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Philippines President Revamps AML/CTF Strategy to Exit FATF Greylist

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Filipino President Ferdinand R. Marcos Jr. has mandated all government offices and departments implement a revised anti-money laundering and counter-terrorist financing (AML/CTF) strategy. The revised plan aims to “allow the Philippines to exit” the Financial Action Task Force (FATF) grey list. The country was re-added in 2021 due to ongoing AML/CTF regime gaps. The country remained on the list following the June 2023 FATF Plenary , though it had made progress in critical areas. 

Marcos explained that he intends to bolster the country’s AML/CTF regime through the new National Anti-Money Laundering, Counter-Terrorism Financing, and Counter Proliferation Financing Strategy (NACS) 2023-2027. According to Marcos, NACS 2023-2027 will accomplish this goal alongside the reorganized National AML/CTF Coordinating Committee. Reflecting its wider responsibilities, the Committee has been renamed the National Anti-Money Laundering/Counter-Terrorism Financing/Counter Proliferation Financing Coordinating Committee (NACC).

The Philippines’ AML/CTF Regime: A History

The Philippines enacted the Anti-Money Laundering Act of 2001 to ensure it would not “be used as a money laundering site for the proceeds of any unlawful activity.” It pledged to cooperate with international AML investigations and to sanction terrorist financing and weapons proliferation. Nonetheless, after its 2009 Mutual Evaluation Report (MER), the FATF identified “strategic weaknesses” in the Filipino AML/CTF framework.

Between the remedial action plan announced in 2010 and the country’s 2019 MER, the Philippines’ progress was regularly measured in light of FATF recommendations. By June 2013, the global watchdog recognized that the country had completed its action plan and established the necessary frameworks. Still, gaps remained in the casino sector. 

In October 2019, the FATF’s updated MER noted several outstanding regime deficiencies. These emerged despite the 2018 creation of an AML/CTF Coordinating Committee and National Strategy (Executive Order 68). The FATF recommended 17 priority actions to address these weaknesses. Among these, it urged the Philippines to take measures to implement targeted financial sanctions on proliferation financing “without delay.”

As of the August 2020 review, critical deficiencies remained. In June 2021, the FATF added the Philippines to its list of ‘Jurisdictions under Increased Monitoring’, also known as the grey list. The watchdog submits these jurisdictions to a special action plan addressing AML/CTF gaps, assessing progress onsite to determine if the country qualifies for greylist removal. 

In February 2023, the FATF revealed that the Filipino action plan had expired with multiple outstanding deficiencies. These included:

  • Incomplete NACC objectives and action plans – Specifically, NACC law enforcement agency objectives were focused on drugs and corruption, and so did not fully reflect financial crime risks. 
  • Insufficient terrorist financing (TF) prosecutions – Authorities over-focused on prosecuting TF predicate offenses, neglecting terrorist financing crimes.
  • No targeted financial sanctions (TFS) framework against proliferation financing The FATF urged the Philippines to address this deficiency immediately.

Exiting the Greylist: A New Filipino AML/CTF Strategy

Under Executive Order (EO) 33, the Philippines has approved a new strategy to address these deficiencies. It amends EO 68, and has three core features:

  1. Revising the expired NACS for 2018-2022 – The government renamed the NACS strategy, reframing it to include a counter-proliferation financing (CPF) strategy. This responds to the FATF’s urgent call to implement CPF measures.
  2. Restructuring the NACC and granting it new powers – The government added the National Intelligence Coordinating Agency (NICA) as a NACC member. This move reflects the FATF’s call for enhanced financial intelligence supporting AML/CTF law enforcement investigations. NACC has also been granted powers to help agencies implement the new AML/CTF/CPF strategy. Finally, the committee can now organize its own subcommittees.
  3. Reorganizing the Terrorism Financing and Proliferation Subcommittee – To support the expanded focus on CPF, the government has split this subcommittee into the Terrorism Financing Subcommittee and the Proliferation Financing Subcommittee.

These updates echo several of the 2019 FATF MER’s priority actions, including:

  • Enhance financial intelligence to support law enforcement agency investigations of money laundering, terrorist financing, and predicate offenses.
  • Continue the implementation of the National AML/CTF Strategy and ensure the effectiveness of NACC and its subcommittees. 
  • Create a legal framework to promptly implement targeted financial sanctions of proliferation financing, monitoring and enforcing compliance.

A strengthened AML/CTF framework will better position the Philippines to address all 17 of the FATF’s recommended actions.

Key Takeaways

As the national AML/CTF framework is reorganized and expanded, regulated firms should stay on top of the most current legislation. Areas formerly unregulated or where enforcement was minimal, especially in the risk areas noted above, are likely to face new requirements. Firms should renew their enterprise-wide risk assessments to ensure they are equipped to manage their operational risks. A proactive risk management approach remains the best way to stay ahead of the regulatory and financial crime curve.

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Originally published 14 July 2023, updated 14 July 2023

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