The Philippines has implemented the required 18 action plans needed to exit the “gray list” of Paris-based global anti-money laundering watchdog Financial Action Task Force (FATF) and edging the country closer to the scheduled 2025 delisting from the dreaded watchlist.
Based on the latest FATF assessment it released on Oct. 25, it noted that during its October 2024 plenary, the FATF has “made the initial determination that the Philippines has substantially completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT (anti-money laundering/ combating financing of terrorism) reforms has begun and is being sustained.”
The FATF also said that “the necessary political commitment remains in place to sustain implementation in the future.”
In its assessment, the global AML/CFT warden said the Philippines has addressed key reforms such as: demonstrating that risk-based supervision of DNFBPs (designated non-financial businesses and professions) is occuring; demonstrating that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets; implementing the new registration requirements for MVTS (money or value transfer services) and applying sanctions to unregistered and illegal remittance operators.
The FATF also noted the government actions on: enhancing and streamlining law enforcement agencies or LEA access to BO (beneficial ownership) information and taking steps to ensure that BO information is accurate and up-to-date; demonstrating an increase in the use of financial intelligence and an increase in ML (money laundering) investigations and prosecutions in line with risk; demonstrating an increase in the identification, investigation and prosecution of TF (terrorist financing) cases; demonstrating that appropriate measures are taken with respect to the NPO or non-profit organizations sector (including unregistered NPOs) without disrupting legitimate NPO activity; and enhancing the effectiveness of the targeted financial sanctions framework for both TF and PF (proliferation financing).
Meanwhile, the government’s own financial intelligence unit, the central bank-based Anti Money Laundering Council (AMLC) said the Philippines is closer to a gray list delisting and thus “paving the way for Filipinos, especially Overseas Filipino Workers, to benefit from faster and cheaper remittances and other transactions.”
The Philippines has been on the FATF gray list since June 25, 2021. To faciliate the exit, the FATF’s Asia/Pacific Joint Group (APJG) will be in town early 2025 to “verify the sustainability of the AML/CTF reforms towards addressing the 18 action plan items as well as the high-level political commitment of the Philippine government to continue improving the Philippines' AML/CTPF regime,” according to AMLC.
“This is the final step toward the country’s removal from the greylist,” it added.
AMLC has warned that “failure to address the remaining action plan items would have put the Philippines at risk of entering the blacklist.”
“FATF member countries impose restrictions and additional checks, and possibly refusal of financial transactions with countries in the blacklist. This results in failed transactions, delays, and costs that may be passed on to the consumers,” AMLC also said.
In commenting about the latest FATF assessment, Executive Secretary and National Anti-Money Laundering and Combating of Terrorism Financing/Counter-Proliferation Financing Coordinating Committee Chairman Lucas Bersamin, for his part said, “this milestone is a testament to the hard work and coordination across government agencies” and and “it reflects our strong commitment to meeting the FATF’s stringent standards and ensuring the long-term protection of our financial system (and we) are confident that this progress will be affirmed during the on-site visit.”
The interagency task force was the one that adopted an action plan to exit the FATF greylist. Last July, Malacanang issued Executive Order No. 33 requiring all government offices and departments that are members of the NACC to adopt the National Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing Strategy (NACS) 2023-2027.
Bangko Sentral ng Pilipinas Governor Eli M. Remolona Jr. has said earlier that the AMLC will address by October the last three remaining items in the FATF action plans. Since this has been done, the 2025 delisting is more possible.
The FATF has reiterated that since June 2021, the Philippines has made “a high-level political commitment” to work with the FATF and the Asia/Pacific Group on Money Laundering (APG) to strengthen the effectiveness of its anti-money laundering and combating financing of terrorism.
The original deadline given the Philippines to implement action plans was January 2023. After a year of extension or until January 2024, the country sought another extension to address the deficiencies.
The Philippines has been one of jurisdictions closely watched by FATF since the middle of 2021. As a watchlisted country, it means the Philippines is subject to increased monitoring and is required to actively work with the FATF. Failure to be removed from the gray list will have an impact on the country’s financial reputation on a global scale.
Before 2021, the last time the country was on the FATF watchlist was in 2013.