The Philippines has successfully exited the grey list of the Financial Action Task Force (FATF) following reforms implemented by the Securities and Exchange Commission (SEC) to enhance financial integrity and transparency in the corporate sector.
On the final day of the FATF plenary on Feb. 21, 2025, in Paris, the global anti-money laundering watchdog officially announced the Philippines’ exit from the grey list.
The list is composed of jurisdictions placed under increased monitoring while they address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing (ML/TF/PF).
“The FATF welcomes the Philippines’ significant progress in improving its AML/CFT [anti-money laundering and counter-terrorism financing] regime. The Philippines strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021,” the global watchdog said in a statement.
SEC Chairperson Emilio B. Aquino, currently the longest serving member of the Anti-Money Laundering Council (AMLC), highlighted the Commission’s role in achieving the milestone development.
“When I became a member of the AMLC in 2018, the SEC stepped up and positioned itself at the forefront of our fight against money laundering and terrorist financing, recognizing the need for reforms to prevent the misuse of the corporate vehicle in illicit activities,” Aquino said.
He added that, “A secure and stable financial system is integral to our vision of a highly sophisticated and globally competitive capital market and corporate sector.”
“To gain the trust of Filipinos and foreigners alike to invest in or transact with corporations based in the Philippines, we must adhere to the highest standards on combating money laundering and the financing of terrorism and proliferation financing.”
The Philippines was placed on the FATF grey list in June 2021 for deficiencies in its AML/CFT framework, which left the country vulnerable to financial crimes and illicit activities. This subjected cross-border financial transactions to and from the Philippines to higher costs and heightened scrutiny.
The FATF subsequently released an action plan to address AML/CFT concerns, including necessary reforms concerning beneficial ownership (BO) of entities, non-profit organizations (NPOs), and casino junkets in the country.
Among others, the FATF urged the Philippines to enhance and streamline access of law enforcement authorities to BO information and take steps to ensure that BO information is accurate and up to date; and demonstrate that appropriate measures are taken with respect to the NPO sector without disrupting legitimate NPO activity.
Designated non-financial businesses and professions, along with Philippine financial institutions, including SEC-covered persons, were also mandated to adopt and implement anti-money laundering/counter-terrorism financing/counter-proliferation financing (AML/CTF/CPF) policies to mitigate the country’s risk for ML/TF/PF abuse.
Accordingly, President Ferdinand R. Marcos Jr. on Jan. 2, 2024, instituted a whole-of-nation approach to address the FATF’s concerns, directing all government agencies to comply with all the remaining action plan items within the year to trigger the exit process.
The National Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing Coordinating Committee (NACC) headed by Executive Secretary Lucas P. Bersamin, as well as all agencies concerned have since exhausted all measures in line with the President’s directive.
In a statement issued on Oct. 25, 2024, the FATF recognized that the Philippines has substantially completed its action plan in enhancing its AML/CTF regime.
“Exiting the FATF grey list required a national, coordinated effort made possible by the Marcos administration, which wasted no time to unite concerned government agencies to work toward the common goal of fortifying the country’s anti-money laundering and terrorism financing controls,” Aquino said.
He noted that, “We are proud to have been instrumental in the Philippines’ exit from the grey list, which is expected to translate to better economic opportunities and improve investor confidence in the country moving forward.”
As early as 2019, the SEC mandated the declaration of a corporation's beneficial owner through the general information sheets required to be submitted annually.
In 2021, the SEC also 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.
The SEC also implemented an amnesty program in 2023 that encouraged corporations to comply with their reportorial requirements through a waiver or reduction of penalties for late submission and noncompliance.
Higher penalties for late submission and noncompliance with reportorial requirements have since been imposed to highlight the importance of timely submission and promote transparency among corporations.
Jumping off the amnesty program, the SEC identified and suspended the registration of more than 117,000 inactive companies and tagged around 168,000 more as delinquent.
The reforms implemented by the SEC resulted in a significant increase in compliance rate, from 26 percent in 2021 to 69 percent as of date, with regard to the BO information disclosure of active and registered companies.
The SEC also took the lead in implementing measures to enhance transparency among NPOs without disrupting legitimate NPO activity, ensuring that such groups will not be a target of terrorist financing.
Starting 2022, the SEC identified high-risk NPOs, and has since audited around 50 high-risk NPOs annually, ensuring the compliance of 115.
The SEC also launched a dedicated campaign geared toward unregistered organizations to encourage them to register with the SEC, as well as the general public to educate them on the risks associated with engaging with unregistered entities.
As a result of this intervention, the SEC successfully encouraged the registration of 7,631 NPOs since 2021.
The SEC also contributed to the successful implementation of other key reforms demonstrating risk-based supervision of designated non-financial businesses and professions; 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.
“With our exit from the FATF grey list, we are optimistic that the international community will see the Philippines as an even more attractive destination for business and investment,” Aquino said.
He stressed that, “The SEC is committed to continuously upholding its adherence with the global standards of AML/CFT framework to uphold financial integrity, in line with our vision of a business sector considered among the best in Southeast Asia.”