Foreign banks that previously withdrew from the Philippines may soon return following the country’s official removal from the Financial Action Task Force’s (FATF) ‘grey list,’ signaling improved financial compliance and reduced regulatory risks.
On Friday, Feb. 21 (Paris time), the FATF, a global anti-money laundering watchdog, removed the Philippines from its ‘grey list’ after nearly four years, citing major improvements in combating money laundering and terrorism financing.
The FATF said in a statement that the Philippines “has completed their Action Plan to resolve the identified strategic deficiencies within agreed timeframes and will no longer be subject to the FATF's increased monitoring process.”
“The FATF decision may prompt foreign banks to review and resume their business relationship and transactions with Philippine financial entities,” said Anti-Money Laundering Council (AMLC), chaired by Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr., in a statement released over the weekend.
The AMLC, the government agency that tracks and combats financial crimes, noted that even before the grey-listing, the Philippines was considered to have “weak anti-dirty money regimes.”
It said that this came with strict requirements and fines imposed by foreign regulators on financial institutions or banks doing business with Philippine entities. As a result, several banks avoided doing business with local entities “rather than managing possible money laundering or terrorist financing risks.”
The AMLC pointed out that being included in the FATF’s greylist is “a burdensome process for banks and other financial institutions. This process discourages correspondent banking relationships and international financial flows into the country.”
Among the countries placed under increased monitoring, the Philippines—which had been on the list since June 2021—is the sole jurisdiction removed from the list. Meanwhile, Laos and Nepal were added to the list.
Remolona asserted that ‘this achievement is a result of strong cooperation within the government as well as the private sector. It also complements our ongoing efforts to make the financial system a stronger driver of sustainable growth.”
Executive Secretary Lucas P. Bersamin, who chairs the National Anti-Money Laundering/Counter-Terrorism Financing/Counter-Proliferation Financing (AML/CTF/CPF) Coordinating Committee (NACC), likewise noted that this is an affirmation that the local measures “align with global standards,” which supports the country’s economic competitiveness.
The AMLC expects that the the country’s exit would prompt “faster and lowercost cross-border transactions, reduce compliance barriers, and enhance financial transparency.”
“These will support business, strengthen the country's position as an attractive destination for foreign direct investment (FDI), and benefit Filipinos, particularly overseas Filipino workers (OFWs),” it added.
As per the FATF’s onsite visit last month, the Philippines demonstrated compliance with its action plan. Among the major improvements seen were stricter oversight of non-financial businesses, tighter regulation on fund transfers, and enhanced measures against money laundering.
It also noted the country’s reinforced cross-border regulations and improved law enforcement access to financial data.
“Exiting the FATF grey list is a significant step in strengthening the Philippines' financial system and maintaining global confidence,” the AMLC said.
Moving forward, the FATF advised the Philippines to continue working with the Asia/Pacific Group on Money Laundering “to sustain its improvements in its AML/CFT system.”
“The FATF encourages the Philippines to continue its work in ensuring that its CFT measures are appropriately applied, particularly the identification and prosecution of TF [Terrorism Financing] cases, and are neither discouraging nor disrupting legitimate NPO [Non-Profit Organisation] activity,” it said.