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Casino Junkets Partially to Blame for Philippines’ Presence on FATF Grey List

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The Financial Action Task Force (FATF), a global financial watchdog comprised of representatives from around the world, has announced that the Philippines remains on its grey list of non-compliant jurisdictions. Part of the issue stems from the use of casino junkets, which are now being scrutinized more than ever because of their alleged ties to money laundering.

More AML Controls Needed

The Philippines was added to the grey list in June 2021, and the FATF has urged the country's authorities to swiftly address outstanding issues related to anti-money laundering (AML) and combating the financing of terrorism (CFT) controls.

One of the key concerns highlighted by the FATF is the need for the Philippines to demonstrate that supervisors are effectively using AML/CFT controls to mitigate risks associated with casino junkets. This issue has been a point of contention, especially given the country's reliance on casino junkets to attract gamblers.

Despite efforts to improve its AML/CFT regime, the Philippines has not yet shown "effective risk-based supervision" of non-financial sectors and professions vulnerable to financial crimes. These sectors include casinos, lawyers, accountants and real estate agents.

In response to the FATF's concerns, President Ferdinand Marcos Jr. has ordered relevant government agencies to expedite efforts in addressing the deficiencies pointed out by the FATF within the year. The president aims to have the Philippines removed from the grey list by October this year. The country had previously been removed after it showed that it had improved its financial controls but was readded in 2021.

New Regulations Already In Place

The Anti-Money Laundering Council (AMLC) of the Philippines has acknowledged the FATF's recognition of the country's high-level political commitment and progress in strengthening its AML/CFT regime. Matthew David, executive director of the AMLC Secretariat, stated that this improvement is a strong recognition of the government's efforts in curbing terrorism and terrorism financing incidents in the country.

David also emphasized that this progress sends a positive signal to the international community about the Philippines' unwavering commitment and continuous progress in this area. Despite these efforts, the Philippines remains on the FATF's "grey list," and it is crucial for the country to address the remaining concerns to achieve compliance with international standards.

The FATF's decision to keep the Philippines on the grey list has significant implications for the country's financial sector and its international reputation. Being on the list can lead to increased scrutiny from international financial institutions and may affect the country's ability to attract foreign investment.

The Philippines has made some progress in addressing the FATF's concerns, but there is still work to be done. The government must continue to prioritize AML/CFT efforts and work closely with the FATF to ensure that the country meets international standards if it intends to be removed from the list.

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