THE Philippines faces the possibility of being included in a “gray list” of economies with lax laws on anti-money laundering and counter-terrorism financing if it fails to pass and effectively implement the proposed Anti-Terror Act (ATA), the Anti-Money Laundering Council (AMLC) said.
The ATA, which critics fear the government will use to violate human rights, is currently awaiting President Rodrigo R. Duterte’s signature.
The Financial Action Task Force (FATF) had placed the Philippines under a 12-month observation period, originally scheduled to end in October but was extended to February 2021. During this time, the Philippines has to address the gaps identified in the Republic Act No. 9372 or the Human Security Act (HSA) of 2007 and the Anti-Money Laundering Act of 2001 (AMLA).
“This observation period is the last opportunity for the Philippine competent authorities to address identified deficiencies in the (2019 mutual evaluation report) to avoid gray-listing… So passing amendments to both the HSA and AMLA, as amended, is among the conditions to avoid the country’s inclusion in the gray list,” AMLC said in a statement released on Saturday.
Passing the law is not enough, AMLC said. The Philippines should also “demonstrate effective implementation of these amendments before the observation period ends in February 2021,” it added.
AMLC noted the FATF evaluation found the HSA lacked necessary provisions for the Philippines to be compliant with certain UN Security Council Resolutions (UNSCR) aimed at cracking down on foreign terrorist fighters. For instance, a key requirement under UNSCR 1624 is to lawfully ban “incitement to commit terrorist acts.”
It proposed several HSA amendments that are now included in the anti-terror measure, such as the “designation ex parte of terrorist individuals; and terrorist groups; and implementation of targeted financial sanctions to stop the flow of funds or assets to terrorists.”
At the same time, the AMLC warned the country’s inclusion in the gray list would further hurt the economy, already facing a recession this year.
“Consequently, the Philippines’ inclusion in the gray list will result in an additional layer of scrutiny from regulators and financial institutions, thereby increasing the cost of doing business; delaying the processing of transactions; and blocking the country’s road to an ‘A’ credit rating,” AMLC said.
“The pandemic is already adversely affecting our economy. It would be prudent to mitigate other risks and avoid problems gray-listing would further bring to our economy.”
Amid criticisms government prioritized the passage of the ATA over economic stimulus measures, AMLC said “fighting terrorism is just as urgent because it also concerns protecting life.
“If there is anything that this pandemic has taught us, it is the importance of being prepared. Just as we don’t know when pandemics will hit, so too when terrorist acts will occur and take away life,” it added.
Proposed amendments to AMLA, which are also relevant to the FATF assessment, have yet to advance beyond the committee level at both the House of Representatives and the Senate.
House Banks and Financial Intermediaries Committee Chairman and Quirino Rep. Junie E. Cua said in a text message to BusinessWorld the AMLA revisions will be “a priority measure” once Congress resumes session in late July. — L.W.T.Noble