Around ₱500 billion is the estimated annual loss the Philippines incurs from tax evasion within the nation’s financial system, proving to be a major threat the country’s fiscal health has been grappling with.

This staggering figure has placed tax crimes at the forefront of the Anti-Money Laundering Council’s (AMLC) latest risk review, detailed in the third national anti-money laundering and counter-terrorism financing (AML/CTF) risk assessment and first national proliferation financing (PF) risk assessment published last Tuesday, June 23.

“Tax evasion became a predicate offense under the amended Anti-Money Laundering Act (AMLA) in 2021,” the interagency AMLC said in the report. Tax-related offenses have only recently been integrated into the country’s legal framework.

This inclusion allowed for a more comprehensive evaluation of how unpaid taxes circulate through the economy.

“The tax crimes assessment references estimates placing annual tax losses at approximately ₱500 billion, underscoring the potential scale of proceeds and the importance of strengthening tax-related money laundering (ML) detection and enforcement,” the assessment said.

Even as authorities work to build stronger legal cases, the sheer volume of missing revenue remains a critical concern, as “tax crimes are assessed as a high ML threat based on the magnitude of illicit proceeds.”

Apart from tax evasion, AMLC likewise identified several other “high-threat” predicate crimes that rake in billions of pesos in illicit revenue. Such risks threaten to undermine the nation’s financial integrity.

“Illegal drug trafficking—dominated by methamphetamine hydrochloride (shabu), with marijuana and other controlled substances also contributing—remains the most significant source of illicit proceeds in the Philippines,” AMLC reported.

Furthermore, the rise of digital technology has fueled a surge in financial scams. “Fraudulent schemes including swindling, phishing, smishing, romance fraud, and cyber-enabled financial crime consistently rank among the most frequently reported predicate crimes in suspicious transaction reports (STRs),” the report noted.

Environmental crimes have also been elevated to a “high” threat level, with illegal logging, mining, and fishing generating significant illicit funds. From 2021 to 2024, over 6,600 STRs related to environmental crimes were filed, involving approximately ₱46.5 billion.

The report also flagged corruption and securities-related offenses as major ML risks, noting that crimes such as bribery, graft, plunder, malversation of public funds, and other fraudulent activities involving public funds continue to pose significant threats.

Meanwhile, the securities sector recorded nearly 7,500 STRs totaling roughly ₱93.5 billion during the same period.

Despite these threats, the Philippines has made notable strides in its regulatory environment, leading to its successful exit from the Paris-headquartered Financial Action Task Force’s (FATF) monitoring list in February 2025.

Currently, the Philippines’ overall ML risk is assessed as “medium-high.” However, AMLC maintains a cautious outlook, noting that sustained implementation of reforms remains important.