SEC pushes on with anti-dirty money reforms

The Securities and Exchange Commission (SEC) is ramping up reforms by launching a beneficial ownership registry, tightening oversight of financial institutions and non-profits, and drafting new crypto asset regulations to ensure the Philippines does not return to the Financial Action Task Force’s (FATF) “gray list,” its chairman said.

“The next two years will be crucial as the Philippines prepares for another mutual evaluation, where the country’s AML/CFT standards will be assessed for compliance with global standards,” SEC Chairperson Emilio B. Aquino said during a briefing on Thursday. 

“Failure to address identified risks — such as gaps in beneficial ownership transparency, enforcement actions, or emerging financial threats — could increase our risk of going back to the gray list,” he added. 

The FATF last week removed the Philippines from its list of jurisdictions under increased monitoring for “dirty money” risks. 

The country had been on the gray list for over three years, since June 2021. The dirty money watchdog said the Philippines’ removal was due to progress in addressing strategic deficiencies in anti-money laundering, countering the financing of terrorism, and proliferation financing (AML/CFT/CPF).

In 2027, the Philippines will undergo a new assessment, during which the FATF will verify whether the measures remain in place. 

The SEC said it will continue cooperating with other government agencies and authorities to combat money laundering and other illicit financial activities.

Project harbor

The SEC plans to launch the Hierarchical Applicable Relations and Beneficial Ownership Registry (Project HARBOR) this year. This will serve as a “registry of beneficial ownership information that will be easily accessible to partner agencies through data-sharing agreements.”

“Project HARBOR’s features will include automated data validation, configurable access levels for authorized users, and analytical tools for identifying complex ownership structures.”

The registry aims to streamline beneficial ownership disclosures, promote regulatory transparency, and enhance compliance with global AML/CFT standards.

“Project HARBOR will modernize how we manage beneficial ownership data, reducing manual interventions and facilitating a secure, efficient disclosure process for corporations, thereby addressing concerns over the accuracy of beneficial ownership information submitted to the SEC,” Mr. Aquino added. 

Non-profit organizations

The SEC also said it will continue to monitor the non-profit organization (NPO) sector through regular offsite and onsite examinations. 

“The SEC has committed to continuing outreach and knowledge-sharing activities for the NPO sector, while also encouraging unincorporated entities to register with the Commission to reduce their risk of being used for money laundering and terrorist financing.” 

The FATF, in its statement, emphasized that the Philippines’ reform measures should not impede legitimate nonprofit activities. 

“We recognize the important role that non-profit organizations play in nation-building through the advocacies they put forward,” Mr. Aquino said.

“At the SEC, our goal in regulation is to improve corporate governance without unduly burdening legitimate NPO activities,” he added. 

The SEC said it is also streamlining processes and removing redundancies by prioritizing engagement with NPOs through capacity-building initiatives instead of imposing additional regulatory requirements. 

Financial institutions
“Aside from the NPO sector, the SEC is also strengthening enforcement of AML/CFT policies over financial institutions under its jurisdiction, including brokers, dealers, lending and financing corporations, and other securities dealers, in line with its mandate as the country’s capital market regulator.” 

Mr. Aquino said the SEC is also closely monitoring virtual currencies and other digital assets.

“To mitigate risks, the Commission is drafting new rules on crypto-asset service providers (CASPs) to enhance oversight and supervision of businesses engaged in offering, trading, and other activities involving innovative financial products.”

The draft guidelines for CASPs have already been released for public consultation, the SEC added. 

“The SEC reiterates its commitment to implementing the necessary measures in compliance with evolving global AML/CFT standards, ensuring that the Philippines’ presence on the FATF gray list will finally become a thing of the past,” Mr. Aquino said. 

Impact

The banking, financial institutions, and financial technology sectors could see a boost in investment. 

“There are a lot of potential venture capitalists and private equity firms interested. They will bring in their money as long as the country is not seen as a high-risk investment destination. Now, with our removal from the gray list, the Philippines has become more attractive. Investors no longer have to worry,” Mr. Aquino said. 

In 2002, the FATF blacklisted the Philippines for having no legal anti-money laundering framework. The country was removed from the blacklist a year later after the passage of the Anti-Money Laundering Act. 

Last year, President Ferdinand R. Marcos, Jr. directed all relevant agencies to work toward the country’s removal from the gray list by October. 

In July, Malacañang issued an executive order mandating all government offices to adopt the National Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing Strategy 2023–2027. – Luisa Maria Jacinta C. Jocson, Reporter