The Philippines is celebrating its removal from the Paris-based Financial Action Task Force (FATF) so-called "grey list.”

For those unfamiliar with global finance, the FATF is an international watchdog that sets standards for combating money laundering and terrorism financing. Placement on the "grey list" indicated weaknesses in the Philippines’ financial systems that criminals could exploit.

While less severe than being "blacklisted," the grey list still triggered increased scrutiny for the Philippines from global financial institutions that led to delays, higher costs, and a perception of risk that deterred investors.

The Philippines was added to the FATF’s grey list in June 2021. Since then, the nation, led by the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC), diligently addressed the identified weaknesses.

In July 2023, President Marcos issued Executive Order 33, which outlined a roadmap for addressing the FATF's action plan. He followed this with more directives in October 2023 and January 2024 to expedite the country’s removal from the list.

The government spearheaded its reform agenda by strengthening regulations for vulnerable sectors such as real estate and casinos, as well as enhanced transparency around company ownership and bolstered law enforcement's capacity to combat financial crimes.

Moreover, businesses, both large and small, improved their compliance procedures. Civil society organizations also contributed by raising awareness and promoting best practices.

This collective effort culminated in the FATF's decision to remove the Philippines from the grey list on Friday, Feb. 21 (Paris time).

Now, what are the implications of this positive development for businesses operating in or considering investing in the Philippines?

First, it removes an impediment to international trade and investment. Cross-border transactions should no longer face excessive delays or fees. Now, businesses can operate more efficiently, confident that their financial dealings will not face undue scrutiny.

The removal also underscores the Philippines' commitment to transparency and good governance.

Moreover, investors are more likely to commit capital to the Philippines today, given its stronger regulatory frameworks and commitment to fighting financial crime.

The benefits extend beyond attracting foreign investment. Local businesses, particularly smaller enterprises, will also find it easier to access credit, expand operations, and participate in the global marketplace.

Of course, the work does not end here. Maintaining the country's exclusion from the grey list is crucial. The Philippines must now remain vigilant by ensuring its anti-money laundering and counter-terrorism financing (AML/CFT) framework remains robust and up-to-date.