The Philippines is no longer under increased monitoring by the Financial Action Task Force (FATF), the global watchdog on money laundering and terrorism financing.

After addressing 18 key deficiencies in its financial system, the country successfully exited the FATF’s “grey list” following a February review.

The FATF, a Paris-based international body, places countries on its grey list if they have strategic deficiencies in combating financial crimes. While grey-listed nations do not face direct sanctions, they are subjected to stricter financial scrutiny, which can lead to reduced foreign investments, higher transaction costs, and reputational damage.

The FATF said the Philippines should continue working with the Asia/Pacific Group on Money Laundering, of which it is a member, to “sustain its improvements” in its anti-money laundering and counter-terrorism financing (AML/CFT) system.

Government credit and reforms

The Malacañang Palace credited the country’s removal from the list to President Ferdinand Marcos Jr’s reforms, including Executive Order 33, which outlined the Philippines’ anti-money laundering, counter-terrorism financing, and counter-proliferation financing strategy for 2023 to 2027.

“We, especially the president, can certainly clean up the mess left behind by the previous administration. Let us just pray that we can sustain our non-inclusion in the FATF’s gray list or blacklist,” said Palace Press Officer and Presidential Communications Office Undersecretary Clarissa Castro.

Castro said that the Philippines’ removal from the FATF grey list would benefit overseas Filipino workers (OFWs) by reducing remittance fees. She added that the country’s improved financial standing is expected to attract more foreign investors.

“The president will not stop in addressing these issues and stopping money laundering and terrorism financing activities,” Castro said in a recorded video posted on Radio Television Malacañang’s Facebook page. The Palace official emphasized that the current leadership has made significant progress in tackling financial crimes.

“This is such a big accomplishment for the President to have the Philippines removed from the gray list,” she added.

The FATF placed the Philippines under increased monitoring in June 2021 during the Duterte administration after identifying weaknesses in regulatory supervision, particularly in the oversight of Philippine Offshore Gaming Operators (POGOs), the enforcement of targeted financial sanctions, and the implementation of the Anti-Terrorism Act of 2020.

Castro said the previous administration failed to regulate gambling operations, noting that POGOs were expanding rapidly at the time.

Economic and business impacts 

With its removal from the grey list, the Philippines is expected to benefit from increased investor confidence, smoother financial transactions, and lower remittance fees for OFWs.

“There may be venture capitalists who are interested, private equity firms. They will bring in their money so long as it will not be a high-risk investment destination,” said Securities and Exchange Commission (SEC) Chair Emilio Aquino.

Business process outsourcing firms, which prioritize well-regulated financial systems, may also be more inclined to expand operations in the country. Banks and other financial institutions are expected to see improved access to international transactions.

“With the removal (from the FATF grey list), it will make our country attractive … and with their technology, their investments coming in, it will also help us cope with all the changes happening in the business environment,” Aquino added.

Maintaining compliance to avoid relisting

Despite this milestone, financial regulators stress the need for continued vigilance. Aquino cautioned that the next two years will be crucial as the country prepares for its next FATF mutual evaluation in 2027.

“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 grey list,” he said. 

“Therefore, continued vigilance, policy enhancements, and effective enforcement remain critical to ensuring that the Philippines stays off the grey list and maintains its position as a reliable and competitive financial hub in the region.”

The FATF’s decision to remove the Philippines from its grey list follows a January 20 to 22, 2025, onsite visit, during which the country successfully demonstrated compliance with its action plan.

To maintain compliance, the SEC and the Anti-Money Laundering Council have committed to further strengthening anti-money laundering and counter-terrorism financing measures to prevent a relapse.

With the FATF’s decision, the Philippines now faces the challenge of maintaining compliance and ensuring that financial institutions, businesses, and regulators work together to keep illicit money flows at bay.

Photo credit: iStock/ junpinzon