By Luisa Maria Jacinta C. Jocson, Reporter
THE PHILIPPINES is so far on track to achieve its target of exiting the Financial Action Task Force’s (FATF) “gray list” by next month, the central bank’s top official said.
Asked about the progress on the country’s final steps to exiting the gray list, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. told BusinessWorld that it has been “so far so good.”
The FATF recently concluded its onsite visit in the Philippines this month ahead of its plenary and meetings in February, which Mr. Remolona is scheduled to attend.
At its October plenary, the FATF kept the country on its list of jurisdictions under increased monitoring for “dirty money” risks.
The Philippines has been on the list for over three years now or since June 2021.
However, the dirty money watchdog initially determined that the country had substantially completed the recommended action items to improve its anti-money laundering and counter financing of terrorism (AML/CFT) regime.
The FATF’s recent onsite visit and assessment aimed to verify the country’s progress and sustainability of AML/CFT reforms. This is typically the final step before it grants a country an exit from the list.
The Anti-Money Laundering Council earlier said it was positive that the country will be able to exit the dirty money list this year as it has addressed the remaining deficiencies.
However, it cited the need to sustain the progress on these reforms to ensure the country stays out of the list.
Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said the government must fast-track its financial reforms to exit the list.
“If in case it achieves the exodus from the gray list, to draw more investments and be considered a respectable economy in the region, the Philippines is obliged to have a clear-cut monitoring and innovative actions on how to stay buoyant financially without scar from its hits in FATF,” he said.
Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that reforms should go further than those recommended by the FATF.
“The biggest reform that can deter money laundering and tax evasion is the lifting of the Bank Secrecy Act (BSA),” he said via Facebook messenger.
“Bank secrecy law is a Jurassic institution; only countries that are centers of money laundering have them. But international pressure is forcing this limited number of countries to relax their laws.”
Nueva Ecija Rep. Rosanna “Ria” V. Vergara said being part of the gray list for years now has had “significant consequences for our economy and citizens.”
“While enhanced due diligence is not explicitly required by the FATF, being on the gray list has resulted in a decline in foreign investments, reduced investor trust, and added financial burdens on Filipinos working abroad.”
“Getting off the gray list would have a transformative impact. It would restore global confidence in the Philippines, stimulate economic growth, and attract foreign investors back to our shores,” she added.
This would also be more beneficial for overseas Filipino workers (OFWs), as they face high transaction costs.
“As a result of being on the FATF gray list, they end up going to financial service providers (FSPs) that charge higher fees to send money,” Ms. Vergara said.
“These FSPs take advantage of our being on the list for the higher charges. Being removed from the gray list will allow our OFW to choose FSPs who do not charge exorbitant fees.”
Monitoring of financial risks should not just be limited to institutions, Ms. Vergara said.
“Most often these unscrupulous individuals use nonfinancial agencies to do their illegal activities — casinos for one. Thus, vigilance is required.”
“Legislation must be passed to criminalize online scamming. We need to upgrade our government’s capacity to identify and track down these illegal rings that often operate outside our country, defrauding our people of their hard-earned money.”
Last year, the Anti-Financial Account Scamming Act (AFASA) was signed into law. It aims to protect consumers from financial cybercrimes by penalizing violations.
Meanwhile, the Defend NGOs Alliance in a statement raised concern over the “misuse of CFT measures and erosion of civic space in the Philippines.”
It said the government’s efforts to exit the gray list have led to “increasing judicial attacks on nongovernment organizations (NGOs) and people’s organizations (POs).”
The group said the government’s implementation of FATF recommendations have been used to “justify restrictive measures against NGOs it sees as critical of the government under the guise of counterterrorism.”
“Stricter restrictions and regulations on NGOs disrupt their finances, operations and services. The research also points out that trumped-up cases are for ‘paper compliance’ to meet arbitrary quotas for exiting the FATF gray list.”
Data from Defend NGOs Alliance showed that there are at least 69 development workers and 29 NGOs in the country that have been tagged with charges related to terrorism.
In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. It was removed from the blacklist a year later after the passage of the Anti-Money Laundering Act.