The Philippines is bullish on exiting the FATF grey list this year. To that end, the country’s president, Ferdinand R. Marcos Jr has asked all government agencies to fix the regulatory shortcomings identified by the Financial Action Task Force.

According to reports, Marcos’ directive was communicated to agencies during a recent meeting. During that meeting, the President highlighted the economic importance of exiting the grey list. For reference, the Philippines originally had to convince the FATF that it should be removed from the grey list by January 2023. However, this period was extended by 12 months, providing the country with more time to address its shortcomings.

Matthew David, the executive director of the Anti-Money Laundering Council (AMLC) Secretariat, commented on the matter, saying that the President has “reiterated the government’s commitment” to addressing the deficiencies identified by the FATF.

David confirmed that the country hopes to address all of the points made by the task force in 2024 and trigger the country’s exit from the grey list by the end of the year. According to him, 10 of the 18 deficiencies identified by the FATF have already been addressed. The remaining eight are currently being addressed or not yet addressed.

David admitted that the Philippines still needs to properly tackle terrorism financing.

The Philippines Is Optimistic about Its Exit

While there is a lot more work to do, David said that the Philippine government believes that it is on the right track. According to him, the President is very content with the work of the AMLC.

In his interview with the Philippine News Agency, David said:

Our goal is to eventually exit the grey list. There are repercussions for being in the grey list because the longer we are in the grey list, the bigger the possibility or the higher risk that we will enter the black list.

Matthew David, exec director, AMLC Secretariat

In October, the Philippine government published Memorandum Circular No. 37, ordering 44 government agencies to work on addressing the 18 deficiencies outlined in the FATF’s report. A number of authorities, including the PAGCOR, were thus required to step up their AML efforts.

In line with its efforts to strengthen its regulations, the Philippines also joined forces with China to crack down on illegal offshore operators in the country. This followed a joint action between the two countries that resulted in the repatriation of 400 Chinese nationals.

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Bullish on exiting the Financial Action Task Force (FATF) grey list, the Philippine government ordered 44 government agencies to update their policies. As a result, a number of authorities, including the PAGCOR, will be required to review their anti-money laundering (AML) and counter-terrorism financing (CTF) protocols.

Under a Memorandum Circular No. 37, issued by the Office of the President, government organizations will need to address the deficiencies that led to the Philippines’ inclusion in the FATF grey list.

For reference, the Philippines was included in the list back in 2021 for failing to properly counteract money laundering. The lax controls concerning casino junkets and the deficient information sharing between financial institutions were among the chief reasons for the greylisting.

The Memorandum Circular calls for urgent implementation of the National AML, CTF and Counter-Proliferation Financing Strategy (NACS) 2023-2027. In its announcement, the government emphasized its desire to crack down on fraud. The country hopes to exit the FATF grey list by January 2024.

The Philippines Hopes to Exit the FATF Grey List Quickly

The Memorandum prioritizes quick action, in accordance with the NACS and FATF’s International Co-operation Review Group (ICRG) Action Plans. The Memorandum Circular also establishes an ML/TF NRA Working Group that will have nine subgroups dedicated to different aspects of the NRA.

The ML/TF NRA Working Group will be led by the Anti-Money Laundering Council (AMCL), which will also be responsible for issuing guidelines and coordinating with other departments, agencies and private sector entities. The announcement said that funding for the initiative would be allocated from relevant agency budgets, in accordance with the applicable regulations.

The Memorandum Circular takes effect immediately, attesting to the Philippines’ desire to exit the FATF grey list as soon as possible.

Earlier this month, China agreed to help the Philippines crack down on illegal offshore gambling. This followed a recent joint action between the two countries that led to the repatriation of 400 Chinese nationals.

Speaking of that, in September, China joined forces with ASEAN and the United Nations Office on Drugs and Crime for a new initiative that seeks to combat transnational criminal activities.

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Moving forward, though, the FATF would not consider Cambodia a high-risk jurisdiction, albeit the country will most certainly have to maintain its unfaltering commitment towards cracking down on illegal gambling and eliminating any doubt that it may be allowing human trafficking to happen on its watch.

Cambodia Finally Makes It Off the FATF’s List

Both Cambodia and Morocco have been removed from the list, with the FATF citing the two countries’ sustained efforts in improving AML and CFT regulation and enforcing rules. In a statement published on Friday during a plenary meeting, the regulator said:

Each country has addressed its technical deficiencies to meet the commitments of its action plan on strategic deficiencies that the FATF identified in February 2019 and 2021 respectively.

FATF

This does not mean that there are no issues to be tackled still. Cambodia has not quite cleared all the hurdles it faces, but it has been actively trying to, which is what FATF considers a qualifying factor to be taken off its list.

The country has been in hot water with international regulators since 2019 as it lacked a clear strategy to address AML/CFT issues it faced at the time. This prompted the US Department of State and the FATF to both criticize the country’s lack of action and recommend not doing business in Cambodia.

Much Effort and Time Expended to Achieve This Goal

In the meantime, Cambodia has made significant efforts to plug one of the biggest holes in its AML and CFT standards – the gambling industry. The country’s officials have cajoled licensed and upstanding operators, encouraging them to pay due taxes.

There is a fair degree of involvement from China, a neighbour who has been advocating for a tougher stance on illegal casinos in the country for a very long while. Recently, China said that it’s looking to work together with Cambodia on addressing trans-border crime, including gambling, drugs, and human trafficking among other illicit activities.

Yet, the true driver of change has come from within the government and police authorities which have pushed against the illegal gambling sector and cracked down on it heavily.

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