Senator Grace Poe on Thursday warned that Overseas Filipino workers are likely to take a hit if the Philippines is placed on the so-called gray list on its failure to strengthen its Anti-Money Laundering Law.
“This will impact our OFWs who are the nation’s breadwinners. Sending money to their families could entail higher fees and difficulties,” said Poe, head of the Senate committee on banks, financial institutions and currencies.
According to the Financial Action Task Force, a country or jurisdiction placed under its gray list means “it has committed to resolve swiftly the identified strategic deficiencies within agreed time frames and is subject to increased monitoring.”
“We are implored to immediately act on it by the Asia Pacific Group on Money Laundering, as a form of national economic emergency, due to the very serious economic costs arising from non-compliance,” Poe said in her sponsorship speech of Senate Bill 1945 under Committee Report 149 on the proposed amendments to the Anti-Money Laundering Act of 2001.
Without passing the needed amendments to the law, the senator said, the Asia Pacific Joint Group could place the Philippines in the so-called “gray list” along with countries like Albania, Pakistan, Panama, Syria, Uganda and Zimbabwe.
“Being on this list is a very strong signal to market participants and regulators globally. It has implications which we must avoid as much as we can, especially during the time of a global pandemic,” Poe said.
The “enhanced due diligence” to be imposed on the Philippines could translate to a higher cost of remittances for the millions of OFWs sending money to their families.
Money sent home by the Filipinos abroad have helped keep the economy afloat, especially during times of crisis.
In 2019 the central bank said remittances from OFWs reached $33.5 billion or 3.9 percent higher than the previous year’s.
Being under tight scrutiny, Filipino nationals and businesses that transact with AP-JG members could also face additional cost, paperwork, higher interest rates and processing fees.
The Philippines will also likely incur a “reputational risk” that would certainly result in reduced investor and lender confidence.
“We can only imagine the domino effect that this would trigger on all of our local industries. All of these things will be a major setback in our efforts to achieve an “A” credit rating before 2022. This is a scenario that we have to steer away from,” Poe said.
Under the proposal, real estate developers and brokers engaged in a single cash transaction in excess of P5 million will be included as covered persons. The bill noted that real estate activities are widely used as a front for money laundering and terrorism financing all over the world.
“To clarify the coverage of internet-based casinos, we also expressly specified the coverage of offshore gaming operators and their service providers,” Poe said.
The bill also now includes the commission of tax crimes and violation of the Strategic Trade Management Act, which relates to the proliferation of weapons of mass destruction and its financing as predicate offenses to money laundering.