To get out of the “gray list” as scheduled, the Philippines' Anti Money Laundering Council (AMLC) has submitted its latest progress report containing "good news" to the Paris-based Financial Action Task Force (FATF) in mid-January.
“The presentation included good news and there’s progress,” according to Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. who is also the AMLC chair. AMLC is a BSP-led financial intelligence unit (FIU). The Philippines was given a one year extension from January 2023 to January 2024 to comply with the requirements.
By progress, he means the AMLC showed positive developments to address the country’s strategic deficiencies to counter money laundering, terrorist financing, and proliferation financing, and to get out of the FATF’s gray list.
The Philippines has been one of jurisdictions under the global anti-money laundering watchdog’s gray list since June 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.
Remolona is hoping the FATF assessors, which received the AMLC progress report on Jan. 16 in Bangkok, Thailand, will find it sufficient and results in a positive assessment.
The FATF recently held its annual plenary meeting in Bangkok for the Asia Pacific Group (APG) on Money Laundering. The Philippine delegation usually consists of AMLC members, the BSP, and the Securities and Exchange Commission, among others.
“We presented to assessors (on Jan. 16) what we have been doing. The next one (presentation) is in February,” Remolona said in a mixture of English and Filipino.
The FATF assessors have also visited the country to review and evaluate the progress made on anti-money laundering/combating terrorist financing (AML/CTF) action plans.
When asked if he is more confident now of getting out of the gray list, the BSP chief said the Philippine progress report was sufficiently accomplished, but it is difficult to tell how the FATF assessors will evaluate it using its own metrics and methods.
Previously, Remolona has assured that they “know what to do” regarding the crucial measures they need to fix and comply with to be taken out of the gray list.
There are two important proposed legislation that BSP is supporting to help convince FATF to remove the Philippines from the watchlist, and these are the bills Amending the Bank Secrecy Law and the Anti Financial Account Scamming Act (AFASA), among others.
On the issue of bank deposits secrecy law, he said last year that they can partially address this with the proposed new bill that was passed in the Lower House and now with the Senate. Specifically, it involves amendments to the DOSRI or directors, officers, stockholders and their related interests policy of the BSP.
The AFASA provides the framework to prohibit and punish scammers and other financial crimes. The BSP is hoping the Senate will approve and pass this bill by the middle of 2024.
Last December, Remolona said that by February this year, they will know whether “we stay on the list or leave the list entirely. ”
The “all hands on deck” strategy has been in place for a long time and Remolona is fairly confident the BSP and the government has collaborated enough to get removed from the gray list.
Remolona has said that if the Philippines is retained in the gray list, this would affect how correspondent banks are dealt with by other banks overseas, which means there will be continued due diligence that will be tighter compared to other banks in countries not on the gray list.
In an Oct. 27, 2023 report, the FATF said it “urges the Philippines to swiftly implement its action plan to address (the) strategic deficiencies as soon as possible as all deadlines expired in January 2023.”
Based on the schedule, the Philippines was given a one year extension from January 2023 to January 2024 to work on complying with the required AML/CTF action plans.
In the update, the FATF listed five areas of 18 action plan items that still needs to be addressed before the January 2024 deadline, the same five items that was in the June 2023 update. This was lower than the six items listed in both the February 2023 and October 2022 update.
Three of the five items are: the implementation of effective risk-based supervision of Designated Non-Financial Businesses and Professions; supervisors should be using AML/CTF controls to mitigate risks associated with casino junkets; and an enhanced and streamlined law enforcement agencies’ access to beneficial ownership information and taking steps to ensure that information is accurate and up-to-date.
Other action plans that need to be taken cared of as soon as possible include: an increase in money laundering investigations and prosecutions in line with risk; and an increase in the identification, investigation and prosecution of terrorist financing cases.
The Philippines was gray-listed on June 25, 2021 because of unresolved AML/CTF problems and other technical compliance deficiencies. Before 2021, the last time the country was on the FATF watchlist was in 2013.
Previously, the FATF has already recognized amendments to the bank deposits secrecy law since the AMLC is exempted from the restrictions of the said law.
The FATF has also taken note of the Philippines' progress in adopting stronger measures against money laundering and terrorist financing.
Progress reports are usually submitted to the FATF in three reporting cycles in a given year, or in January, May and September.