PH sure to return to global money laundering watchlist if new law not passed by February – BSP chief

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Metro Manila (CNN Philippines, November 20) — The Philippines may be months away from returning to a global watchlist of states with weak rules to protect against dirty money, something that would make remittances and international transactions costlier.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno warned Friday the Philippines could slip back into the global "gray list" of nations with gaps in local rules on anti-money laundering and on countering terrorist financing (AML-CTF).

Diokno said the country's reputation before the Financial Action Task Force or FATF, a global watchdog protecting against ill-gotten money and criminal proceeds, would be strained if Congress fails to pass a law updating the Anti-Money Laundering Act of 2001.

"In a recent evaluation of the Philippines, the FATF saw gaps in the country's laws and regulations on anti-money laundering and counter-terrorism financing," Diokno said during his GBED Talks media forum on Friday. "If any of the proposed amendments are not passed and not implemented before February 2021, the Philippines will be included in the FATF International Co-operation Review Group gray list."

"This will publicly identify the Philippines as a jurisdiction with strategic deficiencies in its AML-CTF regime that presents a risk to the international financial system," he added. 

Senate Bill 1412 and House Bill 6174 both seek to further tighten rules by imposing "targeted financial sanctions" on entities that evade anti-money laundering safeguards, such as swift asset freezing, and to explicitly ban the financing of the distribution of weapons of mass destruction. Real estate developers and brokers are also required to report buying and selling of property to the regulators.

READ: Criminals use real estate transactions in PH to wash dirty money 

The Philippines got out of the gray list in 2017 after global regulators saw strides made in boosting local safeguards against dirty money, or any cash or wealth obtained through illegal channels. A big change then was the placement of physical and internet-based casino operators under the helm of the Anti-Money Laundering Council or AMLC, following the $81-million Bangladesh Bank heist, which saw the money trail of stolen funds from Dhaka's central bank vanish in Manila's gaming tables.

Returning to the gray list will merit higher costs for transactions with Philippine banks and other institutions, meant to offset the higher risk of money laundering. This is one level above the black list, which are dubbed as "high-risk" and "non-cooperative" states like North Korea and Iran.

Earlier this year, the AMLC also pushed for the passage of the controversial Anti-Terrorism Law, saying it also plugged gaps that previously allowed terrorist organizations to send, receive, or "cleanse" money to sow conflict here.

Diokno said he remains "optimistic" the measures will be passed in time with Malacañang's nudge, as these have been certified as urgent by President Rodrigo Duterte.

The Senate is still finishing plenary debates on the 2021 national budget, with the AMLC-backed bill still pending at the committee level. A counterpart measure in the House is still under scrutiny for second reading approval.