THE PHILIPPINES must remain vigilant regarding money laundering threats stemming from online gaming and cryptocurrency, even after it has moved off the dirty money watchdog’s “gray list,” as noted by an analyst.
Choon Hong Chua, who leads Moody’s financial crime practice group for Asia-Pacific and the Middle East, stated that the Philippines’ removal from the Financial Action Task Force’s (FATF) gray list “demonstrates its dedication to enhancing its anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks.”
“Leaving the gray list will enhance investor trust and financial stability. The Philippines has improved inter-agency collaboration and executed extensive reforms,” he elaborated.
“Nonetheless, completely eradicating money laundering risks is quite challenging. Sectors such as online gaming and cryptocurrency go beyond the financial sector and will necessitate ongoing scrutiny to mitigate potential threats,” he remarked.
In recent years, online gaming has increased in popularity within the Philippines. According to data from the Philippine Amusement and Gaming Corp. (PAGCOR), revenues reached a record-high P112 billion in 2024, with the electronic games segment contributing half or P48.79 billion.
The FATF has ultimately removed the Philippines from its gray list of jurisdictions subject to increased scrutiny for dirty money, following a successful on-site evaluation that confirmed the nation had fulfilled its action plan.
The Philippine government is optimistic that this removal from the gray list will boost investments and broaden trade alliances that will stimulate economic growth.
However, a Citi economist indicated that merely exiting the gray list is insufficient to stimulate investments in key areas like manufacturing.
“Certainly, it’s positive to no longer be on the gray list, but I don’t believe this will directly result in substantial diversion opportunities in manufacturing since it clearly requires much more than that,” remarked Citi Head of Emerging Markets Economics Research Johanna Chua during an interview on Money Talks with Cathy Yang on One News on Monday.
The Philippines had been on the FATF’s gray list for more than three years, starting from June 2021.
“It’s encouraging to be off the gray list, but we require more than that to establish a robust ecosystem for manufacturing, which includes better infrastructure and supply-chain systems,” emphasized Ms. Chua.
“That’s clearly not a competitive edge for the Philippines. The nation is more suited for services,” she added.
The Philippines recorded $37.4 billion in service exports during the first nine months of 2024, marking a 6.25% increase from the previous year, according to central bank statistics.
In 2024, the exports of services surged by 8.3%, as per data from the local statistics authority. This segment also represented 13% of the gross domestic product (GDP).
Ms. Chua highlighted India as an instance, where significant public capital investments in infrastructure have been observed in recent years.
The government has vowed to allocate 5-6% of GDP towards infrastructure annually.
Meanwhile, former Finance and Socioeconomic Planning Secretary Jesus P. Estanislao described the Philippines’ removal from the gray list as a “very encouraging development.”
“It has been quite embarrassing for the Philippines to have been on that list for so long. Now we are demonstrating to the global community that we wish to be integrated with you, and we reject money laundering, financing, or any criminal activities.”
“We aim to refine our systems, and I am pleased that we have succeeded in persuading them of our commitment to this effort. This is uplifting news,” he stated.
This also reflects that the Philippines is evolving into a “much more transparent economy.”
“We are signaling to the world that we aspire to participate in the global financial system, which combats terrorism financing, fights against money laundering, and all other dubious activities exploiting the international financial system,” Mr. Estanislao added.
TARIFFS
In the meantime, Ms. Chua stated that the Philippines ranks among the economies least affected by the United States’ tariff proposals.
“In Asia, I believe the Philippines is somewhat second to India in being relatively insulated from the tariff discussions. One advantage India possesses is the significant interest in diversifying investments in manufacturing,” she noted.
Markets are preparing for the potential repercussions of US President Donald J. Trump’s trade policies, which include reciprocal tariffs on all nations assessing taxes on US imports.
Since office inception in January, Mr. Trump has already imposed a 10% tariff on Chinese imports, along with levies on all steel and aluminum imports starting in March.
“Much of the tariff discussions, aside from China, appear to be more sector-specific and targeted, often viewed as a pretext for negotiations,” she further explained.
Concurrently, Ms. Chua indicated that it is “not implausible” for the Philippines to approach nearly 6% growth this year.
“We anticipate Philippine growth will nearly reach 6%, specifically 5.9%, which is still a notably solid growth rate compared to many emerging market nations,” she remarked.
Economic leaders aim for a GDP growth target of 6-8% for the year.
The Philippine economy expanded by 5.6% in 2024, falling short of the government’s 6-6.5% target. — Luisa Maria Jacinta C. Jocson