3 weeks ago
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MANILA, Philippines — The Philippines’ exit from the gray list of Paris-based Financial Action Task Force (FATF) last Friday is expected to help attract more foreign investments and create jobs, according to government officials.
“Our successful exit from the FATF’s gray list shows the government’s commitment to financial integrity and compliance with global standards,” Special Assistant to the President for Investment and Economic Affairs Frederick Go said yesterday.
“This boosts confidence in the country’s financial system, which can lead to more foreign investments and ultimately result in more and better job opportunities for Filipinos,” Go said.
The FATF, a global watchdog against money laundering and terrorist financing, sets international standards aimed at preventing these illegal activities and their societal harm.
Countries under the gray list are those actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing.
When a country is placed under the gray list, it means it has committed to swiftly resolving the identified strategic deficiencies within agreed timeframes and to be subject to increased scrutiny.
Data from the Philippine Statistics Authority showed that foreign investment commitments approved by the country’s investment promotion agencies amounted to P543.62 billion lin 2024.
The Securities and Exchange Commission (SEC) said the Philippines would indeed become an even more attractive destination for business and investment following the country’s exit from the list of countries under increased monitoring.
“With our exit from the FATF gray list, we are optimistic that the international community will see the Philippines as an even more attractive destination for business and investment,” SEC chairperson Emilio Aquino said.
Aquino, currently the longest-serving member of the Anti-Money Laundering Council (AMLC), said the commission had played an instrumental role in the milestone development, with the SEC’s reforms helping drive the country’s exit from the FATF gray list.
“We are proud to have been instrumental in the Philippines’ exit from the gray list, which is expected to translate to better economic opportunities and improve investor confidence in the country moving forward,” Aquino said.
“Exiting the FATF gray list required a national, coordinated effort made possible by the Marcos administration, which wasted no time to unite concerned government agencies to work toward the common goal of fortifying the country’s anti-money laundering and terrorism financing controls,” he said.
Upon becoming a member of the AMLC in 2018, Aquino said the SEC stepped up and positioned itself at the forefront of the fight against money laundering and terrorist financing.
According to Aquino, these efforts were in recognition of the need for reforms to prevent the misuse of the corporate vehicle in illicit activities.
“A secure and stable financial system is integral to our vision of a highly sophisticated and globally competitive capital market and corporate sector. To gain the trust of Filipinos and foreigners alike to invest in or transact with corporations based in the Philippines, we must adhere to the highest standards on combating money laundering and the financing of terrorism and proliferation financing,” Aquino said.
The Philippines was placed on the FATF gray list in June 2021 for deficiencies in its AML/CFT framework, which left the country vulnerable to financial crimes and illicit activities.
This subjected cross-border financial transactions to and from the Philippines to higher costs and heightened scrutiny.
On the final day of the FATF Plenary on Feb. 21 in Paris, the global anti-money laundering watchdog officially announced the Philippines’ exit from the gray list, four years after the country was placed under increased monitoring.
The SEC said that as early as 2019, it has mandated the declaration of the corporation’s beneficial owner through the general information sheets required to be submitted annually.
In 2021, it also prohibited the issuance and sale of bearer shares and bearer share warrants to promote transparency further and curb the misuse of corporations for illicit activities.
The SEC likewise implemented an amnesty program in 2023 that encouraged corporations to comply with their reportorial requirements by waiving or reducing penalties for late submission and non-compliance.
Higher penalties for late submission and non-compliance with reportorial requirements have since been imposed to highlight the importance of timely submission and promote transparency among corporations.
The SEC has identified and suspended the registration of more than 117,000 inactive companies and tagged around 168,000 more as delinquent.
On top of these developments, the commission said that the reforms it implemented have resulted in a significant increase in compliance rate, from 26 percent in 2021 to 69 percent as of date, concerning the beneficial ownership information disclosure of active and registered companies.
Further, the SEC said that it took the lead in implementing measures to enhance transparency among non-profit organizations without disrupting legitimate NPO activity, ensuring that such groups will not be a target of terrorist financing.
Starting in 2022, the commission identified high-risk NPOs and has since audited around 50 high-risk NPOs annually.
It also launched a dedicated campaign geared toward unregistered organizations to encourage them to register with the SEC, as well as the general public to educate them on the risks associated with engaging with unregistered entities.
As a result of this intervention, the SEC successfully encouraged the registration of 7,631 NPOs since 2021.
“The SEC is committed to continuously upholding its adherence to the global standards of the AML/CFT framework to uphold financial integrity, which is in line with our vision of a business sector considered among the best in Southeast Asia,” Aquino said.
