From grey list to green light

From being blacklisted in 2000 to greylisted in 2021, the Philippines has made significant strides in its battle against financial crimes. In a remarkable turnaround, the country has now reached a pivotal milestone: removal from the Financial Action Task Force (FATF) monitoring list.

This achievement was announced on Feb. 21, 2025, marking a new chapter in the Philippines' commitment to financial integrity and global security. The country's journey through the FATF listings has been challenging, marked by cycles of blacklisting and grey-listing.

Initially blacklisted in the early 2000s due to the absence of a strong Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) legal framework, the Philippines took its first step toward reform with the pas-sage of Republic Act 9160, also known as the Anti-Money Laundering Act of 2001.

This led to the country's removal from the blacklist in 2005. However, achieving full compliance was still challenging. Between 2008 and 2021, the country's listing status varied, often due to concerns about counter-terrorist financing laws and other regulatory gaps.

Despite these challenges, the Philippines showed resilience. In response to its 2021 greylisting, the country implemented a comprehensive action plan to address key AML/CFT deficiencies. It involved strengthening supervision of designated nonfinancial businesses and professions, cracking down on illegal money transfers, improving law enforcement's access to beneficial ownership information and safeguarding nonprofit organizations from misuse.

The collaborative efforts have led to the Philippines' removal from the greylist, highlighting the country's commitment, through the Anti-Money Laundering Council, to combating financial crimes and strengthening global financial security.

It must be emphasized that the Philippines' removal from the FATF greylist is more than just a symbolic victory. It signifies an exceptional strengthening of the country's financial system. For businesses and financial institutions, this development brings immediate and tangible benefits.

One of the most notable advantages is the reduction in the need for enhanced due diligence on cross-border transactions, which not only lowers operational costs but also streamlines processes. Moreover, the easing of reporting requirements also reduces administrative tasks, allowing entities to use resources more efficiently.

This makes the country's financial system more attractive to international investors, enhancing the Philip-pines' competitiveness. This shift is especially significant given the well-documented negative effects of grey-listing: studies indicate that countries on the FATF greylist often experience a decline in gross domestic product (GDP), reduced foreign direct investment (FDI) inflows and a lower FDI-to-GDP ratio.

For the Philippines, reversing these effects will pave the way for a more resilient and dynamic economy. Moreover, the removal from the greylist will help streamline and reduce the cost of remittance processing, providing direct benefits to overseas Filipino workers (OFWs).

With fewer regulatory hurdles and faster transaction times, OFWs will be able to send more of their hard-earned money back home, further improving their financial well-being. While the Philippines' removal from the FATF greylist is a remarkable feat, it is only the beginning of a long-term commitment to maintaining financial integrity.

To avoid future relisting, the country must keep enforcing strong measures to tackle emerging financial crime trends. Drawing from nearly 25 years of experience in exiting the FATF watch list and learnings from countries with strong, consistent AML/CFT frameworks — such as Australia, Canada and several EU nations — will be crucial.

This includes enacting forward-thinking legislation to stay ahead of emerging threats, reinforcing the enforcement and prosecution of financial crimes and conducting thorough national risk assessments to identify and address specific deficiencies.

Additionally, maintaining risk-based supervision across all sectors and fostering collaboration between the government and private sectors in implementing AML/CFT measures will be essential. Above all, maintaining strong political commitment to AML/CFT as a national priority will be crucial for protecting the country's financial system in the long term.

The key takeaway is that the Philippines' successful exit from the FATF greylist underscores the collective commitment of all stakeholders to maintaining a transparent financial system.

This achievement has boosted investor confidence and contributed to a more dynamic global market. How-ever, maintaining this success will require continuous compliance, proactive measures and the ability to adapt to emerging threats.

By doing so, the Philippines will ensure the long-term stability and resilience of its financial system.

Source: Manila Times

Investor sentiment likely to improve as Philippines is removed from ‘gray list’

The Philippines’ exit from the Financial Action Task Force’s (FATF) “gray list” is seen to improve investor sentiment, but analysts noted that continued reforms are necessary to sustain progress.

The FATF on Friday removed the Philippines from its list of jurisdictions under increased monitoring for “dirty money” following a “successful” on-site visit.

BSP Governor Eli M. Remolona, Jr. said in a text message that the Philippines’ removal from the FATF’s gray list will “help our overseas Filipino workers (OFWs) and foster more investment in our economy.”

“It also complements our ongoing efforts to make the financial system a stronger driver of sustainable growth,” he added.

Mr. Remolona attended the FATF Plenary and Working Group Meetings that took place in Paris, France from Feb. 17 to Feb. 21.

