The Philippines is on the verge of a significant regulatory milestone as it nears its removal from the Financial Action Task Force’s (FATF) grey list. This progress stems from a series of strategic reforms implemented to enhance the nation’s anti-money laundering (AML) and combating the financing of terrorism (CFT) frameworks, aligning with international standards.
In-depth review of AML/CFT reforms:
The Securities and Exchange Commission (SEC) has been instrumental in driving these reforms, focusing on the robust implementation of 18 key action items prescribed by FATF. These reforms are critical to lifting the Philippines from the grey list, where it has been placed since June 2021 due to perceived vulnerabilities in its financial monitoring systems.
During its October 2024 plenary session, FATF recognized that the Philippines had “substantially completed its action plan.” This acknowledgment is a testament to the Philippines’ unwavering commitment to reinforcing its regulatory mechanisms against financial crimes.
As Manila Bulletin reports, SEC Chairperson Emilio B. Aquino commented on the ongoing efforts to sustain these reforms: “On our part, the SEC will continue investing in digitalizing and optimizing resources to ensure that the reforms we have implemented will be sustainable. We will also remain unwavering in our dedication to transparency and compliance, as we build on our gains and work alongside local and international partners to further strengthen our AML/CFT efforts.”
A pivotal moment will be the upcoming on-site assessment by FATF’s Asia/Pacific Joint Group early next year, intended to verify the effective implementation and sustainability of these reforms. This assessment will also evaluate the continued political commitment to upholding these standards.
Highlights of key reforms:
The Philippines has achieved significant milestones in enhancing the supervision of designated non-financial businesses and professions (DNFBPs), streamlining access to beneficial ownership information, and ramping up efforts in prosecuting money laundering and terrorist financing cases. These reforms show the Philippines’ comprehensive approach to mitigating financial risks.
Among the notable measures implemented are:
- Enhanced Supervision of DNFBPs: The SEC has intensified its oversight of designated non-financial businesses and professions, implementing risk-based supervision to ensure these entities do not inadvertently facilitate financial crimes.
- Accurate Beneficial Ownership Tracking: A critical reform has been the improvement in the accuracy and accessibility of beneficial ownership information. This measure is vital for tracing the origins of large and potentially suspicious transactions.
- Streamlined Law Enforcement Access: Law enforcement agencies now have enhanced access to crucial financial data, enabling quicker and more effective responses to financial crimes.
- Increased ML and TF Prosecutions: There has been a significant increase in the investigation and prosecution of money laundering and terrorist financing cases, demonstrating the country’s strengthened enforcement capabilities.
- Targeted Financial Sanctions: The Philippines has improved its framework for imposing targeted financial sanctions related to terrorism and proliferation financing, ensuring compliance with international standards.
- Registration and Control of Money Value Transfer Services (MVTS): New registration requirements for MVTS operators have been implemented, alongside stringent sanctions for unregistered or illegal operators, tightening control over this sector.
Remaining on the FATF grey list can lead to increased scrutiny of financial transactions, resulting in delays and higher costs that ultimately burden consumers. The Philippines’ proactive steps aim to minimize these impacts by aligning with FATF regulations, thus fostering smoother international financial relationships and reducing transaction costs, especially benefiting the large community of overseas Filipino workers.
The government’s Anti-Money Laundering Council (AMLC) has echoed the significance of these reforms, noting that they pave the way for more efficient financial transactions for Filipinos. According to GGRAsia, Lucas Bersamin, the council’s executive secretary, highlighted the collaborative efforts across the government sector. He added: “It reflects our strong commitment to meeting the FATF’s stringent standards and ensuring the long-term protection of our financial system. We are confident that this progress will be affirmed during the on-site visit,” underscoring the broad governmental cooperation required to meet FATF’s stringent standards.
