Philippines exits FATF money laundering ‘gray list’

MANILA, Philippines — The Philippines is no longer on the list of countries under heavy scrutiny by the top global money laundering and terrorism financing watchdog.

The Financial Action Task Force (FATF) has removed the Philippines from its gray list after an on-site visit in January confirmed the country’s significant progress in strengthening measures on anti-money laundering and combatting the financing of terrorism (AML/CFT).

This was announced by FATF president Elisa de Anda Madrazo at a virtual press conference following the conclusion of a three-day plenary and working group meeting held in Paris from Feb. 17 to 20.

Madrazo said the Philippines successfully exited the gray list after nearly four years, or since its inclusion in June 2021.

She commended the Philippines for addressing the deficiencies identified in previous mutual evaluations. The country will no longer be subject to the FATF’s increased monitoring process as a result of its removal from the gray list.

“The plenary agreed to take the Philippines off the gray list in recognition of the completion of their action plan, which was agreed in June 2021,” Madrazo said.

She also cited the country’s actively combating the risk of dirty money flowing through casinos as well as banning of Philippine offshore gaming operators last year.

“The Philippines is expected to sustain the implementation of the reforms and importantly, to do so in a way that is consistent with the FATF standard,” she said.

In a statement, the FATF said the country strengthened the effectiveness of its AML/CFT framework to meet commitments outlined in its action plan.

It also said the Philippines demonstrated effective risk-based supervision of designated non-financial businesses and professions. Authorities ensured that supervisors use AML/CFT controls to mitigate risks associated with casino junkets.

The country also implemented new registration requirements for money or value transfer services and applied sanctions on unregistered and illegal remittance operators, according to the FATF.

Furthermore, law enforcement agencies enhanced and streamlined their access to beneficial ownership information, ensuring accuracy and timeliness.

There was also an increase in the use of financial intelligence, leading to more money laundering investigations and prosecutions.

Appropriate measures were also taken in dealing with the nonprofit organization sector, including unregistered NPOs, while ensuring no disruption in legitimate NPO activities.

The Philippines, the FATF said, also enhanced the effectiveness of its targeted financial sanctions framework for both terrorism and proliferation financing. Additionally, cross-border measures were applied to all major international sea and airports.

Madrazo stressed the importance of sustaining reforms as she encouraged the country to continue working with the Asia/Pacific Group on Money Laundering to ensure measures in place remain effective.

She said the Philippines will undergo another FATF assessment in 2027.

“This will provide an opportunity for the FATF to verify that the reforms remain in place and are being sustained in line with FATF standards,” she added.

Vote of confidence

In a text message, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. called the FATF’s decision a “vote of confidence” for the Philippine financial system.

“It feels like a thorn has been pulled from our side,” he said.

“This will help our OFWs and foster more investment in our economy,” he added.

He also highlighted the role of collaborative effort behind the development.

“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,” he pointed out.

Remolona attended the FATF meetings in Paris.

In a separate statement, the Anti-Money Laundering Council (AMLC) said the country’s exit from the gray list is expected to speed up and lower the cost of cross-border transactions, as well as reduce compliance barriers and enhance financial transparency.

“These will support business, strengthen the country’s position as an attractive destination for foreign direct investment and benefit Filipinos, particularly OFWs,” it said.

According to the AMLC, some foreign regulators were imposing stringent requirements or fines on financial institutions dealing with entities in the Philippines even prior to the gray listing.

“This prompted some banks to just avoid doing business with entities in those countries rather than managing possible money laundering or terrorist financing risks. The FATF decision may prompt foreign banks to review and resume their business relationship and transactions with Philippine financial entities,” it said.

The AMLC added that exiting the gray list is a significant step toward strengthening the financial system and maintaining global confidence.

“The government remains committed to ensuring long-term compliance with international standards,” it maintained.

Hard-fought

Executive Secretary Lucas Bersamin, chairman of the National AML/CFT Coordinating Committee, also welcomed the FATF’s decision.

“This recognition affirms that the Philippines’ AML/CTF/CPF (counter proliferation financing) framework aligns with global standards. It supports our vision to enhance economic competitiveness for the benefit of our people,” he said in a statement yesterday.

“Our well-earned exit from the Financial Action Task Force’s grey list boosts our drive to attract job-creating, growth-inducing foreign direct investments,” he added.

He said the country’s investment attractiveness had been tainted by the “dirty money haven label” for so long.

“This hard-fought administration win in its battle against money laundering will be preserved and protected through consistent compliance with global standards,” Bersamin said.

For Finance Secretary Ralph Recto, the FATF decision was a “seal of good housekeeping” for the Philippines. He said the development would benefit OFWs by ensuring smoother remittance transactions.

“This is a much-welcome development,” Recto said.

“I thank everyone in the government who worked tirelessly to achieve this goal,” he said.

The next priority of the Marcos administration, he added, is securing a credit rating upgrade to further bolster the country’s economic standing.

‘Monumental’

It was a “monumental victory,” Speaker Martin Romualdez said of the country’s getting dropped from the FATF gray list.

He called the development “a resounding testament to our collective resolve to uphold the highest standards of financial governance.”

“By restoring our standing in the global financial community, we are removing burdensome restrictions, reducing transaction costs and allowing financial flows to move more efficiently,” he said.

“This is particularly good news for our OFWs, whose hard-earned remittances will now be processed faster and with lower fees,” he added.

“It restores global confidence in our financial institutions and opens the floodgates for greater investments, economic growth and international partnerships,” the Speaker pointed out.

He said the House of Representatives worked closely with the Executive branch, the BSP and the AMLC and other institutions to pass and implement relevant financial measures that made the FATF remove the country from the gray list.

“Under President Marcos’ leadership, we have shown the world that the Philippines is ready to take its place among the most trusted economies,” Romualdez said.

With the FATF decision, Albay Rep. Joey Salceda said the country may now get rid of “absolute bank secrecy” to catch criminals and prevent them from hiding their wealth in banks.

“We need to continue working on other items, such as a law against bulk cash smuggling and getting rid of absolute bank secrecy. The latter is particularly important because it prevents us from fully implementing absolutely automatic exchange of information between other tax jurisdictions,” Salceda said.

“That would allow us to catch Filipino tax evaders seeking refuge abroad and foreign tax evaders seeking refuge in the Philippines,” he added.

The Philippine Amusement and Gaming Corp. (PAGCOR), meanwhile, vowed to “sustain the fight” against money laundering with FATF’s decision to take the country off the gray list.

“We are honored to have played a crucial part in this development, and the public can rest assured that PAGCOR will continue to ensure that all our licensees are compliant with all anti-money laundering rules and regulations,” PAGCOR chairman and CEO Alejandro Tengco said.

“We also commit to sustain the fight against money laundering and terrorist financing in the entire Philippine gaming industry,” he added. — Jose Rodel Clapano, Emmanuel Tupas