‘Never again gray list’

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This is the new battle cry of the Anti-Money Laundering Council (AMLC), according to its executive director Matthew David, as he explained how the AMLC intends to sustain compliance with the action items required by the global money laundering and terrorist financing watchdog Financial Action Task Force following the removal of the Philippines from the FATF gray list last month.

David was the recent guest of the Thursday BREAD Club at The Westin Manila. BREAD stands for business, research, economics, analysis and discussions.

The Philippines was placed on the list in June 2021 after the government failed to comply with 18 action items demanded by the global financial watchdog, specifically those involving money laundering and terrorist financing.

Being designated as among “jurisdictions under increased monitoring” results in unwanted economic consequences that may affect foreign investments and assistance.

Foreign investors and financial institutions may reduce or even cut off completely their business in a country placed on the gray list, posing difficulties for the subject country to transact financial business due to extra compliance and risk management costs.

Its citizens may also experience difficulty in financial transactions such as foreign exchange and remittances, and even force them to use less regulated channels to move money.

Fortunately for the Philippines, David said, President Marcos was fully committed to complying with the FATF’s action agenda. “The current administration really exerted more effort. Unlike before, there’s more coordination, and there are more instructions that show high-level political commitment.”

According to David, it was in October last year, when we complied with all action items. These included filing more 100 plus terrorist financing cases. For money laundering cases, 400 plus.

He added that POGOs were an important action item on money laundering. “We were required or expected by the FATF to file, investigate money laundering.” Thus, he revealed, “Last year we filed a lot of POGO-related money laundering cases, as you very well know in the news, may na file tayo kay Mayor Guo, other POGOs. Sa bank accounts, we have filed freeze orders and, subject to civil forfeiture, P200 plus million in bank accounts, plus more than a few billions worth of real properties, including properties in Tarlac.”

David, however, denied reports that as much as P10 billion a month was entering the Philippine banking system at the height of the POGOs. In reality, he said, the total flow may have reached P10 billion, but this was a series of transactions spread out over a couple of years.

He stressed that it was through the cooperation and the leadership of President Marcos, who issued Executive Order 33, instructing the National AMLC Coordinating Committee, headed by Executive Secretary Lucas Bersamin and member agencies, including the AMLC, PNP, the DILG, DFA, that the order was made to comply with the action items, and in October last year, “na comply natin lahat. It was not easy...it’s not only one agency. AMLC is the lead agency coordinating all these efforts. It’s really a whole-of-government effort, with the leadership of the President ...key is the President, his political commitment to comply with all the action items.”

The FATF, David said, recognized “the high-level political commitment of our government in addressing the 18 action items. It was really a long process and a lot of challenging action items.”

These included risk-based supervision of the DNFBPs (designated non-financial businesses and professionals), which include payment operators, real estate brokers, developers, lawyers and CPAs. We are checking whether or not they comply with implementing rules and regulations of the AMLC and AML-CTF related matters.

The AML-CTF Act implements a risk-based approach to regulation and sets out general principles and obligations. It provides the means to help deter, detect and disrupt money laundering and terrorist financing, providing financial intelligence to revenue and law enforcement agencies.

According to David, “One of our goals after exiting the gray list is to sustain the measures that we did to exit the gray list. The 18 action items should be sustained together with the cooperation of all government agencies, including our covered persons, banks until 2027. Now early on, our goal is not to enter the gray list anymore. Never again gray list because it is really difficult, grabe yung coordination na ginawa ng mga government agencies.”

Amendments to the AMLA

However, David said, “In order to have a stronger or more robust AML-CTF regime here in the Philippines, we need to take some measures. So, one is the amendment or enactment of certain laws or legislations. We’re now planning to submit draft amendments to the Anti- Money Laundering Act, pero sa next Congress na because we will be having elections.”

Among the possible amendments, David said, would be the FATF recommendation on the provision of virtual assets such as cryptocurrency. “That’s a new recommendation. Another possible recommendation is an amendment for an administrative freeze on the part of the AMLC. As you very well know, when we freeze we have to apply with the Court of Appeals and it takes too long. FATF recommendation yun.”

Another amendment that the AMLC is studying is increasing the minimum amount of deposits subject to covered transaction reports (CTRs) and suspicious transaction reports (STRs) submitted regularly by the banks to the AMLC.

He revealed that for last year alone, the AMLC received about 36 million reports. “We received a lot. Last year, we received CTRs and STRs - 36 million.”

However, he explained, the AMLC only has over 40 analysts, “we have to prioritize. We are not undermanned, it’s sufficient, adequate naman ang resources right now. We are planning to increase the number of people by next year. We receive a lot, we prioritize, we have a system, we prioritize the high risk and then we, AMLC,investigate.”