FATF status

The Philippines is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 25 October 2024

In June 2021, the Philippines made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime. At its October 2024 plenary, the FATF made the initial determination that the Philippines has substantially completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future.

The Philippines has made the following key reforms including: (1) demonstrating that risk-based supervision of DNFBPs is occurring; (2) demonstrating that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets; (3) implementing the new registration requirements for MVTS and applying sanctions to unregistered and illegal remittance operators; (4) enhancing and streamlining LEA access to BO information and taking steps to ensure that BO information is accurate and up-to-date; (5) demonstrating an increase in the use of financial intelligence and an increase in ML investigations and prosecutions in line with risk; (6) demonstrating an increase in the identification, investigation and prosecution of TF cases; (7) demonstrating that appropriate measures are taken with respect to the NPO sector (including unregistered NPOs) without disrupting legitimate NPO activity; and (8) enhancing the effectiveness of the targeted financial sanctions framework for both TF and PF.

Compliance with FATF Recommendations

The last follow up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in the Philippines was undertaken in 2022. According to that Evaluation, the Philippines was deemed Compliant for 8 and Largely Compliant for 29 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 1 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Corruption remains a significant issue in the Philippines, with the country ranking 117th in Transparency International's 2021 Corruption Perceptions Index, its lowest score in nine years. The government has initiated measures to combat corruption, including the establishment of the Presidential Complaint Center and various anti-corruption laws, but challenges persist due to limited convictions and a weak enforcement framework. Corruption particularly affects business operations, with extensive bribery and complex regulations creating an uncertain environment for both local and foreign companies.

The Philippines is focused on enhancing its investment climate and recovering from the impacts of the COVID-19 pandemic, with sovereign credit ratings remaining at investment grade despite concerns over rising public debt and inflation. Foreign direct investment (FDI) inflows have rebounded significantly, reaching USD 10.5 billion in 2021, although the country still lags behind its ASEAN peers in attracting FDI over the past decade. Key sectors attracting investment include manufacturing, energy, financial services, and real estate, while challenges such as poor infrastructure, high costs, and regulatory inconsistencies continue to hinder further growth.

The investment climate in the Philippines is characterized by a commitment to improving foreign direct investment (FDI) inflows, which rebounded to USD 10.5 billion in 2021, surpassing pre-pandemic levels. However, challenges such as poor infrastructure, high costs, regulatory inconsistencies, and corruption continue to deter foreign investors, with the country lagging behind its ASEAN peers in attracting FDI. Recent legislative amendments have aimed to open up sectors to greater foreign ownership and reduce barriers, but concerns about public debt and inflationary pressures remain.