Countries/Jurisdictions of Primary Concern - Philippines
The Republic of the Philippines is not a regional financial center, but with a growing economy it is becoming an increasingly important player in Asia. The Philippines faces challenges from transnational drug trafficking organizations, as methamphetamine abuse remains a significant problem domestically and the Philippines has become a drug transit country for cocaine and methamphetamine going into East Asia. In particular, significant quantities of methamphetamine enter the Philippines in bulk shipments via maritime routes and also via drug couriers using commercial aviation flights into the international airports. Transnational drug trafficking organizations based in East Asia use the existing banking system, casinos, and commercial enterprises to transfer drug proceeds from the Philippines to offshore accounts. Other transnational criminal organizations, such as African and Latin American based groups, are expanding their presence throughout East Asia and will likely exploit the Philippine financial system to launder and transfer drug trafficking proceeds. In addition, insurgent groups operating in the Philippines engage in money laundering through ties to organized crime, deriving funding from kidnapping for ransom, as well as narcotics and arms trafficking.
The Philippine Amusement and Gaming Corporation (PAGCOR), a government-owned entity, regulates the growing gaming industry. PAGCOR reported gross revenues equivalent to about $955 million in 2013.
The large Filipino expatriate community sends remittances that also provide a channel for money laundering. Banks and official money remitters are now able to capture the bulk of remittances, approximately 90%, sent by Filipinos overseas.
The Philippines is a leader in the use of cell phone technology for funds transfers. The Government of the Philippines has started using this technology for government-to-persons payments, such as through its Conditional Cash Transfer Program. The technology/systems that telecommunications firms use to facilitate financial transfers are subject to Philippine Central Bank study and approval.
The Philippine Economic Zone Authority (PEZA) regulates about 300 economic zones throughout the country. Local governmental units, the government-owned Bases Conversion Development Authority, or the Clark Development Corporation regulate a handful of other zones. Overall, the PEZA economic zones are properly regulated, but smuggling can be a problem in the locally-regulated zones. In addition, the central bank exercises regulatory supervision over three offshore banking units and requires them to meet reporting provisions and other banking rules and regulations.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: YES
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: List approach
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Universal, commercial, thrift, rural, and cooperative banks; offshore banking units and quasi banks; pawn shops and dealers in precious metals and stones; insurance, reinsurance, and pre-need companies, agents, and brokers; mutual benefit associations and holding companies controlling any authorized insurer; trust funds/entities; securities broker/dealers, sales representatives, consultants, and managers; investment houses and mutual funds; foreign exchange dealers, money changers, remittance/transfer agents, and electronic money issuers; entities dealing in currency, financial derivatives, cash substitutes, and similar monetary instruments; and lawyers and accountants
Number of STRs received and time frame: 80,479: January 1 - October 31, 2014
Number of CTRs received and time frame: 37,861,454: January 1 - October 31, 2014
STR covered entities: Universal, commercial, thrift, rural, and cooperative banks; offshore banking units and quasi banks; pawn shops and dealers in precious metals and stones; insurance, reinsurance, and pre-need companies, agents, and brokers; mutual benefit associations and holding companies controlling any authorized insurer; trust funds/entities; securities broker/dealers, sales representatives, consultants, and managers; investment houses and mutual funds; foreign exchange dealers, money changers, remittance/transfer agents, and electronic money issuers; entities dealing in currency, financial derivatives, cash substitutes, and similar monetary instruments; and lawyers and accountants
money laundering criminal Prosecutions/convictions:
Prosecutions: 0: January 1 - October 31, 2014
Convictions: 1: January 1 - October 31, 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
The Philippines is a member of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/n-r/philippines/documents/mutualevaluationofthephilippines.html
Enforcement and implementation issues and comments:
Since February 2014, the financial intelligence unit (FIU), the AMLC, has been working to secure passage in both houses of the Philippine Congress of an amendment to include casinos in the Anti-Money Laundering Act (AMLA). Considering unsuccessful attempts in the past to include casinos, enactment into law during the remaining one and a half years of the current administration may be a challenge without continued international pressure.
The Philippine Congress did not approve the inclusion of real estate agents in the expanded list of covered institutions under 2013 amendments to the AMLA. Instead, a provision authorizes the AMLC to require reports and other documents from the government’s Land Registration Authority and the Registries of Deeds. The AMLC and the government agencies concerned have yet to finalize operational and technical details/arrangements to implement reporting of real estate transactions.
The AMLC has not begun receiving reports from dealers in precious stones and metals despite their inclusion as covered entities in the 2013 AMLA amendments. The AMLC is consulting with the industry association on operational and technical details/arrangements to implement reporting and other requirements. There is no single government authority regulating jewelry dealers, and the industry association is not well-organized, which poses challenges for coordinating, monitoring, and enforcing their obligations as AMLA-covered entities.
There is no single supervisory authority for entities in the non-profit sector. Monitoring is weak due to insufficient coordination and limited resources of regulatory bodies.
While the Philippines has made progress in enacting legislation and issuing regulations, limited human and financial resources constrain tighter monitoring and enforcement. The small number of prosecutions and convictions is telling. AML/CFT agencies continue to receive assistance to build institutional and technical capabilities for monitoring, investigation, prosecution, and enforcement.