EDITORIAL - Dirty money gray list

Some progress has been made, but “strategic deficiencies” have kept the Philippines in a “gray list” of just 23 countries that are not doing enough to fight money laundering, terrorist financing and proliferation financing.

During a hybrid plenary from Oct. 19 to 21, the Paris-based dirty money watchdog Financial Action Task Force decided to keep the Philippines in the gray list of jurisdictions under heightened monitoring of their anti-money laundering and combating the financing of terrorism or AML/CFT regime. The FATF returned the country to the gray list on June 25 this year.

While the FATF noted some improvements, it cited several strategic deficiencies in the country’s AML/CFT efforts. Among others, the country must show the effective use of AML/CFT controls to mitigate risks associated with casino junkets, and to properly supervise designated non-financial businesses and professions. These include jewelry dealers as well as persons or entities providing management services for banks, client money and securities.

The FATF also wants to see an increased use of financial intelligence as well as more investigations and prosecution related to terrorism financing.

In the gray list with the Philippines are Albania, Barbados, Burkina Faso, Cambodia, the Cayman Islands, Haiti, Jamaica, Jordan, Mali, Malta, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Senegal, South Sudan, Syria, Turkey, Uganda, Yemen and Zimbabwe.

Inclusion in the FATF gray list makes financial transactions more difficult. This complicates doing business in the country and adversely affects remittances from overseas Filipino workers – a critical component of economic recovery amid the COVID pandemic.

The Anti-Money Laundering Council has promised to address the strategic deficiencies within agreed timeframes, and has expressed confidence that the country will be out of the gray list by January 2023. Implementing the necessary reforms might prove to be more challenging in an election year. Even with the general turbulence that normally accompanies a change in the national leadership, however, and with the pandemic posing additional challenges, every effort must be made to swiftly get the country out of the gray list.