“Indeed, the Philippines came out of our gray list. They showed our members that they have completed in full the action plan,” FATF President Elisa de Anda Madrazo said at a press conference late on Friday.

The Philippines was on the FATF’s gray list for over three years or since June 2021.

The dirty money watchdog noted the Philippines’ “positive progress in addressing the strategic anti-money laundering and countering the financing of terrorism and proliferation financing (AML/CFT/CPF) deficiencies previously identified during their mutual evaluations.”

“The Philippines has completed their Action Plan to resolve the identified strategic deficiencies within agreed timeframes and will no longer be subject to the FATF’s increased monitoring process,” it said.

Finance Secretary Ralph G. Recto said in a statement that the removal of the Philippines from the gray list is a “seal of good housekeeping that strengthens public confidence in our financial system.”

“By upholding the highest standards of financial governance, we will attract more foreign direct investments and expand more trade partnerships that will help accelerate economic growth,” he said.

This would also support the government’s push to achieve an A-credit rating, Mr. Recto added.

The Anti-Money Laundering Council (AMLC) said the exit from the gray list will “facilitate faster and lower-cost cross-border transactions, reduce compliance barriers, and enhance financial transparency.”

Being part of the gray list for the past years has been a “burdensome process for banks and other financial institutions,” AMLC said.

“This process discourages correspondent banking relationships and international financial flows into the country. The exit will reduce international fund transfer requirements, benefiting Filipino individuals and businesses.”

The AMLC also said that the gray list status had hindered other countries from doing business with the Philippines.

“Moreover, even prior to the gray-listing, some foreign regulators were already imposing stringent requirements or fines on financial institutions dealing with entities in the Philippines and other countries deemed to have weak anti-dirty money regimes.”

“This prompted some banks to just avoid doing business with entities in those countries rather than managing possible money laundering or terrorist financing risks. The FATF decision may prompt foreign banks to review and resume their business relationship and transactions with Philippine financial entities.”

President Ferdinand R. Marcos, Jr. last year directed all concerned agencies to work on efforts to exit the list by October.

In July, Malacañang issued an executive order mandating all government offices to adopt the National Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing Strategy 2023-2027.

“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,” Securities and Exchange Commission (SEC) Chairperson Emilio B. Aquino said.

Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said that this is a “celebratory moment” for the country.

“As an aspiring upper middle-income country, such transformation will give it more credibility as an investment destination in the region without fear that our financial buoyancy comes from dirty money,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said this would increase investor confidence in the Philippines.

“The Philippines would save more processing time and also save on transaction costs, a more desirable scenario if transactions of the country with the rest of the world move with greater ease,” he added.

FATF’s Ms. Madrazo had also noted the Philippines’ efforts “in combating the risk of dirty money running through the casinos.”

The Philippine Amusement and Gaming Corp. (PAGCOR) said it will continue to strengthen regulations and strictly monitor the local gaming industry.

“We also commit to sustain the fight against money laundering and terrorist financing in the entire Philippine gaming industry, including our online gaming operators, land-based casinos and junket operators,” PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco said.

MOVING FORWARD

However, the FATF said it will be crucial for the Philippines to sustain the measures on strengthening AML/CFT regimes.

“The FATF encourages the Philippines to continue its work in ensuring that its CFT measures are appropriately applied, particularly the identification and prosecution of TF cases, and are neither discouraging nor disrupting legitimate nonprofit organization activity,” it said.

Ms. Madrazo also said the Philippines will face a new assessment in 2027.

“That will be an opportunity for the FATF to verify that the measures are sustained and still in place,” she added.

For its part, the AMLC said that it is committed to “ensuring long-term compliance with international standards.”

Bienvenido S. Oplas, Jr., president of a research consultancy and of the Minimal Government Thinkers think tank, said the Philippines should continue to clamp down on illegal trade, which is a channel for dirty money.

“Illicit trade in tobacco, oil, jewelries, etc., this is a big source of money laundering. The government should crack them down,” he said.

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said the government must accompany reforms with other measures to better attract investments.

“While exiting the FATF gray list removes a major barrier to investments, the Philippines must compete on its strengths, such as its young workforce, service-driven economy, and tourism potential,” he said.

“Regional competitors are also aggressively courting investors, so policy consistency, infrastructure upgrades, and targeted investment promotions will be critical,” he added.

SAFEGUARDS SOUGHT

Meanwhile, Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, said there needs to be “stronger safeguards to mitigate the heightened risk of continued erosion of civic and democratic space.”

“The FATF itself nominally calls for a targeted risk-based approach — the government should be challenged to uphold the spirit of this with transparent data-driven risk assessments and with sanctions governed by due process with clear judicial oversight,” Mr. Africa said.

