Anti Money Laundering (AML) in the Philippines

Money laundering in the Philippines is a significant problem. In the past few years, the illegal drug trade in the Philippines has reportedly evolved into a billion-dollar industry. The Philippines continues to experience an increase in foreign organized criminal activity from China, Hong Kong and Taiwan. Reportedly, insurgency groups operating in the Philippines fund their activities, in part, through the trafficking of narcotics and arms, as well as engaging in money laundering through alleged ties to organized crime. The proceeds of corrupt activities by government officials are also a source of laundered funds. Most of the narcotics trafficking that transited through the Philippines is exchanged using letters of credit.

The Government of the Republic of the Philippines initially established an anti money laundering regime by passing the Anti-Money Laundering Act of 2001. This Act criminalized money laundering and imposed identification, recordkeeping and reporting requirements on financial institutions regulated by the Central Bank. This legislation also established the country’s Financial Intelligence Unit (FIU), called the Anti-Money Laundering Council (AMLC). In addition to traditional FIU responsibilities, the Council can partake in the investigation and prosecution of money laundering cases, and freeze assets allegedly connected to money laundering or terrorism.

The Economy of the Philippines

The economic growth of the Philippines began in the late 1950s and 1960s. Though the country suffered a bit of an economic setback in the late 1990’s due a financial crisis that affected much of Asia and then experienced further economic turmoil as various political leaders took control of the country, the Philippines is now considered a newly industrialized, emerging nation.

In 2005, the Philippine peso was named as the best performing currency of Asia. Major industries of the Filipino economy include electronics, garments, food processing, pharmaceuticals, chemicals, fishing, and petroleum refining. Its main export partners are China, United States, Japan, Netherlands, Taiwan, Hong Kong, Malaysia and Singapore. Many Filipinos have sought work elsewhere due to a lack of opportunities within the country. As such, remittances from overseas continue to be the biggest source of foreign income, estimated at approximately 10% of the GDP.

Although the general macroeconomic outlook has improved significantly in recent years, the Philippines continues to face important challenges and attempts to maintain the reform momentum in order to catch up with regional competitors, improve employment opportunities and alleviate poverty.

Banking in the Philippines

Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. The primary objective of the Central Bank is to maintain price stability conducive to a balanced and sustainable economic growth. The BSP also aims to promote and preserve monetary stability and the convertibility of the national currency. The Central Bank has the exclusive power and authority to issue the national currency.

Filipino Currency

The currency in the Philippines is the Philippine peso*, divided into 100 centavos*. Current denominations of coins are 1, 5, 10, and 25 centavos and 1, 5 and 10 pesos. Banknotes come in denominations of 5, 10, 20, 50, 100, 200, 500 and 1000 pesos. The 5 peso note is no longer printed, but is still legal tender.

*Note: “peso” and “centavo” are the English/Spanish translations. The Filipino terminology is “piso” and “sentimo.”

Other Key Statistics of the Philippines

Time Zone: UTC+8 (13 hours ahead of Washington, DC during Standard Time).

Location: Southeastern Asia, archipelago between the Philippine Sea and the South China Sea, east of Vietnam.

Population: 96,061,680 (July 2008 est.).

Labor Force: Approximately 35% work in agriculture, 15% in industry and 50% in services industries. The unemployment rate is 7.3%.

Languages Spoken: Filipino (official; based on Tagalog) and English (official); eight major dialects - Tagalog, Cebuano, Ilocano, Hiligaynon or Ilonggo, Bicol, Waray, Pampango, and Pangasinan.

Trade Organizations: The Philippines is a member of the World Trade Organization (WTO) and the United Nations (UN).