The Philippines, despite facing significant challenges regarding money laundering, particularly in the gaming sector, is making strides towards potentially exiting the Financial Action Task Force’s (FATF) “gray list,” according to Moody’s.
Choon Hong Chua, Moody’s senior director and head of the Financial Crime Practice Group for Asia and the Pacific and the Middle East, stated that the Philippines is showing commitment to enhancing anti-money laundering and counter financing of terrorism (AML/CFT) controls, indicating progress toward leaving the gray list.
Moody’s Grid database revealed that the Philippines ranked among the top five countries in Southeast Asia for money laundering activity from 2018 to 2023, with a notable increase of 45% in money laundering events added from 2022 to 2023.
Chua highlighted a significant occurrence of money laundering events in the country associated with gaming activities, including online gambling, casinos, and betting centers. He also mentioned links to organized crime and complex scam operations, some of which are based in the Philippines.
The Philippines has been under increased monitoring by the FATF for illicit financial activities since June 2021.
Chua acknowledged the government’s efforts to enhance AML competency in the banking sector, including the implementation of new regulations and active communication with relevant entities. He also noted ongoing initiatives to enforce compliance within the financial sector.
President Ferdinand R. Marcos, Jr. has urged concerned government agencies to expedite efforts to exit the gray list, while the Anti-Money Laundering Council is intensifying investigations and prosecutions related to illicit financial activities.
Chua emphasized the importance of both public and private sector cooperation to lift the Philippines out of the gray list, suggesting that the private sector invest in capabilities to facilitate a faster, more efficient, digitized system.
He recommended measures to enhance the private sector’s capacity to combat money laundering, including strengthening third-party risk management capabilities and leveraging emerging technologies such as artificial intelligence (AI) and machine learning (ML) for improved financial crime detection and reporting.
Chua emphasized the necessity of human involvement in compliance teams to ensure the effectiveness of these technologies and workflows and to maintain a fair and high-quality outcome. He also highlighted AI’s potential to reduce false positives in screening technologies, thereby streamlining risk assessment processes.
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