Philippines still under heightened threat of money laundering

The Philippines remains under heightened threat of money laundering due to the prevalence of crimes such as drug trafficking, financial fraud and tax evasion, a study by the Anti-Money Laundering Council (AMLC) showed.

In its latest National Risk Assessment (NRA), the financial intelligence unit noted that abuse of digital platforms, cryptocurrency transfers, junket operators, and cross-border schemes via offshore platforms and remittance networks have quickly evolved in the country.

“The Philippines continues to face high (money laundering) threat, driven primarily by the scale and profitability of several predicate crimes, including illegal drug trafficking; fraud, swindling, and cyber-enabled scams; environmental crimes; tax evasion; and corruption and securities-related violations,” the AMLC said in a statement on Monday.

Meanwhile, the country has “medium” vulnerability to money laundering risks, “reflecting improved institutional capacity, stronger regulatory frameworks, expanded supervision, and more effective domestic coordination.”

The country had the same ratings in the previous NRA issued for 2015 to 2016.

The NRA provides insights on the threats from criminals and their illegal operations, as well as the vulnerabilities of the financial system. It also outlines strategies for government and private institutions to enhance prevention and detection of such activities.

“The NRA serves as an evidence-based foundation for shaping national policy and strengthening our country’s defense against the threat posed by evolving financial crime,” said Matthew M. David, AMLC executive director and secretariat head of the National Anti-Money Laundering/Counter-Terrorism Financing/Counter-Proliferation Financing Coordinating Committee (NACC).

“It reaffirms the government’s commitment to transparency, integrity, and national security.”

The Council first released an NRA in 2016, which assessed risks from 2011 to 2014.

The AMLC said its third NRA, which covers data from 2021 to 2024, is its most comprehensive assessment yet on money laundering, terrorism financing, and proliferation financing. It is the first NRA to include proliferation financing risks.

The full report has yet to be published.

By sector, casinos, real estate developers and brokers, money service businesses, virtual asset service providers have medium to high vulnerability to money laundering.

Under medium vulnerability are the banking sector, securities sector, trust entities, pawnshops, dealers in precious metals and stones, as well as lawyers and accountants.

The insurance sector and national savings and loan associations, on the other hand, have medium-low to low vulnerability.

“These ratings reflect risk profiles associated with cash intensity, exposure to high-value transactions, digital adoption, and the strength of supervisory oversight,” the AMLC said.

TERRORISM RISKS

Meanwhile, the AMLC also reported that the Philippines faces “medium” risks from terrorism financing, a downgrade from its “high threat” evaluation in the previous NRA.

“This assessment reflects the cumulative impact of sustained security operations,

enhanced intelligence coordination, strengthened oversight of nonprofit organizations, and improvements in financial sector controls and reporting mechanisms,” the AMLC said.

However, terrorism financing risks persist in Mindanao’s conflict zones, cross-border transfers to extremist networks and potential abuse of nonprofit organizations.

The AMLC also identified “medium” risk from proliferation financing (PF), citing limited awareness and readiness among public and private entities, weak enforcement of targeted financial sanctions, and operational coordination gaps.

“The Philippines’ first dedicated PF assessment concludes that while PF threat is low, institutional and sectoral vulnerabilities are high, resulting in an overall medium PF risk profile,” it said.

Still, the AMLC noted substantial progress in the country’s proliferation financing, including the activation of the NACC proliferation financing sub-committee, stronger regulatory issuances, and improved supervisory awareness among financial institutions.

In February, the Philippines exited the Financial Action Task Force’s (FATF) “gray list” or the list of jurisdictions under increased monitoring for money laundering.

The FATF is set to reassess the country in 2027, where it will verify whether the country’s anti-money laundering measures are being sustained and still in place.

The Philippines was also delisted from the United Kingdom and the European Commission’s lists of third countries with high risk of money laundering and terrorism financing in March and June, respectively.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the report reflects the country’s progress on its anti-money laundering and counter-terrorism financing (AML/CTF) initiatives, but still shows gaps in enforcement and risk management.

“For the FATF, (the) EU (and the) UK, the report reinforces the need for (the Philippines) to sustain reforms after its recent delistings,” he said in a Viber message. “While it does not automatically mean a return to watchlists, any weakening in enforcement, prosecutions, or supervision could raise red flags and invite renewed scrutiny.”

Meanwhile, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said via Viber that the AMLC’s findings serve as a “wake-up call.”

“It shows we’ve made progress, but high threats and medium vulnerabilities mean we’re still exposed,” he said. “If we don’t act fast, global bodies like FATF, the EU, and the UK could put us back under scrutiny.”

