PHL at risk of ‘dirty money’ list return amid corruption mess

By Katherine K. Chan, Reporter

DUMAGUETE CITY — The Philippines is working to tighten its safeguards to ensure it stays off a global financial crime watchdog’s list of jurisdictions with high “dirty money” risks as a corruption scandal has highlighted potential gaps in the monitoring of illicit flows.

Asked if the recent graft controversy puts the Philippines in danger of returning to the Financial Action Task Force’s (FATF) “gray list” of countries under increased monitoring for money laundering risks, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said: “To be honest, we have a risk.”

“May risk na babalik tayo sa gray list (There’s a risk that we will return to the gray list), although we’re doing what we can to prevent that,” he told reporters during a media information session here on Monday.

The BSP chief, who also chairs the Anti-Money Laundering Council (AMLC), said they will work to address issues before the FATF’s next review in 2027.

This, as the AMLC’s latest National Risk Assessment released in December also showed that the country remains under heightened threat of money laundering.

The Philippines exited the FATF’s gray list in February 2025. It was put under increased monitoring in 2021 as the watchdog noted deficiencies in anti-money laundering/counter terrorism financing activities in key areas and sectors, namely, designated nonfinancial businesses and professions, casino junkets, beneficial ownership information, money laundering and terrorism financing prosecution, and cross-border declaration measures.

The AMLC has secured several freeze orders for the assets of individuals said to be linked to wide-scale multibillion-peso corruption in anomalous government flood control and infrastructure projects.

GlobalSource Partners Principal Advisor and former BSP Deputy Governor Diwa C. Guinigundo said the Philippines risks re-entering the FATF’s gray list if the watchdog determines lackluster or failed enforcement of anti-money laundering efforts in the country.

“For FATF, the issue is not the scandal itself but whether the Philippines can credibly detect, investigate, and prosecute the laundering of illicit proceeds linked to it,” Mr. Guinigundo said in a Viber message.

“A decisive, coordinated response by the AMLC, DoJ (Department of Justice), and Ombudsman would support the case that post-gray list reforms are working. However, slow investigations, weak case buildup, or perceptions of impunity — especially in large infrastructure projects — would materially elevate gray-listing risk.”

The government needs to show credible results from its ongoing graft probe, he said.

“By 2027, (FATF) assessors will judge several years of enforcement performance, meaning credible results must be evident by 2025-2026,” he said. “Announcements or legislative fine-tuning without convictions, asset recovery, and inter-agency coordination will carry little weight.”

The Philippines is in a better position now with its existing laws, more developed institutions, and enhanced private sector compliance, Mr. Guinigundo said, but the government still needs to prove that it can properly resolve high-value cases, especially those involving politics and infrastructure-related matters.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the government has enough time to address potential areas of concern, but “only if it delivers credible, measurable enforcement outcomes, not just new rules.”

“Preventing a return to the gray list will require stronger prosecution of major laundering and corruption-linked cases, tighter monitoring of politically exposed persons, improved inter-agency coordination, and further reforms such as easing bank secrecy for lawful investigations, enhancing beneficial ownership transparency, and strengthening supervisory powers of regulators,” he said via Viber.

BANK SECRECY
Amid the heightened need for transparency, the BSP said it is pushing to widen the scope of proposed amendments to the country’s decades-old bank deposit secrecy laws to allow authorities look into the accounts of individuals being investigated by other financial regulators.

“The idea is that everybody wants that full transparency,” BSP General Counsel Roberto L. Figueroa told reporters during the same event here. “Everybody wants the BSP to be able to look into the bank deposit accounts of persons that we suspect are engaging in unlawful activities.”

House Bill No. 6707, which was approved on third and final reading in December, only seeks to allow the BSP to investigate accounts owned by bank officers and employees linked to financial crimes.

Mr. Figueroa said that in the Senate version of the amendments, they also want to allow access to accounts of individuals or entities being investigated by the AMLC, the Bureau of Internal Revenue, the Securities and Exchange Commission, the Insurance Commission and the Philippine Deposit Insurance Corp.

“So, it’s much broader now. It’s not limited to the directors, officers (and) stockholders of banks. This inquiry of bank deposit accounts can cover any person so long as the investigation or the examination being done by these regulators I’ve mentioned are conducting this in the course of their own implementation of their mandates,” he said.

The consolidated version of proposed Senate bills (SB) on bank secrecy amendments was filed on Jan. 28 as SB No. 1728 or the Banking Reform for Integrity, Good Governance, Honesty, Transparency Act. It is currently up for second reading.

However, Mr. Figueroa said they also want to propose changes to this bill, specifically on the provisions covering the clearing house of orders to investigate deposits and the crafting of implementing rules.

Bank secrecy law amendments are part of President Ferdinand R. Marcos, Jr.’s priority legislative agenda for the 20th Congress.