Increasing Use of Cryptocurrency for Money Laundering Causes Concern in the Philippines

The use of cryptocurrency in money laundering is raising alarm for the Philippine Central Cank. The bank anticipates using virtual assets and crypto transactions will increase money laundering and terrorist financing risks. 

The Philippine Central Bank remains watchful against money laundering and terrorist financing, but after growing digital transactions in virtual assets and cryptocurrency, it has raised concerns about the risk of financial scams. The central bank is responsible for regulating Virtual Assets Service Providers (VASPs). This regulation previously only covered limited virtual assets, however, the VASPs framework was later amended in 2021, including a new law to combat virtual assets money laundering. Deputy Governor of Bangko Sentral ng Pilipinas (BSP), Chuchi G., stated, “As virtual assets continue to surge both in users and transactions, the BSP anticipates that different types of risks, including anti-money laundering and countering the financing of terrorism (AML/CFT), may contribute to higher risk exposure. BSP remains supportive and proactive amidst these developments while at the same time recognizing that commensurate regulatory mechanisms must be put in place.” 

The Philippines has been included in the Financial Action Task Force (FATF) greylist in 2021, and till now, it is under high monitoring by FATF to combat global money laundering. These amendments in the VASPs will assist the Philippine banking sector in complying with the Anti-Money Laundering (AML) regulations of the FATF.  The Deputy Governor said, “this will also help ensure that VASP activities are executed within an unbroken chain of regulated entities. In addition, additional risk management guidelines and reportorial requirements to enhance AML/CFT regulations, risk management, and consumer protection measures aim to ensure the safety and soundness of the financial industry.”

The BSP also obligates that all the VASPs, referring to the entities that offer services or are involved in the transaction of virtual assets, must comply with regulations. It also classified the transactions of cryptocurrencies as virtual assets. 

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