Financial Crime World

Here is the article in Markdown format:

Financing Companies in Philippines Exposed to Money Laundering Risks

A recent sectoral risk assessment by the Securities and Exchange Commission (SEC) has revealed that financing companies in the Philippines are vulnerable to money laundering and terrorist financing risks.

High Risk of Money Laundering

The assessment found that only a small percentage of financing companies have adequate anti-money laundering and combating the financing of terrorism (AML/CFT) systems and controls in place. The report highlighted several common AML/CFT deficiencies among financing companies, including:

  • Lack of active board and management oversight
  • Inadequate risk assessment
  • No institutional risk management
  • Insufficient customer due diligence

Cash Transactions Prevalent

The report also found that cash is a prevalent method of conducting transactions. In fact, five financing companies reported using cash in over 91% of their total transactions.

Need for Strengthened AML/CFT Reporting Mechanisms

The assessment highlighted the need to strengthen AML/CFT reporting mechanisms to better detect financial crime and increase reporting to the Anti-Money Laundering Council (AMLC). The SEC has initiated more on-site and off-site inspections of financing companies and imposed sanctions on those who fail to submit required reports.

Lending Companies Also Exposed

The sectoral risk assessment also looked at lending companies in the Philippines. The overall vulnerability of lending companies to money laundering and terrorist financing was assessed as medium.

  • 3,302 SEC-registered lending companies are operating in the country
  • 165 covered persons supervised by the SEC for AML/CFT purposes
  • Many lending companies lack adequate AML/CFT systems and controls

Common Deficiencies

The report noted that many lending companies lack:

  • Active board and management oversight
  • Adequate risk profiling
  • Insufficient customer due diligence

Recommendations

==================

The sectoral risk assessment recommends that financing companies improve their AML/CFT systems and controls to better detect financial crime. The report also calls for strengthening of AML/CFT reporting mechanisms and increasing transparency in the reporting of suspicious transactions.

Conclusion

The sectoral risk assessment highlights the need for financing companies and lending companies in the Philippines to improve their AML/CFT systems and controls to prevent money laundering and terrorist financing. The report’s findings and recommendations aim to enhance transparency, accountability, and integrity in the financial sector.