A Guide to Anti-Money Laundering for Crypto Firms

7 Tips for Fintechs to Comply With Anti Money Laundering in The Philippines

AML Compliance Knowledge & Training

The Philippines is one of the Asia Pacific (APAC)’s most prominent business destinations and a global hotspot for FinTech and financial services. With the fifth-largest GDP in the region (behind Singapore and Malaysia), broad mobile network penetration, and a relatively young population of 107 million, the Philippines continues to attract investment from around the world. 

However, the Philippines’ status and influence have also attracted the attention of criminals seeking to exploit the country’s financial system to launder money. That threat has prompted the government to develop and bolster its AML/CFT regulatory framework. With that in mind, anti-money laundering should be a significant concern for FinTechs and other financial services firms setting up and operating in the Philippines.

Anti-money Laundering Philippines Guide

To help your FinTech business manage its compliance obligations, browse our anti money laundering Philippines guide:

1. Financial Regulators

The Philippines Securities and Exchange Commission (SEC) and the Central Bank of the Philippines (BSP) act as the Philippines’ primary financial regulators. Collectively they are responsible for conducting the financial supervision of all banks and non-bank financial institutions in the country. The SEC is involved in policymaking and has the power to investigate violations of securities laws.  

The Philippines also maintains the Anti-Money Laundering Council (AMLC), a dedicated authority tasked with implementing the Anti-Money Laundering Act (2001), the country’s main AML legislation. The AMLC functions as regulator, financial intelligence unit, and law enforcement agency. Its mandate includes protecting the Philippines’ financial system from criminal activities and extending cooperation to other international financial regulators that are engaged in money laundering investigations.

2. Data Privacy and the Cloud

The Philippines’ primary data protection legislation is the Republic Act No.10173, also known as the Data Privacy Act. The legislation applies to all private, personal, or otherwise sensitive data of natural and juridical persons in the Philippines. The Act sets out rules for the collection, processing, and sharing of data, and the need for firms to obtain consent when doing so. The Act includes a definition of the personal and sensitive data covered by its provisions. 

While the Philippines has lagged behind other nations, regionally and globally, in the application of cloud technology, in 2013 it launched the GovCloud initiative, a private cloud initiative for government agencies. GovCloud hosts a range of basic cloud applications, such as email services and payment gateways, and the Philippines government intends to use the initiative as a foundation to build a wider cloud ecosystem within the country.

3. The Anti-Money Laundering Act

The Anti-Money Laundering Act of 2001 (AMLA) is the Philippines’ primary anti-money laundering law. AMLA enables authorities to investigate money laundering and other financial crimes in order to protect financial institutions and deter criminals from using the Philippines as a money-laundering destination.

As a member of the Asia/Pacific Group, the Financial Action Task Force-style body for the region, the Philippines is committed to implementing FATF’s Recommendations through provisions set out in the Act. Under AMLA, FinTechs are required to develop and implement a risk-based AML program, conducting customer risk assessments and deploying an AML/CFT response commensurate with that risk. 

2021 AMLA amendment: Following a number of high-profile money laundering incidents, anti-money laundering in the Philippines has been subject to increased international scrutiny. One particular incident saw the theft of almost US$1 billion from the Bangladesh Central Bank, which was transferred to bank accounts in the Philippines and laundered in the Philippines’ casino system. 

Responding to the theft, Philippine President Rodrigo Duterte announced his support for revisions to the Anti-Money Laundering Act, offering financial authorities more powers and enforcement tools. Those revisions were implemented in February 2021, via an amendment to AMLA. The amendment introduced the following key provisions

  • Covered persons: The amendment adds two categories of ‘covered person’ that are required to report suspicious transactions to the AMLC. The two new categories are ‘real estate developers and brokers’ and ‘offshore gaming operators”.
  • Covered transaction: A new category of covered transaction has also been added to AMLA. Under the new rules, real estate developers and brokers must report transactions that exceed P7.5 million to the AMLC. 
  • Unlawful activities: The amendment expands AMLA’s scope to include two new unlawful activities:
    • Violations of regulations issued by the National Security Council-Strategic Trade Management Committee (NSC-STMCom).
    • Tax evasion where the tax due exceeds P23 million per taxable year. 
  • Freeze orders: Under the revised AMLA, the AMLC has the power to issue freeze orders to facilitate targeted financial sanctions. The provision relates specifically to sanctions targeting the financing of weapons of mass destruction, terrorism, and terrorism financing. 

4. AML Transaction Monitoring

The Anti-Money Laundering Act 2001 generally requires Philippines FinTechs and other obligated institutions to monitor customer transactions on an ongoing basis in order to detect suspicious activity and prevent money laundering. The monitoring process should enable FinTechs to establish that a customer’s transaction activity is consistent with their known risk profile, and allow them to issue suspicious activity reports as quickly as possible when potential money laundering is detected. 