Mr. Rivera said the National Government should ensure that investigations into money laundering crimes yield more convictions to curb risks and improve confidence in the country’s AML/CTF compliance.

The administration should also tighten oversight of high-risk sectors like digital platforms, accelerate beneficial ownership transparency, and strengthen inter-agency coordination, he added.

Source: Business World

AMLC: Philippine remains off global dirty money list

The Anti-Money Laundering Council (AMLC) confirmed that the Philippines remains off the Financial Action Task Force (FATF)’s gray list following its removal in February this year and has not received similar reports of outdated foreign references still linking the country to the list.

In a statement, AMLC said the Philippines was officially delisted from the FATF gray list on Feb. 21, during the global watchdog’s plenary meeting in Paris, France. The delisting came after the country successfully addressed all 18 action items required to strengthen its anti-money laundering and counter-terrorism financing framework.

“The Philippines remains delisted,” AMLC said, adding that the government continues to implement various initiatives to ensure continued compliance with international standards and prevent relisting.

The clarification comes after the Department of Foreign Affairs (DFA) reported that a close relative of journalist Gretchen Ho was denied foreign exchange service at an Oslo airport on Oct. 6. The incident reportedly stemmed from the use of an outdated list that still included the Philippines under the FATF gray list.

The DFA said it has reached out to the Norwegian Ministry of Foreign Affairs and the Financial Supervisory Authority of Norway to clarify the matter.

The AMLC, however, said it “has not received similar reports of outdated references being used abroad.” It added that the country’s delisting was “disseminated through news coverage, foreign governmental regulatory bulletins, foreign financial institutions’ mechanisms and Philippine embassy or trade channels.”

Among the various initiatives it implemented to ensure continued compliance with FATF standards is the conduct of the third National Risk Assessment, a multi-agency initiative led by the AMLC that evaluates the country’s exposure to money laundering, terrorism financing and proliferation financing risks. The results will help shape targeted mitigation strategies.

The AMLC also cited ongoing work to strengthen its supervisory framework, including updates to enforcement manuals and guidelines to align with FATF recommendations and improve regulatory oversight.

In addition, the council said it continues to enhance inter-agency cooperation by working closely with law enforcement bodies to ensure a “whole-of-nation approach” in investigating and prosecuting financial crimes.

On the legislative front, the AMLC said amendments to the Anti-Money Laundering Act of 2001 are being pursued to address emerging threats and maintain alignment with evolving FATF standards.

The Philippines was first placed under the FATF’s increased monitoring list, or gray list, in June 2021 for deficiencies in its anti-money laundering and counter-terrorist financing systems.

Its removal in February marked the culmination of years of reform efforts by the AMLC, the Bangko Sentral ng Pilipinas and other key agencies.

Source: Philstar

How does the law define money laundering?

Section 4 of Republic Act (RA) 10365, otherwise known as the "Anti-Money Laundering Act of 2001", defines money laundering offenses as follows:

"SEC. 4. Money Laundering Offense. – Money laundering is committed by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity:

"(a) transacts said monetary instrument or property;

"(b) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property;

"(c) conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property;

"(d) attempts or conspires to commit money laundering offenses referred to in paragraphs (a), (b) or (c);

"(e) aids, abets, assists in or counsels the commission of the money laundering offenses referred to in paragraphs (a), (b) or (c) above; and

"(f) performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraphs (a), (b) or (c) above.

"Money laundering is also committed by any covered person who, knowing that a covered or suspicious transaction is required under this Act to be reported to the Anti-Money Laundering Council (AMLC), fails to do so."

Pertinent to the foregoing, the separate opinion of Associate Justice Amy Lazaro-Javier in the recent case of Lingad vs. People (GR 224945, Oct. 11, 2022), an En banc decision of the Supreme Court, is illuminating regarding the permutation of the definition of money laundering, thus:

"The definition in the amended Section 4 of RA 10365 is the prevailing definition of Money Laundering to date.

"Note the permutations of the definition of money laundering in Section 4:

"any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity

"(a) transacts said monetary instrument or property;

"(b) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instrument or property;

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"(c) conceals or disguises the true nature, source, location, disposition, movement or ownership of or rights with respect to said monetary instrument or property;"

Applying the foregoing, the prevailing definition of money laundering is the act of transacting a monetary instrument or property; or the conversion, transfer, disposal of, moving, acquiring, possessing or use of said monetary instrument, or property; or the concealment or disguise of the true nature, source, location, disposition, movement, or ownership of or rights with respect to said monetary instrument or property — by any person who, knowing that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful activity.

In addition, money laundering is also defined as the failure to report to the Anti-Money Laundering Council of any covered person who, knowing that a covered or suspicious transaction is required under the anti-money laundering Act to be reported.

Source: Manila Times