PARIS — A global anti-money laundering watchdog said Thursday that it was modifying its review criteria to focus on countries that pose greater risk to the international financial system.
The Financial Action Task Force (FATF), a Paris-based organization that reviews efforts by more than 200 countries and jurisdictions to prevent money laundering and terrorism financing, compiles a “grey list” of nations that are subject to increased monitoring of financial transactions.
It said it “has made major changes to the criteria for putting countries on its lists to relieve pressures on least developed countries and focus on those countries posing greater risks to the international financial system.”
Twenty-one countries including the Philippines are currently on the FATF’s “grey list,” with the others being Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of Congo, Haiti, Kenya, Mali, Monaco, Mozambique, Namibia, Nigeria, Senegal, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam and Yemen.
Nine of these — Burkina Faso, Congo, Haiti, Mali, Mozambique, Senegal, South Sudan, Tanzania and Yemen — are among those the United Nations considers to be least developed countries.
The FATF said it would review least developed countries only if it considered them to pose a significant money laundering, terrorist financing or proliferation financing risk.
It added that the changes could reduce by half the number of least developed countries on its grey list.
More targeted reviews could also help improve support for least developed countries that need to develop their institutional capacity to combat money laundering, it said, noting that these countries acutely felt the loss of tax revenue due to illicit financial flows.
The FATF said it would focus on reviewing its members with higher incomes and large financial sector assets.
Specifically, jurisdictions will be prioritized for active review if they meet referral criteria and are: an FATF member; a country on the World Bank high-income countries list (excluding those with a financial sector of two or fewer banks); or a country that has financial sector assets above $10 billion in broad money terms.
“If the jurisdiction is a least developed country as defined by the United Nations, they would not be prioritized for active review unless the FATF agrees that they pose a significant money laundering, terrorist financing or proliferation financing risk,” it added.
“In such cases, least developed countries entering the review process could be granted a longer observation period to work on progress against their key recommended action roadmap.”
The FATF is scheduled to hold its next meeting in Paris next week.
The financial watchdog kept the Philippines on the “grey list” for a third straight year during its last meeting in June, noting continued deficiencies in its anti-money laundering and counter-terrorism financing systems.
The country was blacklisted in 2000, which led to economic penalties, and only exited the list in 2005 after the 2001 passage of the Anti-Money Laundering Act and a subsequent 2003 amendment. It returned to the grey list in 2010 due to the lack of counter-terrorism financing laws and was removed in 2013 with the passage of the Terrorism Financing Prevention and Suppression Act of 2012.
Inclusion in the grey list means increased monitoring by the FATF and a commitment to quickly resolve identified deficiencies.
In June, the FATF said the Philippines should “swiftly implement its action plan” as “all deadlines had expired in 2023.”
President Ferdinand Marcos Jr. has ordered all concerned government agencies to work on securing an October exit.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr., however, said in July that while all deficiencies could be resolved by October, this will still have to be validated and that the earliest exit could be in January next year.
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