Yellow Pad


I worry over the news that overseas Filipino workers (OFWs) will vote for Ferdinand “Bongbong” R. Marcos, Jr. Hence, I attempt to explain why Ferdinand Marcos, Jr. is bad for them. (And why Marcos Jr. is bad for everyone.)

The Philippines is on the “grey list” of the Financial Action Task Force (FATF). This has negative effects on the country’s capital flows, including the remittances of OFWs. Being on the grey list translates into higher transaction fees for remittances and delays in remittances because of tighter scrutiny. It, too, undermines our creditworthiness, trade, and flow of investments.

The grey list, says the FATF, covers those jurisdictions that are “under increased monitoring” because of “strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.” A country on the grey list is committed to cooperating with the FATF in addressing the “strategic deficiencies” within an agreed timeframe.

Kapronasia, a leading Asia fintech consulting firm, wrote on Aug. 25, 2021, why the Philippines is on the grey list:

“FATF has been urging Manila to toughen up its AML [anti-money laundering] and CFT [Combating the Financing of Terrorism] controls for several years now, with a focus on enhancing risk-based supervision in non-financial businesses (especially casino gambling and real estate), cracking down on unregistered and illegal remittance operators, increasing money laundering investigations and prosecutions and strengthening the targeted financial sanctions framework for both terrorist and proliferation financing.”

The FATF wants an amendment of the anti-money laundering law, which reformers in government, the private sector and civil society support. Said Kapronasia, this “will give the Philippine central bank stronger investigative powers, making it easier for the regulator to examine suspicious bank accounts, and impose heavy penalties.”

BusinessWorld (Oct. 23, 2021) reported that the government has “to strengthen and streamline the access and accuracy of beneficial ownership information that are used by law enforcement agencies.”

To be removed from the grey list, the Philippines has to take concrete steps to comply with 40 FATF recommendations. In turn, each recommendation has a set of criteria to be met.

The Asia Pacific Group (APG) on Money Laundering evaluates whether a member country is effectively implementing the FATF standards against money laundering, financing of terrorism, and proliferation financing. In August 2021, the APG released a “2nd Follow-up Report: Mutual Evaluation of the Philippines.” It acknowledged the progress of the Philippine government in addressing the FATF’s 40 recommendations.

Nonetheless, the Philippines remains partially compliant in some areas and still has to meet full compliance in other areas. Examples where the Philippines shows partial compliance include: 1) addressing deficiencies related to the cross-border declaration system and 2) having restraints on currencies and bearer monetary instruments. Such will require Philippine Congress to amend existing laws.

Another area of concern pertains to the vulnerabilities associated with virtual asset service providers (VASP), the scope of VASP activities, and the VASP’s wire transfer provisions.

To meet the many FATF recommendations and criteria, the Philippine leadership must muster political will. On the other hand, inaction makes the country’s financial system suffer from tighter scrutiny, delayed processing of transactions, higher transaction costs, and even a downgrading of the country’s credit rating. The latter in turn will jack up interest rates and slow down investments, jobs, and growth.

The question is whether the next administration has the will to complete the reforms that will strengthen the country’s anti-money laundering law and put in place other complementary measures to fight money laundering, tax evasion, and terrorist financing.

Investors, creditors, and financial institutions fear that a Marcos Jr. presidency will not deliver the reforms. Their concerns include the history of corruption, non-filing of tax returns, tax evasion, and money laundering of the Marcos family. Add to all that Marcos Jr.’s uninspiring governance record and his unsound economic program.

The UK-based Capital Economics says that Marcos Jr.’s plans are “far from encouraging.” In the same breath, it says: “It is unlikely the situation will improve under Mr. Marcos and could easily get worse.”

Pantheon Macroeconomics, another UK-based think tank, says that a victory of Marcos Jr. in the 2022 elections would “carry significant event risk.”

Nomura Global Research views Marcos Jr. as lacking national political experience, not being market-friendly, and lacking fiscal discipline.

The report of Fitch Solutions Country Risk and Industry Research states that a Marcos Jr. presidency is “posing risks of increased authoritarianism.”

