Combating Financial Terrorism: Philippines Takes a Crucial Step Forward
The Philippines has made significant progress in combating financial terrorism and money laundering with its recent webinar on anti-money laundering (AML) and countering terrorism and proliferation financing (CTPF). The Bankers Institute of the Philippines Inc. (BAIPHIL) collaborated with the Bangko Sentral ng Pilipinas’ Anti-Money Laundering Specialist Group-Financial System Integrity Department to bring together 388 directors and senior officers from various financial institutions.
The Importance of AML/CTPF Culture
The webinar emphasized the need for a strong AML/CTPF culture from the board level down to the lowest level of personnel. Atty. Elmore O. Capule, BSP senior assistant governor and general counsel, highlighted the serious threat that money laundering poses to the integrity of financial institutions and the legitimate economy.
What is Money Laundering?
Money laundering is the process of using money obtained from criminal activity without its origin being detected. It involves hiding the source of illegally gained funds by transferring them through a series of complex transactions, making it difficult to trace back to its original source.
What is Terrorist Financing?
Terrorist financing involves raising funds to provide financial support to terrorists. This includes activities such as collecting donations, extorting money from individuals and businesses, or using illegal activities like drug trafficking to generate revenue.
The Philippines’ Inclusion on the FATF Gray List
The Philippines’ current inclusion on the Financial Action Task Force’s (FATF) gray list is a wake-up call for the country to address its strategic deficiencies in combating money laundering and terrorist financing. The FATF requires the Philippines to resolve these deficiencies within specific timeframes, subject to increased monitoring.
Role of Regulators
Atty. Capule identified the AML/CTPF regulators, including the BSP, Insurance Commission, Securities and Exchange Commission, and Philippine Amusement and Gaming Corp., which play a critical role in supervising and regulating financial institutions.
Risk Management Practices
The webinar also stressed the importance of risk management practices, including:
- Board-level approval of policies
- Effective implementation of the Money Laundering and Terrorist Financing Prevention Program (MTPP)
- Internal controls
- A self-assessment system
Conclusion
Former BAIPHIL President Belitte Papa commended the webinar for providing officials with valuable insights on how to avoid exceptions or BSP findings and improve their AML ratings. The Philippines’ financial institutions must remain vigilant in combating financial terrorism and money laundering to avoid reputational damage and maintain international confidence.
The views expressed in this article are those of the author and do not necessarily reflect the opinion of her office or FINEX.