Philippines targeting ‘strategic AML deficiencies’ for FATF grey list removal

Philippines targeting ‘strategic AML deficiencies’ for FATF grey list removal

President of the Philippines, Ferdinand R. Marcos Jr, has made the country’s removal from the Financial Action Task Force (FATF) grey list a top priority.

A government press release circulated via the Philippine Information Agency revealed that the country’s Anti-Money Laundering Council (AMLC) has been ordered by President Marcos Jr to address any ‘strategic deficiencies’ in its national AML framework.

Clearing up these deficiencies and removing the Philippines from the FATF greylist has been a government priority for some time. In July last year, Marcos Jr issued Executive Order No. 33, targeting improvements to AML, counter terrorism financing (CTF) and counter proliferation financing (CPF) strategies.

Delisting from the FATF grey list is central to the region’s ambitions. The list contains 23 countries which are under ‘increased monitoring’ by the organisation, which is the international AML and CTF unit of the G7 group of countries – Canada, France, Germany, Italy, Japan, the UK and the US.

Commenting on the Presidential order in a briefing, AMLC Executive Director, Matthew David, said: “The President reiterated the government’s high-level political commitment and directed all government agencies concerned to strictly address the remaining strategic deficiencies identified by the FATF in relation to the grey listing of the Philippines.

“The Philippines is aiming to address all these deficiencies within 2024 and to trigger the exit process from this FATF grey listing,”

The FATF placed the Philippines on the grey list back in 2021, subsequently issuing the country 18 action plans needed to resolve its status. Eight of these action plans still need to be completed.

These include a demonstrated increase in AML and CTF investigations and prosecutions, ensuring cross-border measures across entry points such as seaports and airports, effective risk-based supervision of non-financial businesses and professionals (NFBPs) and streamlining access to beneficial ownership information.

Another factor central to the Philippines removal from the grey list is the activities of casino junkets. Casino junkets are a common feature of some regional gambling sectors across Southeast Asia, such as in Macau.

The significance of junkets to Macau’s casino economy saw the sector raise concerns in 2021 that the junkets may be negatively impacted by the proposed introduction of a digital Juan by the central Chinese government.

The situation facing the Philippines in 2024 is significant, with the country’s prioritisation of FATF delisting coming ahead of the planned launch of an online casino market later this year. 

To prepare for this, the government introduced new regulations in July 2023 targeting illegal overseas gambling, and the following month the Philippine Amusement and Gaming Corporation (PAGCOR) introduced an updated framework for offshore licence holders.

The government has been encouraging an ‘intensified inter-agency’ campaign against illegal gambling. A cross-agency approach has also been endorsed for the grey list removal, with President Marcos Jr calling for good coordination between departments and law enforcement.

As well as a greylist, the FATF also maintains a ‘black list’, consisting of North Korea, Myanmar and Iran. the AMLC’s David warned that the Philippines could risk inclusion on this list of FATF requirements aren’t met.

This could see further FATF countermeasures on the country and on the transactions of Fillipinos living abroad, resulting in rises in remittance services costs and greater risk of transactions being rejected.

“There are precautions for being on the grey list, because the longer we are on the grey list, the bigger the possibility or the higher the risk that we will enter the black list,” he concluded.

“Of course, we don’t want to be in the blacklisted jurisdiction. And if we will be on the blacklisted list, there are repercussions to that and one of the repercussions is the effect on the transactions of our OFWs.”