PH risks return to FATF watchlist

Title PH Risks Return to FATF Watchlist A Threat to Financial Reputation

Introduction

The Philippines' efforts to combat money laundering and terrorism financing may not be sufficient to prevent its return to the Financial Action Task Force (FATF) watchlist. According to Bangko Sentral ng Pilipinas (BSP), there is a risk of being placed back on the grey list due to ongoing corruption scandals and systemic issues in the financial sector.

The Consequences of Returning to the Grey List

We are at risk of returning to the grey list, said BSP Governor Eli Remolona Jr. Being included on the FATF watchlist can have serious consequences for a country's financial reputation and attractiveness to investors.

Ongoing Corruption Scandal

The current corruption scandal surrounding a flood control project has revealed systemic issues in government, highlighting the need for sustained efforts to combat money laundering and terrorism financing. The Anti-Money Laundering Council (AMLC) has identified medium-high concerns due to high-threat predicate crimes and sectoral vulnerabilities that require continued risk-based supervision.

Sectoral Vulnerabilities

The AMLC's national risk assessment has also flagged terrorism financing and proliferation financing risks as medium concerns. While operational capabilities among terrorist groups have reduced, residual risks persist in conflict areas and cross-border channels. Moderate vulnerabilities were also identified in the area of funding activities related to weapons of mass destruction.

A Path Forward

Fortunately, there is still time for the Philippines to demonstrate its commitment to combating money laundering and terrorism financing. The next FATF evaluation will be held in 2027, providing an opportunity for the country to implement reforms and strengthen its defenses against these threats.

Combating Money Laundering

To combat money laundering, the AMLC has secured freeze orders for over 4,600 bank accounts and nearly 300 insurance policies linked to individuals and private entities suspected of participating in anomalous government flood control projects. The amount of frozen assets has reached around P13 billion, and this figure is expected to rise further as investigations continue.

Conclusion

A return to the FATF watchlist would be a significant blow to the Philippines' financial reputation. To avoid this outcome, it is essential for the country to intensify its efforts to combat money laundering and terrorism financing. This includes addressing systemic issues in government and implementing reforms to strengthen the financial sector's defenses against these threats.

Keywords FATF, money laundering, terrorism financing, corruption, AMLC, banking regulator, BSP, Philippines, financial reputation, investors.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

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