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PHL to undergo 3rd round of anti-money laundering evaluations


The Philippines will undergo a third round of mutual evaluations regarding compliance with international anti-money laundering standards among its peers in the Asia Pacific region.

In a statement on Thursday, the Anti-Money Laundering Council (AMLC) said the Philippines—one of the 41 members of the Asia Pacific Group (APG) on Money Laundering—will commit to a mutual peer review system.

The review will gauge levels of compliance with standards of international anti-money laundering and combating financing of terrorism.

The APG is an autonomous and collaborative international organization. The Philippines, along with 12 other jurisdictions, is a founding member of the group created in 1997 in Bangkok, Thailand.

Citing a memorandum dated Feb. 22, 2018, the AMLC said the Office of the Executive Secretary has designated the AMLC—the country’s financial intelligence unit—as the lead agency in the 2018 mutual evaluations.

The council has enjoined all departments, bureaus, offices, and agencies of the Executive Branch, including government financial institutions and government-owned or -controlled corporations to be identified by the AMLC to actively participate and extend the necessary assistance in conducting the mutual evaluations.

Mechanisms
 
Last year, the AMLC led the second National Risk Assessment (NRA) Report covering the years 2015 and 2016, which included stakeholders from government and law enforcement agencies, and private sector institutions.

“The second NRA evaluated the overall threat and effectiveness of the country’s anti-money laundering and combating financing to terrorism mechanisms, and the report will be one of the instruments to be assessed during the mutual evaluation process,” it said.

The mutual evaluation consists of two phases—technical compliance and effectiveness.

The first phase involves submission of the report on technical compliance, which is intended to check whether the existing laws, regulations, legal issuances, and enforceable means comply with the Financial Action Task Force (FATF) Standards and its criteria.

“There are four possible levels of compliance: compliant, largely compliant, partially compliant, and non-compliant. This report is due in May 2018,” the AMLC said.

“The second phase includes turning in the report on the effectiveness of the country’s existing anti-money laundering and combating financing of terrorism system, due in July 2018,” it said.

The report will be validated during an onsite visit in November 2018 by the APG mutual evaluations team, consisting of legal, financial, regulatory, financial intelligence units, and law enforcement experts through a series of interviews with local supervisors, government and law enforcement agencies, and private stakeholders.

Results of the third mutual evaluations will be deliberated upon and published in 2019, according to the AMLC.

High-risk
 
The Philippines has come a long way from the second mutual evaluations in 2009, the council noted.

“In 2013, the country was removed from the gray list of the FATF’s International Co-operation Review Group (ICRG), which analyses high-risk jurisdictions and recommends specific actions to deal with the money laundering and terrorist financing risks, as most of the deficiencies identified in the second mutual evaluations have been addressed, such as the passage of Republic Act (RA) No. 10168 or the Terrorism Financing Prevention and Suppression Act of 2012," it said.

In addition, the passage of RA No. 10365 strengthened the Anti-Money Laundering Act of 2001 (AMLA), as amended, with additional predicate offenses in accordance with FATF-designated categories of offenses, it said.

Poor rating under the mutual evaluations will put the country back on the ICRG’s “monitored jurisdictions,” which will once again deem the Philippines a high-risk jurisdiction.

“Consequently, this will lead to additional scrutiny from regulators and financial institutions that discourages trade and investment and increases the cost of doing business,” it said.
 
“Restrictions, such as limits to the amount of cross-border transactions with the Philippines, may be imposed. Remittance transaction fees, for example, will rise, and for overseas Filipinos, this would mean less money intended for the basic needs of their families back home," the council noted.

The outcome of the mutual evaluations could also reshape the country’s financial and economic landscape through the adoption of responsive and effective policies that are based on reliable data to combat money laundering and terrorist financing, it said. —Ted Cordero/VDS, GMA News

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