The Philippines has marked a significant advancement in its financial oversight mechanisms by exiting the Financial Action Task Force’s (FATF) gray list, a move that reflects its strengthened anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks. Choon Hong Chua, Moody’s head of financial crime practice for the Asia-Pacific and Middle East, emphasized, “Exiting the gray list will boost investor confidence and financial stability.” This development highlights the country’s enhanced inter-agency coordination and the implementation of comprehensive reforms aimed at fortifying its financial systems.

Persistent challenges in emerging sectors: 

Despite this progress, the journey towards completely eradicating money laundering risks is far from over. Chua cautioned, “However, money laundering risks are not easy to sweep out entirely. Businesses such as online gaming and cryptocurrency would be areas beyond the financial sector that would require continuous oversight to mitigate potential risks.” The popularity of online gaming in the Philippines has surged, with PAGCOR reporting record revenues of P112 billion in 2024, indicating a burgeoning sector that continues to require vigilant regulatory oversight.

While the FATF’s delisting is a positive stride, it alone may not be a panacea for all economic challenges, particularly in attracting investments to sectors like manufacturing. Johanna Chua, Citi’s Head of Emerging Markets Economics Research, expressed skepticism about the direct impact of FATF delisting on diversifying investment opportunities. She argued that the country’s infrastructural and supply chain ecosystems need significant enhancement to truly leverage this new status.

The rise of cryptocurrencies as a new frontier in finance brings with it inherent risks, especially in terms of money laundering. The decentralized and anonymous nature of digital currencies makes them attractive channels for illicit financial flows. As the UNODC report in 2024 revealed, casinos, junkets, and crypto platforms are increasingly implicated in underground banking and transnational organized crime across East and Southeast Asia.

Government and regulatory responses:

In response to the complex challenges posed by these high-risk sectors, Philippine regulators, led by PAGCOR Chairman and CEO Alejandro H. Tengco, have reiterated their commitment to combating financial crimes. Tengco stated, “We also commit to sustain the fight against money laundering and terrorist financing in the entire Philippine gaming industry, including our online gaming operators, land-based casinos, and junket operators.”

As the Philippines steps into a phase of increased financial transparency and stability, the government’s focus is likely to shift towards maintaining this momentum. According to BusinessWorld Online, former Finance and Socioeconomic Planning Secretary Jesus P. Estanislao highlighted the broader implications of exiting the gray list, noting, “It has been a great embarrassment for the Philippines to be on that list for so many years. And now what we’re saying to the rest of the world is we want to be part of you, and we do not want to be part of the money laundering, financing or criminal activities.”

The evolving global trade landscape, marked by the U.S. implementing tariffs under President Donald Trump’s administration, positions the Philippines in a relatively insulated stance compared to its Asian counterparts, thanks to its limited exposure to the sectors targeted by these tariffs.