Philippines off money laundering grey list, eyes stronger financial flows

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The Philippines has officially been removed from the Financial Action Task Force's (FATF) grey list of jurisdictions under increased monitoring, marking a significant step in improving its financial oversight and credibility on the global stage. The FATF, an international watchdog on money laundering and terrorist financing, announced the decision on 21 February during its plenary session in Paris.

The FATF first placed the Philippines on its grey list in June 2021 due to deficiencies in its mechanisms for preventing illicit financial activities. One of the key concerns was the role of Philippine Offshore Gaming Operators (POGOs), which had been linked to financial crimes such as money laundering, human trafficking, and fraud. In response, President Ferdinand Marcos Jr. moved to ban POGOs, addressing one of the FATF's major concerns.

In its announcement, the FATF commended the Philippines for making "significant progress in improving its AML/CFT (anti-money laundering/countering the financing of terrorism) regime" and for addressing the "strategic deficiencies" identified in 2021. The watchdog urged the country to sustain its efforts in ensuring robust application of counter-terrorism financing measures.

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The removal from the grey list is expected to ease international fund transfer requirements, benefiting both individuals and businesses. The Philippines' Anti-Money Laundering Council (AMLC) released a statement, highlighting that the move would facilitate faster and lower-cost cross-border transactions, enhance financial transparency, and reduce compliance barriers.

"These will support business, strengthen the country's position as an attractive destination for foreign direct investment, and benefit Filipinos, particularly overseas Filipino workers," it added. The listing has been a burdensome process for banks and other financial institutions, discouraging correspondent banking relationships and international financial flows into the country, the AMLC reflected.

Eli Remolona Jr., Governor of Bangko Sentral ng Pilipinas and chairman of the AMLC, credited the achievement to strong collaboration between the government and private sector. He emphasised that this development aligns with efforts to strengthen the financial system as a driver of sustainable growth.

The Securities and Exchange Commission also played a crucial role in the reforms, with chairperson Emilio Aquino noting the importance of stricter oversight in preventing corporate entities from being misused for illicit financial activities.

The Philippines was the only country removed from the grey list in this FATF review. However, Laos and Nepal were newly added due to concerns over their financial supervision systems. Vietnam is another Southeast Asian nation currently on the grey list, having been added in 2023 due to potential deficiencies in its anti-money laundering and counter-terrorism financing frameworks.

While exiting the grey list is a major milestone, international watchdogs, including Human Rights Watch (HRW), have raised concerns over the Philippine government’s approach. HRW has pointed to cases where counter-terrorism financing laws have been used to prosecute activists, civil society organisations, and journalists. The National Union of Peoples' Lawyers further claimed that compliance with FATF standards has led to excessive financial restrictions and surveillance on non-profit organisations, potentially stifling legitimate activities.

The FATF has urged the Philippines to continue strengthening its financial security measures, particularly in identifying and prosecuting terrorist financing cases without discouraging legitimate non-profit work. Despite the achievement, the Philippines must remain vigilant to avoid future lapses that could prompt renewed scrutiny.

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