PH financial system at ‘medium risk’ of being used for money laundering
The Philippine financial system carries a moderate risk of being used for money laundering, terrorist financing and as conduit for funding weapons of mass destruction, according to the results of the latest multisectoral assessment done by the central bank.
Where criminal activities are involved, the local banking ecosystem is most vulnerable to being exploited for corruption activities, drug trafficking, investment fraud and swindling and violations of the Electronic Commerce Act and various cybercrimes, the report stated.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its latest risk assessment showed that the net money laundering, terrorist and proliferation financing risk exposure of the sector was “medium,” except for pawning operations, which were “low risk.”
Financial inclusion products also have “low risk” except for e-money and remittance services of pawnshops which were assessed as “medium risk.”
The BSP Governor Benjamin Diokno said the report “showed us the results of the hard work not only of the BSP, but also of BSP-supervised financial institutions and partner agencies in our fight against money laundering and terrorist financing.”
“But we should also use the results of this exercise as a reminder to remain vigilant to threats that undermine the integrity of the Philippine financial system,” he said.
The BSP recently completed its third sectoral risk assessment of banks and other BSP-supervised financial institutions, which aims to enhance and update the stakeholders’ understanding of the extent of unlawful activities being coursed through the local financial system and the vulnerabilities used as conduits for these unlawful proceeds.
The BSP said the study was made in view of the high number of incidents of varied typologies and schemes, the amount of criminal proceeds they generate, and materiality of impact to the sector.
The BSP said it expected financial institutions to consider the results of the assessment in their enterprise-wide risk assessment and to use these as inputs in enhancing their risk mitigation policies and strategies.
The study was conducted in coordination with the Anti-Money Laundering Council and other institutions in line with the National Anti-Money Laundering/Countering the Financing of Terrorism strategy that calls for a whole-of-government approach to respond to the identified risks.
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