Philippines: Banks Reminded to Closely Monitor and Report Suspicious Transactions

Philippines ramps up efforts to step out of the FATF’s gray list and reminds banks to monitor and report suspicious activities related to financial crimes.  

Philippines is taking more steps to be removed from Financial Action Task Force’s (FATF) gray list and as part of these steps, the Bangko Sentral ng Pilipinas (BSP) has reminded banks to keep a close eye on suspicious activities. 

The Deputy Governor of BSP, Chuchi Fonacier, said that banks must submit proper Suspicious Transaction Reports (STRs) with links to tax crimes, particularly the ones with a tax deficit exceeding P25 million and violating the National Internal Revenue Code of 1997. 

In addition to this, Fonacier said that BSP-supervised financial institutions (BSFIs) must include the suggested tax-related phrases in the narrative STRs with links to financial crimes or predicate offenses like fraud, violation, corruption, and intellectual property. 

Chuchi said, “BSFIs are reminded to conduct commensurate measures and consider the results of the above reports in their institutional risk assessment as well as risk profiling of the real estate sector, to improve their overall anti-money laundering/counter- terrorism and proliferation financing framework.” 

Back in April, an analysis of STRs with possible links to tax crimes was released, in which the Anti-Money Laundering Council (AMLC) uncovered P62.5 trillion worth of suspicious activities between January 2018 and November 2020. Based on this analysis, approximately 92% of the STRs filed from January 2018 to November 2020 contain “the amount involved is not commensurate with the business or financial capacity of the client.”

The remaining 8% STRs filed by covered persons pertain to certain suspicious circumstances, for instance, no underlying trade or legal obligation, analogous or identical transactions. 

According to the financial intelligence unit, covered persons including BSFIs must incorporate phrases like taxation, taxable, tax fraud, or tax crime, and may refer to income tax details. 

Based on money laundering investigations, cases and STRs, the AMLC reported that the real estate sector is at a higher risk of corruption, fraud, illegal drugs, including violation of Securities Regulation Code. 

The AMLC said, “Criminals potentially facilitate movement and hide illegal proceeds through the purchase of or investment in real properties. Assets are also used as clandestine hideouts for illegal operations.”

Philippines was added to the FATF’s gray list on June 25 for strategic deficiencies in money laundering, proliferation financing, and terrorism financing regimes. Benjamin Diokno, BSP Governor and AMLC Chairman, is confident that the country will step out of the gray list before or in January 2023 as it has already addressed the action plans indicated in the 2019 Mutual Evaluation Report of the Asia Pacific Group (APG) on Money Laundering. 

Suggested: 40 recommendations of FATF – Shaping the future of your business