Philippines’ progress in fighting financial crimes

To keep the integrity of financial institutions and the economy in general, activities that lead to the diversion of resources away from economically- and socially-productive uses must be prevented from thriving. Fighting and preventing these activities, particularly money laundering and the financing of terrorism, have been regarded as essential in keeping economies stable.

With global institutions like the Financial Action Task Force (FATF) taking the lead in these areas, the Philippines has likewise been active in anti-money laundering and combating the financing of terrorism (AML/CFT), although the FATF’s latest evaluation reveals that much more needs to be achieved.

In the Philippines, the Anti-Money Laundering Act (AMLA) of 2001 serves as the framework by which efforts AML/CFT efforts are pushed. In efforts to improve its the country’s AML/CFT drive, the AMLA was amended several times, the latest of which was signed by President Rodrigo R. Duterte in January 2021. The Anti-Money Laundering Council (AMLC), the country’s financial intelligence unit (FIU), is tasked to implement AMLA, along with the “Terrorism Financing Prevention and Suppression Act of 2012.”

Republic Act No. 11521, which is said to further strengthen AMLA, gives additional powers to the AMLC, namely: applying before a competent court for a search and seizure warrant and a subpoena; preserving, managing or disposing of assets pursuant to a freeze order, preservation order or judgment of forfeiture; and implementing targeted financial sanctions against the proliferation of weapons of mass destruction and its financing. The amendment also expands the list of covered persons, which now includes real estate developers and brokers and Philippine offshore gaming operators (POGOs) and their service providers.

For over two decades now, AMLC has been steadfast in pushing AML/CFT in the Philippines. Its current chairman, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, recalled the council’s recent initiatives last year at an annual AML/CFT summit.

“The AMLC is closely coordinating with law enforcers, such as the National Bureau of Investigation and the Philippine National Police, as they are the primary investigators for predicate crimes. For the first eight months of 2021, the AMLC has filed a total of 85 cases, varying from civil and criminal cases and involving over P1.31 billion and other assets,” Mr. Diokno started sharing in a message during the summit.

The BSP governor also noted the continued progress in the National Anti-Money Laundering and Countering the Financing of Terrorism Strategy (NACS) for 2018 to 2022, which is aimed at coordinating efforts of relevant agencies in AML/CTF.

“The NACS has also integrated the International Co-Operation Review Group (ICRG) Action Plan to ensure a whole-of-nation approach in addressing our country’s shortcomings in its AML/CTF system,” he added.

AMLC, Mr. Diokno continued, is sharing its risk assessments, strategic studies, and typologies with law enforcement agencies and covered persons to increase awareness of money laundering and terrorism financing typologies and red flags.

FATF, in a statement last month, recognized the country’s progress in AML/CTF. “Since June 2021, when the Philippines made a high-level political commitment to work with the FATF and APG (Asia/Pacific Group on Money Laundering) to strengthen the effectiveness of its AML/CFT regime, the Philippines has taken steps towards improving its AML/CFT regime, including by increasing the resources of its FIU and utilizing its targeted financial sanction framework for terrorism financing, ahead of any relevant deadlines expiring,” the global financial crime watchdog said on its website.

Additionally, AMLC Executive Director Mel Georgie B. Racela said in a recent BusinessWorld report that more financial intelligence analysts, investigators, and lawyers were hired to boost the operational capabilities of their units on compliance as well as litigation and evaluation. “Relevant Philippine authorities continue to work together in strengthening the country’s AML/CFT measures and in showing progress toward effectiveness,” Mr. Racela added.

In spite of these efforts, however, the Philippines is yet to get out of FATF’s “gray list” of jurisdictions subjected to increased monitoring for “dirty money” risks.

In the same statement, FATF calls for the Philippines to keep working on implementing its action plan by demonstrating that effective risk-based supervision of designated non-financial business and professions is occurring, as well as that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets.

Among several organizations actively collaborating in combatting financial crimes, the Philippine Amusement and Gaming Corp. (PAGCOR) is expected to play an important role in mitigating risks associated with casino junkets.

Aside from creating the PAGCOR Anti-Money Laundering Supervision and Enforcement Department (PASED), PAGCOR signed a memorandum of agreement with AMLC in 2020, enjoining both parties to cooperate in the area of capacity building to enhance both of their capabilities in addressing AML/CTF issues and concerns. Last January, PAGCOR was recognized by AMLC for its invaluable contribution AML/CFT efforts.

Furthermore, FATF also seeks progress on how the Philippines implements new registration requirements for money or value transfer services and applies sanctions to unregistered and illegal remittance operators, as well as on how it implements measures with respect to non-profit organizations without disrupting their legitimate activities.

The watchdog also sees the need to ensure that beneficial ownership information is accurate and up-to-date and that its access is streamlined for law enforcement agencies.

Moreover, the task force said it will keep checking for increases in the use of financial intelligence; in money laundering investigations and prosecutions; and in the identification, investigation, and prosecution of terrorism financing cases. It will also monitor for enhancements in the effectiveness of the country’s targeted financial sanctions framework for both terrorism financing and proliferation financing. — Adrian Paul B. Conoza