FATF ‘gray list’ inclusion seen to hurt PHL

THE LOGO of the Financial Action Task Force (FATF) is seen at the OECD headquarters in Paris, France,
Oct. 18, 2019. — REUTERS

THE PHILIPPINES’ continued inclusion in the Financial Action Task Force’s (FATF) “gray list” of jurisdictions under increased monitoring for “dirty money” risks may affect remittance fees, borrowing costs and investments, an official from the Philippine Amusement and Gaming Corp. (PAGCOR) said.

Overseas Filipino workers (OFWs) will be the first to be affected by the country’s continued inclusion in the gray list, Dave Fermin J. Sevilla, assistant vice-president of PAGCOR’s Anti-Money Laundering Supervision and Enforcement Department, said in an interview with One News PH on Wednesday.

“As long as we are in the gray list, banks and other institutions will tighten their (anti-money laundering controls) for Filipinos. Sanctions and transaction fees for OFWs may increase,” he said in mixed English and Filipino. 

“Even in the casino industry, our customers coming from abroad may be reduced because we are still in the gray list,” he added.

The FATF is also an intergovernmental organization that crafts and promotes policies and standards to help combat financial crime.

It said in a report released on Saturday that the Philippines remains part of its gray list of jurisdictions under increased monitoring for dirty money risks after failing to address strategic deficiencies against money laundering, terrorist financing and proliferation financing.

After a three-day plenary session in Singapore, the dirty money watchdog said the Philippines still needs to address five out of the 18 deficiencies in anti-money laundering/combating the financing of terrorism (AML/CFT) controls.

The Philippines should continue to demonstrate effective risk-based supervision of designated nonfinancial business and professions (DNFBPs) and ensure that supervisors are using the proper AML/CFT controls to mitigate risks associated with casino junkets, the FATF said.

It should also enhance and streamline law enforcement agencies’ access to beneficial ownership information and ensure accurate and up-to-date information and increase investigation and prosecution of cases related to money laundering and proliferation financing.

The Philippines has been on the FATF’s gray list since June 2021.

Government officials earlier said they hope the Philippines can exit the gray list by January 2024.

According to Mr. Sevilla, banks are required to do strict customer due diligence on clients from high-risk jurisdictions as identified by the FATF, or those included in its gray and black lists.

“Unfortunately, Filipinos are subjected to that. Banks need to check and monitor our transactions, which leads to higher fees because more resources are being used,” he said. “And as long as we continue in the gray list, the charges for remittances may continue to increase and our OFWs would have a harder time.”

Companies in the Philippines that want to secure foreign loans could also face higher interest rates and charges, Mr. Sevilla said.

The country’s attractiveness as an investment destination will likewise take a hit if it remains on the FATF’s gray list, he added.

“Why would you invest in a country that is gray-listed? The FATF and the APG (Asia-Pacific Group) encourages investors to put their money in safe countries, or countries that has good AML/CTF systems,” he said.

The APG on Money Laundering is an intergovernmental organization with 42 member jurisdictions. It aims to ensure that individual members effectively implement the international standards against money laundering, terrorist financing and proliferation financing. 

For PAGCOR, the FATF and the APG want the Philippines to demonstrate effective and intensive monitoring of covered entities for money laundering risks, he said.

“We are now intensifying the monitoring of all our gaming licenses… We always check our big casinos and we have always had people stationed there. Then we also check the smaller stations. For POGOs (Philippine Offshore Gaming Operators) or internet gaming licenses, we have new rules that require more intensive monitoring of the weaknesses identified by the AMLC,” Mr. Sevilla said.

“We have also identified areas in the sector that can be used for money laundering, and we try to mitigate these weaknesses with new rules and regulations,” he added.

President Ferdinand R. Marcos, Jr. has given government agencies until Nov. 30 to address deficiencies in their anti-money laundering strategies in hopes that the Philippines could exit the FATF’s gray list by January. — K.B. Ta-asan

Neil Banzuelo

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