SEC moves to help Philippines exit from FATF gray list

MANILA, Philippines — The Securities and Exchange Commission (SEC) plans to further raise the compliance rate among corporations for reporting beneficial ownership, a move that will support the country’s bid to exit the global ‘dirty money’ gray list this year.

SEC chairperson Emilio Aquino said the commission targets to increase the compliance rate for beneficial ownership reports to 65 percent in the coming months.

“Our task is really the immediate outcome number five, pertaining to beneficial ownership. The tall order is for us to hit 65 percent,” he said.

Aquino said compliance rate has been at 20 percent in previous years, but the SEC has managed to raise it to 50.7 percent at present.

“But it’s not enough. We were told to increase it to 65 percent at the very least,” he said.

To reach the 65 percent target in the next few months, Aquino said the SEC would have to purge the list of corporations under delinquent status.

The SEC last month suspended the corporate registration of close to 118,000 corporations for failing to comply with their reportorial requirements.

Certificates of incorporation of a total of 117,885 corporations were suspended for failure to submit their annual reports for more than five years.

It also included corporations that have commenced their business but subsequently became inoperative for more than five consecutive years.

“We found out that of all those which are non-compliant, at least 117,000 of them, they had been there in our database but they had not been complying in the submissions of their annual financial statements and their general information sheet where they are supposed to lodge their beneficial ownership,” Aquino said.

“So what we did is we came up with an order suspending, not yet revoking so there is still a window of opportunity for them to still go back. But then again, they will be taken out from the universe so in which case, we reduce the base then our compliance will increase,” he said.

According to the SEC, beneficial owners of a corporation are distinguished from legal owners, which are defined as natural or juridical persons who, in accordance with the law, owns or has the controlling ownership interest over the corporation, or has the ability of taking relevant decisions within the corporation and impose those resolutions.

The SEC collects beneficial ownership information from its regulated entities through Memorandum Circular 15, which amended the general information sheet to include beneficial ownership information.

The SEC said sharing beneficial ownership data is also in line with the recommendations of the Financial Action Task Force (FATF), an intergovernmental money laundering and terrorist financing watchdog that sets international standards to prevent such illegal activities.

The Philippines entered the FATF gray list in June 2021 and continues to do so as it has yet to address remaining strategic deficiencies.

“We have to reach the 65 percent target. Because if we do not, we will not be largely compliant, then we will get sanctions,” Aquino said.

“The President wants us to get out of the gray list. Why? Our problem is it immediately affects our OFWs who are remitting money constantly.”

Being placed on the FATF gray list has tangible consequences for the country’s economy and financial system as this restricts cross-border transactions particularly remittances from overseas Filipino workers, leading to difficulties in obtaining credit and limiting inward foreign investments.

Anti-Money Laundering Council (AMLC) Secretariat executive director Matthew David, however, said the goal for the country is to exit the gray list within this year.

“We at the AMLC Secretariat reaffirm our commitment to ensure collective success in line the directive of our President Marcos in addressing the remaining action plan items. We have the power to shape our future. We will exit the gray list this year,” David said.