By Katherine K. Chan
THE Anti-Money Laundering Council (AMLC) on Monday said the Philippines is unlikely to return to the Financial Action Task Force’s (FATF) “gray list,” despite a probe into allegations that former Public Works engineers laundered billions of pesos through casinos using funds meant for flood-control projects.
Asked if the Philippines may once again be included in the FATF’s gray list, AMLC Executive Director Matthew M. David said: “Hindi, hindi totoo ’yun (No, that’s not true).”
“We’re doing our best for the Philippines not to enter the gray list anymore,” he told reporters in Filipino on the sidelines of a Senate briefing on Monday.
The FATF removed the Philippines from its gray list of jurisdictions under increased monitoring for “dirty money” in February.
Mr. David said the Philippines is now preparing for the FATF’s next mutual evaluation in 2027.
Mutual evaluation is a process wherein the FATF, through the Asia Pacific Group for Money Laundering, assesses the Philippines for its compliance with the FATF recommendations and standards, he said.
However, Mr. David said the AMLC is now working on tracking potential money laundering by individuals involved in anomalous flood-control projects.
He said they are looking into the covered transaction reports (CTRs) and suspicious transaction reports (STRs) that have been filed to uncover possible money laundering.
“Because of the recent events regarding the flood-control project involving our public officials and the contractors, what we did was identify if there is a money laundering aspect through corruption,” he told reporters in Filipino.
“We see those from the CTRs, from the STRs, which were submitted by the covered persons including casinos and banks.”
Once these transaction reports are submitted, Mr. David said the AMLC will conduct an investigation and then file a freeze order, a civil forfeiture case or a money laundering case, accordingly. Then the AMLC will begin prosecution of the case.
Last week, Senate President Pro Tempore Panfilo “Ping” M. Lacson revealed a money laundering scheme allegedly conducted by some officials of the Department of Public Works and Highways (DPWH). These DPWH officials were allegedly using money siphoned off flood-control projects to play in casinos and exchange them for chips.
However, Russell Stanley Q. Geronimo, founder and managing lawyer of Geronimo Law, said recent corruption and money laundering controversies could bring the country back to the FATF’s gray list but not immediately.
“Evidence of illicit large-scale cash movement, such as the one testified on by DPWH Engineer Brice Hernandez, is unlikely, by itself, to cause immediate re-listing,” Mr. Geronimo told BusinessWorld in an e-mail.
“But if combined with other structural weaknesses, then there is a real risk of being placed back on the FATF gray list and the European Union and UK high-risk lists,” he added.
In a post on social media platform LinkedIn last week, Mr. Geronimo called on the FATF to revisit the Philippines’ removal from the gray list.
Besides money laundering, the officials may face charges of plunder, graft, malversation and tax evasion, among others, according to Mr. Geronimo.
“Officials can be charged with plunder if their kickbacks exceed P50 million, graft under Republic Act No. 3019 for taking percentages from contracts or granting unwarranted benefits, malversation for misappropriating public funds, and falsification for fake accomplishment reports and vouchers,” he said.
“They may also face direct or indirect bribery, and violations of the procurement law if bidding was rigged. The BIR (Bureau of Internal Revenu) could also pursue tax evasion since presumably kickbacks were not declared as income,” he added.
Mr. Geronimo also noted that no suspicions were raised from the AMLC or banks when the government released large funds for the DPWH’s flood projects, noting that oversight bodies are “mainly reactive.”
“The BSP (Bangko Sentral ng Pilipinas) imposes no ceiling on domestic cash withdrawals. This enabled large-scale illicit cash hoarding of proceeds of ghost or substandard projects,” he added.
John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the country might return to these dirty money watchlists if the AMLC and the government fail to enforce anti-money laundering and combating the financing of terrorism (AML/CFT) policies and measures.
“Given the ongoing flood control corruption scandal, and now these alleged laundering schemes through casinos, the risk of relisting on the FATF gray list or the EU’s high-risk third country list is real, especially if the AMLC and government fail to show consistent enforcement,” he said in a Viber message.
Mr. Rivera noted that corruption in public infrastructure projects undermines investor confidence and weakens fiscal institutions’ credibility.
“When ill-gotten funds are funneled through opaque channels like casinos, it signals to both domestic and foreign investors that the rule of law and anti-corruption safeguards are fragile,” he said. “This raises perceived political and regulatory risk premiums, potentially dampening infrastructure investments and development lending.”
Mr. Rivera said the AMLC should enhance its casino-related reporting, prosecution of high-level offenders, audit of STRs and inter-agency coordination to ensure compliance with AML/CFT policies.
“To restore confidence, AMLC must tighten enforcement on casino-related reporting, increase prosecutions of high-level offenders, and demonstrate inter-agency coordination with PAGCOR (Philippine Amusement and Gaming Corp.), DoJ (Department of Justice), and CoA (Commission on Audit) in investigating politically exposed transactions,” he said.
“Equally important is the protection of whistleblowers and a push for asset recovery mechanisms to ensure public funds are returned,” he added.
Meanwhile, Mr. Geronimo said the AMLC should take a more proactive approach and use its artificial intelligence and machine learning system to detect structuring across various accounts, track multi-bank transfers and link transactions involving several beneficial owners.
He added that the council should improve the quality of STRs from banks and casinos and use joint analytics to identify high-risk patterns.
“For credibility, AMLC must show that the system is working,” he added. “AMLC should coordinate with the BSP to address the absence of a domestic cash withdrawal limit. Very large encashments should trigger mandatory reviews or temporary holds, not just transaction reports.”
BIR INVESTIGATIONMeanwhile, the Bureau of Internal Revenue (BIR) said it tapped AMLC to help audit flood-control contractors for tax fraud.
In a statement on Monday, BIR Commissioner Romeo D. Lumagui, Jr. said AMLC’s access to financial data is crucial in verifying whether contractors involved in anomalous infrastructure projects have declared their income properly.
“The BIR is in close coordination with the AMLC in relation to the tax fraud audit of companies and individuals involved in anomalous flood control projects,” Mr. Lumagui said.
Mr. Lumagui met with AMLC’s Mr. David on Sept. 12, to discuss how tax evasion and money laundering charges may be filed against those found to have discrepancies between their bank records and tax filings.
“These bank reports and transactions can be analyzed with tax returns and payments in conducting a tax fraud audit. If the wealth of the contractor or individual as stated in bank records does not have corresponding tax payments, then there is a case for tax evasion,” the BIR said.
This move comes after the BIR’s announced a tax fraud audit to the top 15 flood-control contractors that cornered around 20% or P100 billion worth of flood-control projects since 2022. — with Aubrey Rose A. Inosante