Philippines avoids international blacklist

2 antimoney laundering laws lead to upgrade

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03:00 PM June 23rd, 2012

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By: Norman Bordadora, June 23rd, 2012 03:00 PM

Abigail Valte spokesperson for President Aquino. INQUIRER file photo

The Philippines gained some standing in the international campaign against money laundering and terrorist financing by being successfully upgraded from the “dark gray” list to the “gray” list of the intergovernmental Financial Action Task Force (FATF).

The FATF approved the upgrade after Congress enacted two of three key pieces of legislation demanded by the Paris-based money-laundering watchdog to keep the country from falling into the dreaded FATF blacklist—a roster of countries and territories perceived to be noncooperative in the global fight against money laundering and terrorist financing.

A dark gray listing means a country is not making sufficient progress against money laundering and terrorist financing, while being part of the so-called compliance document, or gray list, signifies that a jurisdiction is making sufficient progress in the global campaign against money launderers and terrorists, the Anti-Money Laundering Council (AMLC) explained in a statement.

According to AMLC, avoiding the FATF blacklist was positive news for the Philippines, particularly for overseas workers and the economy, “as financial transactions of countries on the FATF blacklist are subjected to additional reporting requirements and more stringent inspections that delay remittances and raise service fees.”

“In some cases, financial institutions stop transactions with countries in the FATF black list,” the AMLC said.

Being on the gray list is just a level below being fully compliant with the FATF’s antimoney-laundering standards, explained deputy presidential spokesperson Abigail Valte. It means the Philippines is making sufficient progress in dealing with its deficiencies, she said.

Appearing on the FATF blacklist would have resulted in more stringent regulations for Filipinos engaged in international transactions, a situation that officials feared would seriously impact much-needed remittances from the millions of overseas Filipino workers.

Reforms recognized

According to Valte, the news about the FATF upgrade was relayed by letter to President Aquino by Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., the AMLC chair.

In his letter, Tetangco said the FATF had recognized the reforms instituted by the Philippine government, resulting in the country being spared from a downgrade to the blacklist and instead upgraded from the dark gray list to the so-called compliance document or gray list.

“We didn’t just avoid getting into the blacklist, our status was even upgraded,” Valte said.

The FATF apparently looked past the Philippines’ failure to pass the third measure seeking to increase the number of predicate crimes that would justify inquiries being made into suspect accounts by the AMLC.

Congress in early June gave the final nod to two bills that amended the Anti-Money Laundering Act (Amla). The first, Republic Act No. 10167, waived the requirement for the AMLC to give notice to suspected launderers that their bank deposits are being monitored. The second, RA 10168, criminalizes financial support for known terrorists as a stand-alone offense.

The Senate failed to act on the third measure in time because of the almost four months it spent on the impeachment trial of deposed Chief Justice Renato Corona. The measure remains pending in Congress.

Lawmakers’ commitment

The two new laws, which strengthened the capability of government to identify and prevent financial transactions related to illegal activities and those that undermine global security, enabled the Philippines to avoid being thrown into the blacklist “which would have resulted in stricter inspections of financial transactions in the country, delayed remittances, and higher transaction fees,” Valte said.

She said lawmakers have made a commitment to immediately take up the third bill “as soon as session resumes on July 23.”

Deficiencies

The FATF, an intergovernmental body established in 1989 on the initiative of the Group of 7 industrialized countries, sets the standards and monitors implementation of measures for fighting money laundering, terrorist financing and other threats to the integrity of the global financial system.

The AMLC said the FATF has nonetheless cited that certain “strategic deficiencies” remain in the Philippines’ antimoney laundering and antifinancial terrorism measures.

“In this connection, it advised the Philippines to enact the pending legislative amendments to our antimoney laundering law that, among others, extend the coverage of reporting entities, provide a broader definition of money laundering and increase the number of predicate crimes to include bribery, malversation of public funds, human trafficking, tax evasion and environmental crimes,” it said.

Valte said it was the Aquino government’s objective to be placed on the list of countries that fully comply with the FATF’s standards.

“We don’t want the Philippines to be considered a money-laundering haven or even a terrorist haven. That’s why we are taking these really stringent measures to make sure that we comply,” she said.

Guiding principles

Transparency and accountability are among the foremost guiding principles of the Aquino administration, she said.

“And while we recognize that more needs to be done to strengthen our existing antimoney laundering and antifinancial terrorism measures, we take the satisfaction expressed by the FATF as affirmation of the institutional reforms that we have constantly advocated,” Valte said.

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