EDITORIAL — More reforms needed

Four years after being placed under close monitoring by global dirty money watchdog Financial Action Task Force, the Philippines has finally exited the gray list of the Paris-based FATF.

The country was placed on the gray list in June 2021 for failure to address deficiencies tagged by the FATF. Following talks with Philippine officials in Paris from Feb. 17 to 20, the FATF deemed the country to have achieved significant progress in strengthening measures on anti-money laundering and combating terrorism and proliferation financing.

Among the measures cited were the efforts to stop the flow of dirty money through casino junkets, tightening of rules on money transfers as well as the application of sanctions on illegal remittance operators. The FATF said the country also demonstrated effective risk-based supervision of designated non-financial businesses and professions.

Increased use of financial intelligence led to more money laundering probes and prosecutions, the FATF noted. Law enforcement agencies gained greater access to beneficial ownership information. Rules were also tightened on nonprofit or non-government organizations.

Exiting the gray list eases financial transactions including the remittance of overseas workers’ earnings. Philippine officials are hoping that the exit will also boost the chances of the country for a credit rating upgrade.

The exit strategy is not without critics. NGOs have decried the action plan for paving the way for restrictive measures against their groups, and for facilitating what they describe as the red-tagging and freezing of assets of organizations classified as terrorists.

Other groups, meanwhile, are calling for more reforms, including the lifting of bank secrecy laws and the passage of campaign finance reforms. Lawmakers, however, have consistently resisted such reform measures.

Instead of promoting financial transparency, the country is moving in the opposite direction, with access to top government officials’ statements of assets, liabilities and net worth now strictly restricted. This restricted access is the perfect complement for bank secrecy laws that effectively conceal slush funds and kickbacks paid to politicians.

Even worse than casino junkets are election campaigns, which have become major laundromats for dirty money, with the Commission on Elections lacking the authority and capability to regulate campaign finance. Combined with the world’s toughest bank secrecy laws, politicians enjoy full protection for their dirty money.

The country missed deadlines to exit the gray list. Now that it has been taken out of the list, the challenge is to sustain the reforms and prevent backsliding. The tougher challenge is to address the other factors that promote money laundering. These reforms need not wait for inclusion in any international gray list or blacklist.