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Gaps in Philippines’ Anti-Money Laundering and Counter-Terrorism Financing Efforts Identified

A recent assessment has revealed significant gaps in the Philippines’ efforts to combat money laundering and terrorist financing. The report analyzed various iterations of National Risk Assessments (NRAs) and Serious and Organized Crimes Threat Assessments (SOCTAs), finding that the country’s anti-money laundering and counter-terrorism financing measures are plagued by a lack of coordination and cooperation among government departments, law enforcement agencies, and regulatory bodies.

Risk Assessment Gaps

The assessment noted that the risk assessment process is not comprehensive, as it does not take into account the threat posed by foreign terrorist fighters. However, tactical analysis conducted on the Maute Group and regional assessments on Islamic State funding have updated and supplemented the understanding of terrorism financing risks.

Coordination Challenges

Despite the existence of operational coordination committees, such as the National Anti-Money Laundering Committee (NACC) and its sub-committee on anti-money laundering/counter-terrorism financing (AML/CFT), there is limited demonstration of cooperation and coordination among agencies. The NACC has the potential to establish better coordinated responses, but this was not evident during the onsite visit.

Regulatory Bodies’ Response

Objectives set by regulatory bodies, such as the Anti-Money Laundering Council (AMLC) and supervisory authorities, are aligned with key risks identified in risk assessments. However, law enforcement agencies (LEAs) do not appear to have a similar understanding of these risks, leading to varying responses across competent authorities.

Private Sector Awareness

Private sector stakeholders are aware of the results of risk assessments undertaken under NRAs, but their response varies widely. Larger banks seem to be more aware and responsive, while smaller financial institutions (FIs) and casinos demonstrate lower levels of awareness and understanding.

Financial Intelligence Gaps

The AMLC, which serves as a hybrid Financial Intelligence Unit (FIU), produces financial intelligence products that are primarily used by its own investigation wing. Requests for financial intelligence from LEAs are limited, and there is no regular dissemination of financial intelligence to support predicate crime investigations. The FIU part of AMLC was also critically understaffed during the onsite visit.

Concerns Over Operational Independence

The AMLC’s inability to disseminate information on politically exposed persons (PEPs) outside of election periods raises concerns about its operational independence and affects the timeliness of PEP information exchanged with LEAs. This limits the effectiveness of the use of financial intelligence by law enforcement agencies.

In conclusion, the assessment highlights the need for improved coordination, cooperation, and understanding among government departments, LEAs, and regulatory bodies to effectively combat money laundering and terrorist financing in the Philippines.