FATF Warns Philippines Of Economic Sanctions

The Financial Action Task Force (FATF) has announced it is keeping the Philippines under its grey list jurisdiction, with a warning it will subject the country to financial sanctions unless it mends its ways.

Photo Insert: The FATF Grey List is a list of countries that are deemed non-compliant with the Financial Action Task Force's (FATF) anti-money laundering and counter-terrorism financing standards.

A country falls under the FATF gray list because it fails to meet the standards set to combat money laundering and the financing of terrorism. It could also fall under that list if it engages in the development of or trading in weapons of mass destruction.

It is inconceivable that the Philippines has the capability or the willingness to deal in weapons of mass destruction. What FATF is concerned about is its failure to counter money laundering and the financing of terrorism activities.

FATF member states could impose economic sanctions on non-compliant countries. The member states include all countries of the European Union, as well as the United States, United Kingdom, Canada, Germany, Japan, South Korea, Brazil, Saudi Arabia, and others.

In a statement dated Feb. 24, FATF said the Philippines should continue addressing its strategic deficiencies in combating money laundering and the financing of terrorism activities within its borders “as soon as possible.”

It would be catastrophic for the Philippines to fall under the blacklist category. It would become a pariah state, as did North Korea, Iran, and Myanmar.

FATF notes that the Philippines is making some progress, but there`s so much work that remains to be done. Moreover, it adds, the deadline for compliance has now expired. It must therefore work overtime if it wishes to be removed from the grey list.

Cambodia and Morocco have been removed from the grey list. Twenty-two other countries, including the Philippines, remain.

In June 2021, the Philippines committed itself to strengthening its Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT).

The country, FATF advised, should closely supervise both financial and non-financial businesses such as casino operation, jewelry dealing, and real estate brokerage and development. It must streamline and improve law enforcement agencies to enable them to come up with accurate and up-to-date information.

FATF will check if the Philippines investigates and prosecutes money laundering cases and terrorism financing. It acknowledges that the Philippine government is currently reviewing proposed changes to the country’s Bank Secrecy Law, with the end view of minimizing or preventing money laundering incidents and terrorism financing.

The Philippines will submit its next progress report to FATF in May.

Felipe M. Medalla of Bangko Sentral ng Pilipinas expresses hope that the Philippines will be removed from the gray list by January 2024. As already mentioned, the country has missed an early deadline to comply with the requirements.

FATF was established in 1989. It has its headquarters in Paris.

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