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

ARROW Act to unlock infrastructure projects

Long-delayed infrastructure projects in the Philippines could gain momentum with the passage of the Accelerated and Reformed Right-of-Way (ARROW) Act, according to analysts.

Republic Act No. 12289, signed last month by President Ferdinand R. Marcos, Jr., amended the Right-of-Way Act of 2016 to make property acquisition faster, more transparent, and predictable.

Under the new law, agencies and private concessionaires must make upfront deposits on properties slated for acquisition — including crops, trees, and improvements — equivalent to 15% of their market value.

“By standardizing compensation and requiring upfront deposits, both landowners and developers gain greater transparency and security,” said Jamie S. Dela Cruz, research manager at KMC Savills.

“For the property sector, this translates into clearer growth corridors and faster value appreciation in areas near planned infrastructure,” she added.

“Developers, investors, and businesses can plan with more certainty, while landowners benefit from more predictable compensation.”

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said the amended RoW Act will support real estate expansion outside Metro Manila.

“You cannot achieve both infrastructure implementation and decentralization if you cannot acquire the properties needed to build infrastructure,” he said.

Analysts have noted developers’ growing interest in regional areas such as Pampanga, Cebu, Bacolod, and Davao, amid favorable economic conditions and talent pools.

However, Ms. Dela Cruz cautioned that uneven implementation at the local level and potential speculative price surges in acquisition areas remain risks.

Right-of-way bottlenecks have long hindered infrastructure projects, affecting property developers’ expansion plans.

Beyond solving RoW bottlenecks, the government should strengthen urban planning and zoning to prevent congestion and ensure that infrastructure projects support balanced growth, she said.

She also stressed the need for more efficient permits, land titling, and property registration, as well as affordable housing for middle-income and working-class households.

“It should also ensure that public-private partnerships in key growth areas align infrastructure with commercial, industrial, and residential demand,” she added.

“If these issues are addressed together, the ARROW Act could become a genuine catalyst not only for infrastructure delivery but also for a more competitive, resilient, and inclusive Philippine property market,” Ms. Dela Cruz said.

Source: Business World

Overseas Filipinos’ access to retirement funds expanded

The Bangko Sentral ng Pilipinas (BSP) has amended its regulations to expand investment opportunities for overseas Filipinos by allowing their retirement funds to freely invest in central bank securities.

Personal Equity and Retirement Account-Unit Investment Trust Funds (PERA-UITFs) will no longer be subject to a 10-percent foreign ownership cap. The policy change recognizes that PERA-UITFs may include overseas Filipinos who are considered non-residents under existing regulations.

“The move reflects the BSP’s continued effort to promote financial health. It helps Filipinos, both at home or abroad, build secure and sustainable retirement savings,” the central bank said. “It also helps develop the country’s private pension system and strengthens domestic capital markets.”

PERA contributions climbed to P491.4 million in 2024, up 24 percent from P396.3 million a year earlier, as more Filipinos joined the voluntary savings program. The number of contributors also increased by 6.4 percent to 5,912 from 5,555.

Employed workers accounted for the largest share, contributing P341.7 million from about 4,211 participants. Overseas Filipinos followed with P82.25 million from 789 contributors, while 912 self-employed individuals invested a combined P67.39 million.

The central bank noted that nine out of 13 PERA-UITFs currently exceeded the 10-percent non-resident ownership limit, preventing them from investing in BSP securities. The updated policy will now allow these funds to diversify their portfolios and enhance potential returns for investors.

Under the revised Section 601-Q of the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions, trust entities are still required to report the participation of non-residents in their UITFs and maintain proper internal controls, monitoring systems, and assurance mechanisms.

Trust entities must continue submitting timely, accurate, and comprehensive reports on non-resident funds to the BSP. They must also make available all relevant documents and information for verification of compliance with the terms and conditions governing access to the BSP Securities Facility.

UITFs are investment vehicles managed by banks and trust companies under BSP supervision. They pool funds from various investors, including those with small contributions, to form a diversified portfolio.

These are comparable to mutual funds, which are regulated by the Securities and Exchange Commission and managed by investment companies.

Source: Manila Times