June 28th, 2021
Salceda statement on PH inclusion in the Financial Action Task Force – Grey List
Until our Bank Secrecy Law remains absolute, our financial monitoring and anti-money laundering regime will remain suspect. The delay in the passage of this measure is the biggest obstacle to improvements in our FATF standing.
In the Committee on Ways and Means, we have already passed in principle the General Amnesty Act with an attached provision relaxing the Bank Secrecy Law for those who will avail of the amnesty. This is to ensure that those who seek a clean slate from government will not besmirch the same slate again.
We have also approved in my Committee the Anti-Bulk Cash Smuggling Act, which would penalize the unauthorized carrying of large quantities of cash and cash equivalents, and which would update disclosure requirements on the cross-border transport of cash.
My Committee has also appealed to the Bangko Sentral ng Pilipinas and to private banks to help ease monitoring of revenues and transactions of legitimate E-sabong industry players by allowing them to deposit in banks, which would subject them to the reach of our anti-money laundering laws. As you know, there is very little we can do to monitor bulk cash if transported and transacted within the country. So, getting the money of regulated sectors in banks where we can track them is a step in the positive direction.
So, the Committee on Ways and Means is doing its part to make the country more credible in the eyes of the international financial industry.
Of course, it goes without saying that this will have an impact on our OFWs and our Foreign Direct Investments. Cash inflows to the country will have to go through extra monitoring and disclosure steps, which may entail additional costs of time and money.
The FATF had five main concerns, which I offer some solutions to.
First, the country needs to demonstrate that effective risk-based supervision of designated non-financial businesses and professions is occurring and that supervisors are using AML/CFT filters to mitigate risks associated with casinos. The solution here is really to allow the non-financial sectors such as gaming to be within the reach of the financial sector, which is the most heavily regulated industry in the country.
Second, the FATF recommended that we should implement the new registration requirements for money or value transfer services and apply sanctions to unregistered and illegal remittance operators. Of course, these shadow financial services enterprises arise out of the informality of many basic sectors that are beyond the reach of traditional financial services. The National ID system will help in this regard. More importantly, we need to encourage our informal sector to begin a process of regularization.
The FATF also said that we need to show an increase in the use of financial intelligence. I am a principal author of the Consumer Financial Protection Bill which has mechanisms for stronger use of financial intelligence to protect consumers.
The FATF also recommended that we show an increase in the identification, investigation, and prosecution of terrorist financing cases. Our military intelligence has to be more sophisticated. It must not be all-in on monitoring ideology and recruitment alone. The ability of terrorist groups to inflict real harm depends on their sources of financing. So, we need more sophistication in the security sector when it comes to tracking where these groups get their money and how.
The FATF also recommended enhancing the effectiveness of the targeted financial sanctions framework for both terrorist and proliferation financing. This is something I am studying. We do not yet have a comprehensive financial sanctions framework, and we will have to study the international experience to see how we can establish one ourselves.
Getting out of the grey list is doable, but we must show our seriousness in doing so. Getting rid of absolute bank secrecy is the first best step. The others are much easier to do