The Philippines’ achievements in addressing anti-money laundering deficiencies

The Philippines continues to make considerable progress in addressing technical compliance deficiencies in its anti-money laundering and counter-terrorist financing (AML/CFT) regime ahead of the deadline set by the Paris-based Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.

On the basis of the third mutual evaluation report on the Philippines, the Asia/Pacific Group on Money Laundering (APG) has upgraded the Philippines’ compliance rating on two Recommendations from partially compliant (PC) to largely compliant (LC).

The APG said that the Philippines had addressed deficiencies relating to the regulation of designated non-financial businesses and professions (DNFBPs), in particular that the licensing procedures of the Philippine Amusement and Gaming Corporation (PAGCOR) covered only the board of directors, not shareholders or beneficial owners, as well as the lack of accurate information on land-based casinos under the supervision of the Cagayan Economic Zone Authority (CEZA) and the Aurora Pacific Economic Zone and Freeport Authority (APECO).

At its peak in February 2021, there were 50 PAGCOR and 25 CEZA licences for offshore gaming, compared with 4 at the time of the 2019 mutual evaluation report.

These deficiencies also included real estate agents, who were not covered persons under any AML/CFT legal framework.

The APG said that PAGCOR had issued additional guidelines, effective from January, on sample checks. In addition, the Anti-Money Laundering Act (AMLA) and its implementing rules and regulations had been amended to add further covered persons, including real estate developers and brokers. The Philippines is also continuing to develop the legal framework for risk-based supervision of the DNFBP sectors.

Furthermore, the APG said that the Philippines had also addressed Recommendation 32, concerning the absence of a competent authority to request and obtain further information from carriers in cases of false declaration or non-declaration. Likewise, criminal penalties in the form of imprisonment were not proportionate, and competent authorities were not clearly empowered to restrain currency and bearer negotiable instruments suspected of being related to money laundering, terrorist financing or other offences.

According to the APG, the Philippines has demonstrated that the Bureau of Customs (BOC) has the authority to request and obtain further information from carriers in cases of false declaration, and has introduced proportionate fines for false declaration or non-declaration, depending on the currency and the value of the goods illegally exported or imported.

The APG said that the Philippines had made good progress in addressing the technical compliance deficiencies identified in the mutual evaluation report and had been upgraded to LC on Recommendations 28 and 32.

However, the Philippines remains rated PC on Recommendation 15 on new technologies, Recommendation 25 on transparency and beneficial ownership, and Recommendation 39 on extradition.

In June 2022 (one year after being placed on the grey list and making a high-level political commitment), the FATF kept the Philippines on the grey list, stressing the need to further strengthen its action plan to address strategic deficiencies in combating money laundering, terrorist financing and proliferation financing. However, the FATF was confident that the Philippines would exit the grey list before January 2023, as the country had committed to swiftly addressing the identified strategic deficiencies within the agreed timeframe.