The transaction monitoring process mandated by the Anti-Money Laundering Act should focus on specific characteristics, including:

  • Suspicious transaction patterns (for example, a high frequency of transactions or multiple transactions over a short period of time). 
  • Unusually complex transactions that do not fit a customer’s usual financial behavior.
  • Transactions deliberately structured to avoid reporting thresholds. 
  • Transactions involving high-risk countries. 
  • Transactions involving politically exposed persons (PEPs) or persons on sanctions/watch lists.

5. Payment Sanctions Screening

Under AMLA, FinTechs must screen transactions against international sanctions lists and watchlists to ensure that their customers are not subject to sanctions, involved in terrorism, or connected to terrorist organizations. 

The sanctions screening process should be conducted on an ongoing basis to ensure that FinTechs respond efficiently to changes in their customers’ risk profiles. Firms should screen their customers against the sanctions list circulated by the BSP and the AMLC, along with lists issued by international authorities such as the Office of Foreign Assets Control (OFAC) and the United Nations

FATF Greylist: The Philippines international profile should also be an AML priority. Following the Bangladesh Central Bank heist, the FATF added the Philippines to its list of Jurisdictions Under Increased Monitoring, also known as the ‘FATF greylist’. Inclusion on the greylist indicates that a country poses an increased risk of money laundering and terrorism financing – and that it may face additional economic sanctions. 

As of April 2022, the Philippines remained on the FATF’s greylist. While it acknowledged that the Philippines had made progress in combating financial crime in terms of implementing sanctions, the FATF noted that stronger AML measures were still needed to address money laundering in casino junkets and nonprofit organizations.  

The Philippines’ greylist status means that firms operating in the Philippines must review the FATF’s action plan for the country. Firms should gauge identified AML deficiencies against their own risk appetite, and put suitable compliance measures in place. It is also important to remember that partners outside the Philippines may seek to obtain compliance assurances before entering into business relationships. The Philippines’ government is working with the FATF to improve its AML/CFT performance. In addition to amendments to AMLA, those efforts include:

  • Closer coordination between the AMLC and the Philippine National Police. 
  • Integration of the International Co-Operation Review Group (ICRG) with the National Anti-Money Laundering and Countering the Financing of Terrorism Strategy (NACS) as part of a national approach to AML/CFT. 
  • The sharing of AMLC risk assessments, studies, and typologies with Philippines law enforcement agencies.
  • An initiative to hire more financial analysts, investigators, and lawyers to enhance the performance of compliance units. 

6. Onboarding and Monitoring

The Philippines’ anti-money laundering rules require FinTechs to verify their customers’ identities and ensure that they are being truthful about the nature of their business. In practice, this means that firms must implement suitable customer due diligence measures (CDD) when they onboard new customers – and then throughout the business relationship.

CDD checks in the Philippines should not only verify customers’ names and personal details but monitor customers for changes in politically exposed person status and for their involvement in adverse media stories. Under a risk-based approach, firms should implement an AML program with two tiers of CDD, deploying enhanced due diligence (EDD) measures when customers present a higher level of AML/CFT risk.

7. Upcoming Regulations

In addition to the proposed revisions to the Anti-Money Laundering Act, the Philippines’ government is in the process of rolling out a national ID system. The system would benefit anti-money laundering compliance in the Philippines by facilitating the faster verification of customer identities and subsequent transaction monitoring and screening measures. In the wake of the global coronavirus pandemic, the Philippines government is seeking to accelerate the introduction of the national ID system.

In 2021, the Philippines’ Department of Finance (DOF) released a statement indicating that new regulations and taxation measures would be introduced for FinTech firms. The statement revealed that the SEC and the Bureau of Internal Revenue (BIR) would collaborate in an effort to increase FinTech compliance with government regulations. The DOF also ordered the PhilFintech Innovation Office to strengthen its capability to facilitate FinTech registrations, anticipating a surge in FinTech activity in the Philippines in the near future. 

The DOF statement indicated that the SEC would continue to evaluate the effectiveness of FinTech regulations specifically relating to investor protections, customer protections, AML/CFT, and cybersecurity.

Anti-Money Laundering Philippines Regulatory Compliance: How ComplyAdvantage Can Help

Complying with anti-money laundering regulations in the Philippines requires significant administrative effort. The complexity of regulations can create costly efficiency drains, while human errors can hamper the process further, and even lead to compliance penalties. 

ComplyAdvantage helps firms avoid those problems with automated AML solutions tailored to their unique risk profiles. Our solution takes advantage of smart technology to build speed and accuracy into your Philippines AML program while complementing the skills of existing compliance teams.

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Originally published June 18, 2020, updated June 26, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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