BEYOND BUDGET
Assalamu alaikum wa Rahmatullahi wa Barakatuh.
Feb. 21, 2025 is a significant day for our country as the Financial Action Task Force (FATF) announced the Philippines’ (PH) exit from its grey list. I am glad that our country has been removed from the list, as it will serve as an additional impetus, a catalyst, in our bid to achieve our Agenda for Prosperity.
FATF
For those unfamiliar with the FATF, it is a Paris-based international watchdog against financial crimes. It sets international standards to prevent illegal activities and ensure that national authorities can effectively go after illicit funds linked to these crimes. It identifies jurisdictions with weak anti-money laundering and counter-terrorist financing (AML/CFT) measures in two public documents.
First is its black list, which pinpoints countries with serious strategic deficiencies in countering money laundering, terrorist financing, and proliferation financing. Meanwhile, the grey list contains countries actively working with the FATF to address strategic deficiencies in their regimes. Being placed on this list means the country is committed to swiftly resolving the strategic deficiencies within agreed timeframes, subject to increased monitoring.
PH on the grey list
In June 2021, our country was placed on the grey list due to 18 identified strategic deficiencies in our AML/CFT frameworks. These included deficiencies in the regulatory supervision of gambling operations related to Philippine Offshore Gaming Operators (POGOs), weaknesses in implementing targeted financial sanctions despite obvious anomalies, and delays in implementing the Anti-Terrorism Act of 2020 despite the huge intelligence confidential funds. The FATF required our country to address these and apply corrective measures to secure removal from the list and avoid being placed on the black list, which would have dire economic consequences.
Government reforms
Recognizing the adverse repercussions of being on the grey list, President Ferdinand R. Marcos Jr. (PBBM) issued Executive Order (EO) No. 33 in July 2023, adopting the National Anti-Money Laundering, Counter-terrorism Financing and Counter-Proliferation Financing Strategy 2023-2027, and reorganizing the National Anti-Money Laundering and Counter-Terrorism Financing Coordinating Committee (NACC).
The President further emphasized the urgency of exiting the grey list through Memorandum Circular No. 37, dated October 2023, highlighting the need to expedite the resolution of outstanding FATF – International Co-operation Review Group (ICRG) Action Plans. In a sectoral meeting in January 2024, PBBM instructed the Anti-Money Laundering Council (AMLC) and all concerned government agencies to address the remaining strategic deficiencies.
FATF's decision and positive impact
The FATF’s decision follows an onsite visit from Jan. 20 to 22, 2025, when the Philippines successfully demonstrated compliance with its action plan: strengthening supervision of designated non-financial businesses and professions; reducing risks associated with casino junkets; cracking down on unregistered and illegal money transfer operators; improving access to accurate beneficial ownership information for law enforcement agencies; increasing investigations and prosecutions related to money laundering and terrorism financing; and implementing stricter cross-border measures on all main sea/airports of the country, among others.
I, therefore, laud PBBM for leading our country’s exit from the FATF grey list. I agree with NACC Chairman Executive Secretary (ES) Lucas Bersamin that, “This recognition affirms that the Philippines’ AML/CTF/CPF framework aligns with global standards. It supports our vision to enhance economic competitiveness for the benefit of our people.”
I also congratulate ES Bersamin and all concerned agencies, local government units, and the private sector, especially the AMLC led by its chairman, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona, Jr., who underscored 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.”
I firmly believe that exiting the FATF grey list will have a huge positive impact on our economy, as we are now aligned with international standards. I also concur with Finance Secretary Ralph Recto that, “This is a landmark achievement of the Marcos Jr. administration. It’s a seal of good housekeeping that strengthens public confidence in our financial system.”
Being placed on the FATF grey list is a major investor concern globally. As such, our exit from the list will lead to greater investor confidence and increased foreign direct investment due to enhanced regulatory control and financial transparency.
I am positive that this heightened investor confidence will lead to stronger financial governance and a credit rating upgrade, resulting in lower borrowing rates. Local banks will likewise find it easier to transact with international counterparts, having easier access to global financial markets at reduced compliance cost. This, in turn, will lower lending rates for consumers and local businesses, further stimulating economic activities. Additionally, it will reduce international fund transfer requirements, benefitting overseas Filipinos and businesses.
Beyond budget, our country’s successful exit from the FATF grey list strengthens the country’s financial system and amplifies our economic prospects. With improved investor confidence and a favorable credit rating outlook, we are well-positioned to achieve our Agenda for Prosperity in our Bagong Pilipinas.
(Amenah F. Pangandaman is the Secretary of the Department of Budget and Management.)