Philippines at Risk of Economic Damage for Failing to Combat Money Laundering and Terrorism Financing

The Philippines has failed to meet deadlines in implementing measures to combat money laundering and terrorism financing, putting the country at risk of being labeled as a haven for illicit activities. According to the Financial Action Task Force (FATF), the Philippines still needs to address various action items to prevent its financial system from being used for money laundering and terrorist financing.

Consequences of Non-Compliance

If not addressed, this could lead to additional costs and delays in transactions, affecting both individuals and businesses. For overseas Filipino workers, higher remittance costs could mean less money for daily necessities, while Philippine businesses may face higher interest rates and production costs. Moreover, the de-risking of Filipino individuals and businesses could become a reality, making it difficult for them to engage in international trade and commerce.

Requirements to Exit Greylist

To exit the FATF greylist, the Philippines must demonstrate substantial progress in addressing its Action Plans. This includes strengthening law enforcement and prosecutorial capacity for money laundering investigations, prosecutions, and confiscations.

Challenges and Efforts

The Philippine National Anti-Money Laundering Committee (NAMLC) has identified areas of improvement, including inadequate resourcing and limited international cooperation. To address these issues, the country has implemented the Deputized AMLC Financial Investigators (DAFI) framework to enhance the capacity of law enforcement agencies in developing financial intelligence.

Key Areas for Improvement

• Increase money laundering investigations and prosecutions, particularly for high-risk predicate offenses such as smuggling and environmental crimes.
• Strengthen coordination mechanisms among law enforcement agencies, prosecutors, and other relevant authorities.
• Improve the country’s framework for confiscation of proceeds of crime, including implementing rules on criminal forfeiture.

Call to Action

The Philippine government must take immediate action to address these issues to avoid economic damage and reputational harm. Failure to do so could lead to additional costs, delays, and potential de-risking of Filipino individuals and businesses. It is essential for the country to demonstrate substantial progress in addressing its Action Plans to exit the FATF greylist and maintain a stable and secure financial system.