The Securities and Exchange Commission (SEC) has committed to ensure the sustainability of reforms it started that paved the way for the Philippines’ imminent exit from the “gray list” of the global anti-money laundering watchdog Financial Action Task Force (FATF).
In a landmark development, FATF announced at its October 2024 plenary that “the Philippines has substantially completed its action plan,” composed of 18 items that had kept the country under increased monitoring since June 2021.
The SEC noted that “failure to address the remaining action plan items would have put the Philippines at the risk of entering the blacklist.”
FATF member countries impose restrictions and additional checks, and possibly refusal of financial transactions with countries in the blacklist. These result in failed transactions, delays, and costs that may be passed on to consumers.
Following its initial determination of the Philippines’ compliance with its action items, the FATF Asia/Pacific Joint Group will now proceed with an on-site visit early next year.
This will be to verify that the implementation of anti-money laundering and combating of financing of terrorism (AML/CFT) reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future.
“This significant milestone demonstrates the Philippines’ strong commitment to tackling money laundering and terrorism financing by adopting crucial reforms aligned with global standards and best practices,” SEC Chairperson Emilio B. Aquino said.
He added that “on our part, the SEC will continue investing in digitalizing and optimizing resources to ensure that the reforms we have implemented will be sustainable. We will also remain unwavering in our dedication to transparency and compliance, as we build on our gains and work alongside local and international partners to further strengthen our AML/CFT efforts.”
In assessing the Philippines’ progress in addressing AML/CFT concerns, FATF cited reforms enhancing and streamlining access of law enforcement agencies to beneficial ownership (BO) information and taking steps to ensure that BO information is accurate and up-to-date, and those demonstrating that appropriate measures are taken with respect to non-profit organizations (NPO) without disrupting legitimate NPO activity, among others.
The SEC said it also “contributed to the successful implementation of other key reforms demonstrating risk-based supervision of designated non-financial businesses and professions (DNFBPs)."
In addition, it said “increase in the use of financial intelligence and an increase in ML investigations and prosecutions in line with risk; increase in identification, investigation and prosecution of TF cases; and effectiveness of the targeted financial sanctions framework for TF and proliferation financing” were also cited by FATF.
For one, the SEC mandated the declaration of beneficial ownership in the General Information Sheets of all corporations and made the same available to the Philippine National Police, the Bureau of Internal Revenue, the Philippine Drug Enforcement Agency, the National Bureau of Investigation, and other law enforcement agencies.
In 2021, the SEC prohibited the issuance and sale of bearer shares and bearer share warrants through SEC Memorandum Circular No. 1, Series of 2021 to further promote transparency and curb the misuse of corporations for illicit activities.
“Looking forward, the SEC is committed to sustaining its AML/CFT reforms through enhanced supervision, continuous audits, and the inclusion of beneficial ownership registry initiatives within its strategic plan for 2023 to 2028,” Aquino said.
He noted that “these measures underscore the SEC’s long-term commitment to protecting the financial system against illicit activities while supporting the Philippines’ journey toward a full exit from the FATF grey list."
“These measures underscore the SEC’s long-term commitment to protecting the financial system against illicit activities while supporting the Philippines’ journey toward a full exit from the FATF grey list,” Aquino added.