The FATF in its statement said that the Philippines’ continued measures should not impede on legitimate nonprofit activities.

“Executive misapplication has already been checked with so-called terrorist financing cases motu proprio dismissed for insufficiency of evidence and no probable cause at least thrice by the courts,” Mr. Africa said.

He said that the government should “stop using AML/CFT as political tools to suppress activism and use them against actual financial crimes.”

“It should stop freezing assets of NGOs and individual activists with trumped-up terrorism financing accusations and redirect enforcement towards systemic financial crimes including those committed by politically connected individuals.”

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. It was removed from the blacklist a year later after the passage of the Anti-Money Laundering Act.

Source: Business World

PHL on track to exit ‘gray list’

The Philippines is so far on track to achieve its target of exiting the Financial Action Task Force’s (FATF) “gray list” by next month, the central bank’s top official said.

Asked about the progress on the country’s final steps to exiting the gray list, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. told BusinessWorld that it has been “so far so good.”

The FATF recently concluded its onsite visit in the Philippines this month ahead of its plenary and meetings in February, which Mr. Remolona is scheduled to attend.

At its October plenary, the FATF kept the country on its list of jurisdictions under increased monitoring for “dirty money” risks.

The Philippines has been on the list for over three years now or since June 2021.

However, the dirty money watchdog initially determined that the country had substantially completed the recommended action items to improve its anti-money laundering and counter financing of terrorism (AML/CFT) regime.

The FATF’s recent onsite visit and assessment aimed to verify the country’s progress and sustainability of AML/CFT reforms. This is typically the final step before it grants a country an exit from the list.

The Anti-Money Laundering Council earlier said it was positive that the country will be able to exit the dirty money list this year as it has addressed the remaining deficiencies.

However, it cited the need to sustain the progress on these reforms to ensure the country stays out of the list.

Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said the government must fast-track its financial reforms to exit the list.

“If in case it achieves the exodus from the gray list, to draw more investments and be considered a respectable economy in the region, the Philippines is obliged to have a clear-cut monitoring and innovative actions on how to stay buoyant financially without scar from its hits in FATF,” he said.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that reforms should go further than those recommended by the FATF.

“The biggest reform that can deter money laundering and tax evasion is the lifting of the Bank Secrecy Act (BSA),” he said via Facebook messenger.

“Bank secrecy law is a Jurassic institution; only countries that are centers of money laundering have them. But international pressure is forcing this limited number of countries to relax their laws.”

Nueva Ecija Rep. Rosanna “Ria” V. Vergara said being part of the gray list for years now has had “significant consequences for our economy and citizens.”

“While enhanced due diligence is not explicitly required by the FATF, being on the gray list has resulted in a decline in foreign investments, reduced investor trust, and added financial burdens on Filipinos working abroad.”

“Getting off the gray list would have a transformative impact. It would restore global confidence in the Philippines, stimulate economic growth, and attract foreign investors back to our shores,” she added.

This would also be more beneficial for overseas Filipino workers (OFWs), as they face high transaction costs.

“As a result of being on the FATF gray list, they end up going to financial service providers (FSPs) that charge higher fees to send money,” Ms. Vergara said.

“These FSPs take advantage of our being on the list for the higher charges.  Being removed from the gray list will allow our OFW to choose FSPs who do not charge exorbitant fees.”

Monitoring of financial risks should not just be limited to institutions, Ms. Vergara said.

“Most often these unscrupulous individuals use nonfinancial agencies to do their illegal activities — casinos for one. Thus, vigilance is required.”

“Legislation must be passed to criminalize online scamming.  We need to upgrade our government’s capacity to identify and track down these illegal rings that often operate outside our country, defrauding our people of their hard-earned money.”

Last year, the Anti-Financial Account Scamming Act (AFASA) was signed into law. It aims to protect consumers from financial cybercrimes by penalizing violations.

Meanwhile, the Defend NGOs Alliance in a statement raised concern over the “misuse of CFT measures and erosion of civic space in the Philippines.”

It said the government’s efforts to exit the gray list have led to “increasing judicial attacks on nongovernment organizations (NGOs) and people’s organizations (POs).”

The group said the government’s implementation of FATF recommendations have been used to “justify restrictive measures against NGOs it sees as critical of the government under the guise of counterterrorism.”

“Stricter restrictions and regulations on NGOs disrupt their finances, operations and services. The research also points out that trumped-up cases are for ‘paper compliance’ to meet arbitrary quotas for exiting the FATF gray list.”

Data from Defend NGOs Alliance showed that there are at least 69 development workers and 29 NGOs in the country that have been tagged with charges related to terrorism.

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. It was removed from the blacklist a year later after the passage of the Anti-Money Laundering Act.

Source: Business World