Philippines fails to exit FATF gray list

MANILA, Philippines — The Philippines was retained in the gray list of global dirty money watchdog Financial Action Task Force (FATF) as it failed to address strategic deficiencies to counter money laundering, terrorist financing and proliferation financing.

After a two-day plenary, the Paris-based FATF decided to keep the Philippines, together with 22 other countries in the list of jurisdictions under increased monitoring.

The Philippines has made a high-level political commitment to work with the FATF and Asia Pacific Group on Money Laundering (APG) to strengthen the effectiveness of its anti-money laundering/combating of financing of terrorism (AML/CFT) regime when it was placed in the gray list in June last year.

According to the FATF, the Philippines has taken steps toward improving its AML/CFT regime and demonstrating that appropriate measures are being taken with respect to the non-profit organization  sector and implementing supervision for targeted financial sanctions.

However, the dirty money watchdog said the country still needs to work on implementing its action plan to address its strategic deficiencies, by demonstrating that effective risk-based supervision of designated non-financial businesses and professional (DNFBPs) is occurring and that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets.

According to the FATF, the Philippines should also enhance and streamline law enforcement agencies access to beneficial ownership information and take steps to ensure that the information is accurate and up-to-date.

The country should also demonstrate an increase in the use of financial intelligence and an increase in money laundering investigations and prosecutions in line with risk.

In addition, the Philippines should demonstrate an increase in the identification, investigation and prosecution of terrorism financing cases as well as enhance the effectiveness of the targeted financial sanctions framework for both terrorism financing and proliferation financing by demonstrating that DNFBPs understand their obligations.

After it was reincluded in the gray list more than a year ago, the Philippines has worked vigorously to address the deficiencies to meet the January 2023 deadline set by the FATF.

It would be recalled that the Philippines was included in the black list of the FATF in June 2000 but was removed from the list in February 2005 after the passage of Republic Act 9180 or the Anti-Money Laundering Act (AMLA) of 2001 followed by the establishment of the Anti-Money Laundering Council (AMLC) via RA 9194 in 2003.

Since then the Philippines has been in and out of the gray list until it was reincluded in the list of jurisdictions under increased monitoring in June 2021 despite the enactment of RA 11479 or the Anti-Terrorism Act of 2020 as well as RA 11521 that amended the AMLA.

Multilateral lender International Monetary Fund (IMF) earlier stressed the need for the Philippines to address the deficiencies cited by the FATF to help encourage foreign direct investment (FDI) inflow into the country.

“Completion of the Philippines Action Plan with the FATF is critical to successfully exit the FATF list,” IMF mission head for the 2022 Article IV Consultation Cheng Hoon Lim earlier said.

FATF president Raja Kumar said in an in-person and virtual press conference after the two-day plenary in Paris that the watchdog has included the Democratic Republic of Congo, Mozambique, and Tanzania in the gray list.

On the other hand, Kumar said Nicaragua and Pakistan were removed from the list of jurisdictions under increased monitoring.

“The FATF welcomes the progress made by these countries in combating money laundering and terrorist financing, despite the challenges posed by COVID-19,” Kumar said.

Meanwhile, the FATF has called on its members and other jurisdictions to apply enhanced due diligence measures on Myanmar after it was included in the black list that includes North Korea and Iran. It also further cut Russia’s role in the organization amid its continued invasion of Ukraine.