PHL requires effort to exit FATF ‘gray list’

By Keisha B. Ta-asan, Reporter

THE PHILIPPINES will require “some effort” to be removed from the Financial Action Task Force’s (FATF) “gray list” by January next year, the central bank governor said on Tuesday.

At the same time, the Anti-Money Laundering Council (AMLC) said it is continuously working with other government agencies to address money laundering and terrorism financing concerns raised by the FATF.

“The government is doing its best to get us out of [the gray list] and unfortunately, a lot of work has to be done for the requirements to be met,” Bangko Sentral ng Pilipinas Governor Felipe M. Medalla told reporters on Tuesday.

He declined to give specific details but said “it will require some effort to get out (of the gray list) by January.”

The Philippines remained under a gray list of countries under increased monitoring for money laundering and terrorism financing risks, despite some progress in implementing measures against such financial crimes, the FATF said over the weekend.

In a statement, the FATF said the Philippines has taken steps to promote the target financial sanctions obligations among financial institutions and Designated Non-Financial Business and Professions (DNFBPs). This would help improve law enforcement agencies’ investigations in cases related to “dirty money,” as well as prioritize asset-tracing and confiscation at the point of conviction in criminal cases.   

However, the FATF said the Philippines needs to address strategic deficiencies. The country should demonstrate effective risk-based supervision of DNFBPs, ensure supervisors are using anti-money laundering and counter-terrorism financing (AML/CTF) tools to mitigate risks, and streamline government access to up-to-date beneficial ownership information.

The anti-money laundering watchdog also said the Philippines should show there has been an increase in the identification, investigation, and prosecution of money laundering and terrorism financing cases.   

The assessment was made during the FATF’s plenary from June 21 to 24.

In an e-mail interview with BusinessWorld, the AMLC said it is continuously working with other relevant government agencies to address the strategic deficiencies identified by the FATF.   

“In particular, the AMLC, Philippine Amusement and Gaming Corp., Cagayan Economic Zone Authority and Aurora Pacific Economic Zone and Freeport are implementing risk-based supervision over the covered DNFBPs,” it said.   

The AMLC also noted that the Securities and Exchange Commission had implemented measures to increase submissions of beneficial ownership declarations by companies.

Earlier in May, the AMLC told financial institutions to strengthen sanction screening systems amid underperformance in testing metrics over the last 12 months.

Sanction screening is used to identify individuals or entities that are subject to economic sanctions. It is a requirement for financial players and other regulated industries.     

In the Philippines, the 2021 Sanctions Guidelines outlines the current requirements and obligations as set out by the AMLC.     

Under current legislation, all covered entities must screen all relevant parties against the Anti-Terrorism Council lists and United Nations Security Council resolutions.     

“The law enforcement agencies, prosecutors and AMLC are continuously coordinating for the investigation and filing of money laundering and terrorism financing cases,” the AMLC said.   

The AMLC also expects more lawyers to report any suspicious transactions or unlawful activities under relevant laws on anti-money laundering as the Supreme Court approved the Code of Professional Responsibility and Accountability in April.    

“With the assured cooperation of all agencies concerned, the AMLC is optimistic that the Philippines can promptly resolve its remaining strategic deficiencies to finally exit the gray list,” the AMLC said.   

The global financial crime watchdog placed the country in its list of jurisdictions under increased monitoring for dirty money risks in June 2021.

Mr. Medalla earlier said officials are hoping the Philippines will be removed from the FATF’s gray list by January 2024, after missing an earlier deadline.

The Philippines and 25 other countries remained in the FATF’s gray list. Meanwhile, North Korea, Iran, and Myanmar were countries in the FATF’s blacklist.