3 weeks ago
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Keisha Ta-Asan - The Philippine Star
February 25, 2025 | 12:00am
Despite FATF gray list exit
MANILA, Philippines — The country’s removal from the Financial Action Task Force (FATF)’s gray list is a welcome development, but its impact on investments and economic competitiveness may be limited without deeper structural reforms.
Choon Hong Chua, head of financial crime practice group for Asia-Pacific and Middle East at Moody’s, said the removal of the Philippines from the gray list reflects its commitment to strengthening its anti-money laundering (AML) and counterterrorism financing (CTF) frameworks.
Chua said exiting the list of jurisdictions under increased monitoring by the global dirty money watchdog would boost investor confidence and financial stability.
“The Philippines has enhanced inter-agency coordination and has implemented comprehensive reforms. However, money laundering risks are not easy to sweep out entirely. Businesses such as online gaming and cryptocurrency would be areas beyond the financial sector that would require continuous oversight to mitigate potential risks,” Chua said.
Citi emerging markets economic research head Johanna Chua said that getting off the gray list is important but it is not a game-changer in terms of attracting large-scale foreign investments.
“It’s great to be out of the gray list, but I don’t think this is necessarily going to translate to a kind of meaningful diversion of opportunities in manufacturing because clearly it takes a lot more than that,” she said.
She added that the Philippines needs stronger infrastructure investments, similar to India, where sustained public capital expenditures, favorable tax reforms and incentive programs have made it a more attractive destination for manufacturers seeking diversification.
“We need more than (financial compliance to build a strong) ecosystem for manufacturing, including having a better established infrastructure. That’s obviously not a competitive advantage for the Philippines. The Philippines is really more for services,” she said.
The FATF announced the Philippines’ removal from its gray list last Friday, citing that the country has made sufficient progress in strengthening anti-money laundering and counterterrorism financing measures.
The Philippines had been on the list since June 2021 – a designation that raised compliance risks for banks and businesses dealing with Philippine entities.
However, concerns over financial integrity remain.
Just days before the FATF announcement, Hong Kong authorities arrested two Filipinos attempting to withdraw $10 billion from HSBC using fraudulent documents.
The case is now under the Central District Police’s Criminal Investigation Team. Following their inquiries, three more suspects of different nationalities were arrested. This brought the total number of individuals who have been apprehended in connection with the incident to five.
Despite these concerns, Jonathan Ravelas, senior adviser at professional services firm Reyes Tacandong and Co., said the exit from the FATF gray list is a step toward attracting more foreign capital.
“The removal is quite significant as it signals improved financial compliance and reduced regulatory risks, which can encourage foreign banks to re-enter the market,” Ravelas said.
Ravelas said that this development enhances the country’s competitiveness in Southeast Asia, where it has struggled to attract manufacturing and foreign direct investments.
“With improved compliance standards, the Philippine financial sector is expected to become more resilient and attractive to foreign investments, enhancing financial transparency and reducing compliance barriers,” he said.
While these measures can provide support to the economy, Ravelas added that they may not be a complete solution.
“The economy still faces challenges like global uncertainties and inflation,” Ravelas said.
Former finance and socioeconomic planning secretary Jesus Estanislao called the exit from the gray list a “very positive development” that reinforces the Philippines’ commitment to financial integrity.
“It has been a great embarrassment for the Philippines to be on that list for so many years. Now, we’re telling the world we want to be part of the global financial system and we do not want to be part of the money laundering,” Estanislao said.
Meanwhile, the Department of Justice (DOJ) said it contributed to the country’s removal from the FATF’s “gray list” after ramping up money laundering (ML) and terrorist financing (TF) investigations.
Data shared by the DOJ, through the Financial Investigation and Litigation Enhancement and Prosecution Support Center (FILEPSC) showed that were 5,557 TF entities and 71 arrests were made from 2020 to 2024.
Likewise, there were 1,816 TF investigations that proved the government’s campaign against financial crimes and 1,031 TF information for further action.
In a statement, the Justice department said that the “significant increase in identifications and investigations has resulted in a sharp rise in filed cases, ensuring justice is served.”
While 237 TF prosecutions have been initiated, six accused have been convicted of 114 TF counts, which reinforced the government’s commitment to holding criminals accountable.
The DOJ added that there were a total of 794 individuals accused of ML from 2021 to 2024, A total of 264 ML cases filed under FILEPSC, of which 185 prosecutions were filed in 2024 alone.
While a total of 13,799 ML investigations were conducted during the period, with 5,821 investigations in 2024 alone which was more than doubled in 2021-2022.
“These milestones serve as a powerful reminder that justice can be attained through perseverance, commitment and unity. This accolade fuels our relentless pursuit for justice and vow that we will never hold back from our duties until we completely eradicate these two evils of society: money laundering and terrorism financing,” Justice Secretary Jesus Crispin Remulla said. — Evelyn Macairan
