By Luisa Maria Jacinta C. Jocson, Senior Reporter
THE ANTI-MONEY Laundering Council (AMLC) is pushing amendments to the Anti-Money Laundering Act as part of its next steps to ensure the country stays out of the Financial Action Task Force’s (FATF) “gray list.”
These amendments aim to align the Philippines’ law with international standards, such as the enhanced monitoring of virtual asset service providers (VASP).
“As part of the preparations for the forthcoming mutual evaluation, the AMLC is currently undertaking a review of the Anti-Money Laundering Act of 2001 (AMLA), as amended,” it said in an e-mail to BusinessWorld.
“With the country’s recent exit from the FATF gray list, this initiative is essential in ensuring sustained compliance with international standards and preventing any potential relisting.”
In February, the FATF removed the Philippines from its list of jurisdictions under increased monitoring for “dirty money” after over three years or since June 2021.
The next assessment is slated for 2027, when the FATF will verify if the anti-money laundering measures are being sustained and still in place.
“As part of this initiative, a set of proposed amendments has been formulated to enhance the provisions of the AMLA,” the AMLC said.
The proposed tweaks to the AMLA would “address the technical compliance requirements arising from the updated FATF standards.”
These include the authority to temporarily suspend transactions and the designation of VASP as covered persons under the revised international standards and FATF recommendations, it added.
The FATF said in its latest recommendations that countries must ensure VASPs are regulated for AML/CFT (countering the financing of terrorism) purposes. These providers must also be licensed or registered, as well as subject to effective systems for monitoring.
Virtual assets, also called crypto assets, refer to “any digital representation of value that can be digitally traded, transferred or used for payment.” However, these do not include digital representation of fiat currencies.
“Without proper regulation, virtual assets also risk becoming a safe haven for the financial transactions of criminals and terrorists,” the FATF earlier said.
The proposed amendments also aim to “ensure its continued effectiveness in addressing emerging threats.”
It will also ensure the alignment with international standards on its AML/CFT/CPF (countering proliferation financing) regime, as well as address gaps identified in previous FATF reports.
While AMLC gave no timeline for the proposed amendments to the AMLA, this is likely to be tackled by the 20th Congress, which will formally open in late July.
In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. It was removed from the blacklist a year later after the passage of the AMLA.
The AMLA criminalizes money laundering, relaxes tight bank deposit secrecy laws, imposes requirements to better track transactions, and provides for international cooperation, among others.
RISK ASSESSEMENTMeanwhile, the AMLC is currently conducting a National Risk Assessment (NRA), with a draft expected to be completed within the year.
“The NRA aims to evaluate potential money laundering threats and vulnerabilities affecting our country,” it said.
“Through the NRA, we will be able to adopt measures to address determined risks. This will ensure the sustainability of our country’s AML/CFT/CPF regime.”
The AMLC said the results of the risk assessment aim to guide government agencies in their preparations for the forthcoming mutual evaluation.
Aside from the ongoing NRA and proposed AMLA amendments, the AMLC said it is working on other initiatives after the Philippines’ exit from the gray list.
“Systems have been institutionalized to prevent another FATF gray-listing,” it said.
Malacañang last year issued an executive order mandating all government offices to adopt the National Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing Strategy 2023-2027.
“Likewise, the AMLC is consistently coordinating with relevant government agencies to ensure that the improvements made in our AML/CFT/CPF framework are continuously implemented and sustained.”
Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that even with the gray list exit, money laundering risks still exist.
“The truth is money laundering is alive and well in the Philippines despite our exit from the gray list. It’s also an open secret that banks tolerate it,” he said via Messenger.
Mr. Sta. Ana said that the “shadow economy” in the Philippines accounts for about one-fourth or one-third of gross domestic product (GDP).
“That’s pretty high and that means money laundering is prevalent. I think the most effective solution is to lift the Bank Secrecy Act,” he added.
Earlier data from Moody’s Investors Service showed that from 2018 to 2023, the Philippines was among the top five countries in Southeast Asia with money laundering activity events added over the five-year period. The number of money laundering events added in the Philippines jumped by 45% from 2022 to 2023.