Consider, too, the following:

Marcos Jr. has flip-flopped on disclosing his Statement of Assets, Liabilities and Net Worth (SALN). Is he hiding anything?

Despite the international and domestic pressure to strengthen the Anti-Money Laundering Law (AMLA), Marcos Jr. when he was a senator, voted for a softer, deficient AMLA in 2012.

To toughen anti-money laundering, LexisNexis Risk Solutions Asia Pacific Managing Director Bharath Vellore proposed a three-pronged approach: legislation, supervision, and prosecution. That goes against the self-interest of the Marcos family.

Marcos Jr. has been convicted for tax evasion, specifically the non-payment of taxes from 1982 to 1985.

In October 2012, a US Court of Appeals for the Ninth Circuit upheld a contempt judgment against Marcos Jr. and his mother Imelda, being the executors of the estate of Ferdinand E. Marcos. This was in relation to a human rights class suit against the dictator Marcos.

Marcos Jr. and Imelda violated an injunction that prohibited them from dissipating the assets of the Marcos estate. The judgment amounted to $353.6 million, which the Marcoses have refused to pay. The Court can issue a warrant to compel the Marcoses to appear in order to comply with the judgment.

Switzerland’s Federal Supreme Court ruled that Marcos assets hidden in Swiss banks had criminal ownership. Following the Court’s order, the Swiss government transferred to the Philippines bank deposits amounting to $627 million in 1998.

During the Rodrigo Duterte administration, in 2018, the Sandiganbayan convicted Imelda Marcos on seven counts of graft for laundering $231 million in Swiss accounts. She named herself and her children as the beneficiaries of the Swiss accounts.

In 2016, investigative journalists revealed the Panama Papers, containing loads of information on how the ultra-rich, including Filipinos, created shell corporations to secure their assets and taxes. The leak included the listing of Marcos Jr.’s sister Irene Marcos Araneta and her husband Gregorio Araneta III as officers of Orient Wind Development Limited, registered in the British Virgin Islands, a tax haven.

Bloomberg Tax (May 7, 2021) said: “The use of shell companies means that the ownership and financial history of these assets can be hard to determine.” Many of these shell corporations may be able to escape charges of tax evasion, but they surely are examples of deplorable tax avoidance. To quote Bloomberg Tax again: “Although shell corporations are not illegal in and of themselves, their anonymity and lack of transparency mean that they can be used for tax evasion, fraud, and evading sanctions.”

All the facts and circumstances above lead to this conclusion: Marcos Jr. and family lack transparency in disclosing assets and taxes. Marcos Jr. does not have the credibility to fight money laundering and tax evasion. Marcos Jr. does not have the high level of political commitment to undertake the reforms for the country to be removed from the grey list.

The US government’s Financial Crimes Enforcement Network (FinCEN) closely monitors the Philippines in light of our country being on the grey list. The FinCEN treats the Philippines as a high-risk jurisdiction for money laundering and other financial crimes.

FinCEN’s heightened vigilance towards the Philippines and actions it can take to penalize bad behavior will have a negative impact on Filipino citizens. The US is the largest source of overseas Filipino remittances. Moreover, financial transactions from other countries that use the US currency also flow to US financial centers. They are all subject to the tight scrutiny and discipline of FinCEN.

The situation becomes all the more dangerous when government is bereft of a reform agenda. The worst scenario, God forbid, is a Marcos Jr. presidency rolling back the previous measures to fight financial crimes. This is plausible, for the Marcoses want to preserve the ill-gotten wealth, which the government has yet to fully recover.

This scenario makes possible the Philippines being included on the FATF black list. That means the global community is called upon “to apply counter-measures” against a country violating the FATF standards. Currently, two countries are on the black list, namely Iran and North Korea. Blacklisted countries are subject to more restrictive measures and economic sanctions.

Being on the black list brings terrible consequences. It damages the credibility and creditworthiness of a country. Thus, investments will be diverted, loans will be subject to higher interest rates, and trade will be disrupted.

OFWs will be inconvenienced by the delay in remittances brought about by stricter due diligence measures. Worse, the cost of making remittances will increase.

To the OFWs and their families, beware of Marcos Jr. We do not want to punish the remittances. And we do not want our economy to become a North Korea.


Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.