By Eileen Mencias
Some foreign banks and other financial institutions have stopped transacting with Filipinos and Philippine-based entities after the Financial Action Task Force kept the country on its list of jurisdictions that needs increased monitoring.
Bangko Sentral ng Pilipinas deputy governor Chuchi Fonacier said this would create problems for overseas Filipino workers sending money home and significantly increase their transaction costs.
“Despite the clear pronouncement of the FATF, there were reports that Philippine-related transactions have been subjected to more scrutiny, or worse, de-risking,” Fonacier said in a memorandum dated December 31, 2021.
Transactions costs increase as banks and financial institutions subject certain customers to increased scrutiny.
In de-risking, banks and financial institutions simply refuse to transact with certain customers instead of running the risk of dealing with a money launderer that will mean grave penalties.
Fonacier said the FATF gave the Philippines until January 2023 to address deficiencies in its anti money laundering measures but some financial institutions have been too eager in tightening up the noose on the Philippines.
“These are clear cases of over compliance and disproportionate application of FATF Recommendation 19 measures against grey-listed countries, their citizens, and businesses,” Fonacier said.
She said the FATF recommendation involves only requiring financial institutions to terminate customer relationships on a case-to-case basis and when money laundering and terrorist financing risks cannot be mitigated.
Dollars sent home by Filipinos working abroad likely reached $31.7 billion, up six percent from the $29.9 billion they remitted in 2020.
For this year, personal remittances are expected to grow by only 4% to $33 billion.
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