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Gray list woes

The Philippines remains in the so-called gray list of global anti-money laundering watchdog, the Paris-based Financial Action Task Force, joining 22 other countries in the list that was released at the end of the FATF’s recently held hybrid plenary.

Because those on the gray list are considered as threats to the international financial system, the Philippines will have to expect tighter scrutiny from regulators and financial institutions. Aside from slowing down transactions, it also drives up the cost of doing business, which could aggravate inflation.

The Philippines was first blacklisted by the FATF in 2000, but was removed in February 2005 following the implementation of the Anti-Money Laundering Act. However, weaknesses in the AMLA put the country in the gray list in June 2012, after loopholes were flagged in terrorism and proliferation financing, tax evasion and laundering through casinos. We were removed from the list in 2013 but returned shortly before the pandemic stuck and has stayed there since.

In 2016, the Philippines was described as a black hole in global finance, with one of the world’s toughest bank secrecy laws and hackers were able to steal $80 million of the Bangladesh government’s money from the Federal Reserve Bank of New York and electronically funnel the cash to a Philippine bank through the country’s casinos.

The Philippines still has a lot of work to do if it intends to exit the dreaded gray list. FATF recommendations include addressing deficiencies in supervising designated non-financial businesses and professions and mitigating risks associated with casino junkets. Tighter financial supervision of non-profit organizations, greater use of financial intelligence, intensifying probes and prosecution of money laundering and terrorist financing cases was also urged by the FATF.

Despite the extended stay in the FATF gray list, there remains a strong resistance to global anti-money laundering measures. Lawmakers have dragged their feet when it comes to corruption and tax evasion, as well as resist proposals to from finance officials to ease bank secrecy laws, all while ordinary Filipinos, especially those living and working overseas and regularly remitting funds home, suffer the consequences.

Will our new set of leaders take these recommendations of the FATF seriously and work towards weaning the country away from being a global money-laundering hotspot or are Filipinos doomed to suffer the inconveniences of their country being indefinitely stuck in the FATF gray list?*

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