Exporters, OFWs to benefit from removal of RP from US money-laundering watchlist

Exporters and overseas Filipino workers will benefit from the Philippines’ removal from the United States’ money-laundering watchlist as the move is expected to make investment decisions easier and more positive for Philippine businesses.

The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced earlier this week that it was withdrawing an advisory it had issued against the Philippines in 2000 when the country was first tagged as a money-laundering haven.

The withdrawal of the advisory followed the removal of the Philippines from the list of non-cooperative countries and territories of the Financial Action Task Force (FATF).

According to the Bangko Sentral ng Pilipinas (BSP), the decision of FATF, and subsequently that of FinCEN, was expected to make it easier for Philippine businesses to transact with the international financial system.

Money-laundering refers to activities intended to legitimize funds generated from illegal activities, ranging from common criminal acts to white-collar crimes in high finance.

According to BSP Deputy Governor Alberto Reyes, the tag given to the Philippines as a money-laundering haven had caused much difficulty for the country as additional layers of examination and verification were created for transactions originating or involving Philippine institutions.

"A large part of financial transactions are coursed through US-based institutions," Reyes explained. "Now that the tag has been lifted, just imagine how much easier it would be for our institutions to carry on their regular business transactions."

At its simplest, Reyes said the clearing of checks would now be easier and cheaper.

Donald Dee, president of the Philippine Chamber of Commerce and Industry (PCCI), said bank transactions would become easier for exporters, importers and overseas Filipino workers as well as investors.

"While before there were extra steps or extra precautions that our international counterparts were required to take when dealing with us, now we will just be like everyone else," Dee said, noting that this would translate to shorter processing time, easier clearance procedures and generally lower friction costs.

According to the Bankers Association of the Philippines (BAP), the removal of the stigma will be good for Philippine banks and financial institutions as well.

"That we are no longer marked as a haven for money-laundering will open for us opportunities and possibilities that were not available before," said BAP executive director Leonilo Coronel.

He added that international money-laundering watchdogs only wanted to see that the anti-money laundering framework is ingrained in the legal system.

"I think now we have shown fairly convincingly that it is already in our bloodstream and the policy for addressing these concerns has been institutionalized," Coronel said.

He noted though that the easing of financial transactions would not be instantaneous and institutional relaxation in dealing with Philippine entities would have long-term benefits in making investment decisions.

"The less delay there is, the lower the cost," Coronel said. "Business decisions are largely based on cost efficiency so this whole thing removes the disadvantage that we used to have."