The Philippines’ experience with the FATF greylist: A tax on migrant workers? Looking ahead to 2027’s evaluation

This is Part 2 of a three-part series on the Philippines’ compliance landscape, written by Iain Armstrong, Executive Director of FCC Strategy at ComplyAdvantage. Here, Iain recounts why the Philippines’ years on the FATF greylist fell hardest on the workers who send money home, and why the greylist is still an active concern for the country.

The Philippines came off the Financial Action Task Force (FATF) greylist in February 2025, after nearly four years under increased monitoring. A lot of the coverage at the time rightly framed it as a win for investor confidence and the country’s standing abroad. 

But there is another story which matters much more to ordinary Filipinos. Greylisting is usually described as a reputational problem. For a country that sends millions of its people overseas to work, it is closer to a tax, and the people who paid it were the workers wiring money home.

Greylisting in practice

On the face of it, the greylist is FATF’s way of indicating deficiencies in a country’s AML/CFT regimes, and a commitment on the part of that country to fix them. But being greylisted is also a signal which tells banks abroad that dealing with that country’s institutions now carries extra risk. The response from those banks is to apply enhanced checks, and in fact, some decide the cleaner option is to step back altogether. The cost of that signal is often significant. 

An IMF study of 89 emerging and developing economies found that greylisting cuts a country’s capital inflows by an average of 7.6% of GDP, with foreign direct investment commonly falling by around 3%. Pakistan, no stranger to the greylist, is estimated by independent analysts to have lost tens of billions of dollars in output over the period. For a remittance economy, the impact is particularly pronounced.

A tax on the diaspora

The mechanism that does the most damage tends to stem from de-risking activity: correspondent banks abroad close the accounts of MSBs to avoid, rather than manage, the compliance risk of handling their payments. The decline in available options translates to higher prices, and the World Bank has been clear that de-risking has pushed remittance costs up in ways that are stubbornly difficult to unwind. Remittances are integral to how money flows into the Philippines. Overseas Filipino workers sent home a record US$35.63 billion in cash in 2025, around 7.3% of the country’s GDP.

That’s an enormous movement of money, and the margins for the people sending them are, frankly, brutal. The average cost of sending money home still teeters above 6% globally, over double the UN target of 3%. The Philippines, with its key inward channels from the Gulf states and Singapore, has expended a lot of effort to pull those corridors down toward that 3% mark, and greylisting was a blow to that progress. 

Every fraction of a percent levied onto a corridor is money taken from the wages of a domestic worker in Riyadh or a nurse in London. It strikes me as a particular injustice that the compliance and enforcement failures of a state create a tab that must then be picked up by ordinary households.

Staying out of the greylist

None of this should understate the effort which doubtless went into the greylist exit. The country worked through an 18-point action plan, tightening supervision of casinos and MSBs, improving beneficial-ownership transparency, and, crucially, banning the offshore gaming operators, the POGOs, whose scam hubs had become a national embarrassment. It took an all-systems push and an on-site inspection before the delisting was confirmed.

The harder task, as expressed by Governor Eli M Remolona, Jr in his excellent speech, which is well worth a read, isn’t getting out but staying out. The next FATF evaluation is due in 2027. I spent years in financial crime compliance at banks that were working their way out of US deferred-prosecution agreements, and one of several lessons I learnt was that cutting off risk is a far cry from actually managing it. 

Framework overhauls and remediation projects are never the end state, either: the only viable approach is to weave financial crime controls into the fabric of how an institution runs, year in and year out. That’s one of your best defenses against the threat of de-risking.

So for now it’s ‘two cheers’ for the delisting. The question now is whether the country’s institutions can show in the next evaluation that the standard has been maintained in a durable way. In this nation of overseas workers, millions of households will be hoping that they can.

• Read Part 1: Why the Philippines is one of Asia’s most exciting financial markets, and why fraudsters have taken note