow-up report (FUR) on its MER, the FATF said the country has acted sufficiently to resolve some of the AML/CFT issues within the agreed timelines.
“Overall, the Philippines has made good progress in addressing the technical compliance deficiencies identified in its MER,” said FATF in the FUR published on Aug. 26.
The Philippines’ latest MER was deemed “largely compliant” on two of 37 recommendations based on the 18 action plans necessary to delist the Philippines from the grey list.
Being on the list means the Philippines is one of jurisdictions under closed monitoring by the FATF until these strategic flaws have been addressed.
The country currently has 37 FATF recommendations that are rated under four possible levels of technical compliance: compliant; largely compliant; partially compliant; and non-compliant.
The Aug. 26 progress report contains the current ratings based on the follow-up re-ratings.
The FATF said that after reviewing the latest MER, the Philippines will stay in the so-called “enhanced follow-up” level and will continue to report back to the organization’s APG on money laundering to monitor its progress and to “strengthen its implementation of AML/CFT measures.”
To be taken out of the grey list, the country has committed to comply with 18 action plan items by January 2023. Progress reports are submitted to the FATF in three reporting cycles in a given year, or in January, May and September. The updated FUR was based on progress made up until Feb. 1, 2022.
So far, the Philippines has resolved some of its AML/CFT problems and has made good progress in dealing with technical compliance deficiencies in the MER, according to the FATF.