Philippine Exit from Money-laundering ‘Grey List’ Marred by Allegations of Abuse   – The Diplomat

Philippine authorities celebrated the country’s removal last week from the money-laundering “grey list” of the Financial Action Task Force (FATF), but some civil society groups described it as a “Pyrrhic victory” because of the filing of trumped-up terrorism financing cases against activists and community-based organizations.

The Philippine government has worked hard to comply with the standards set by FATF to improve the local financial system. Aside from forming an inter-agency task force, it teamed up with the private banking sector to address the concerns raised by FATF.

News of the removal of the Philippines from the “grey list” was immediately welcomed by government officials. The House Speaker said it would lead to the removal of “burdensome restrictions,” reduction of transaction costs, and allow financial flows to move more efficiently. He added that overseas Filipino workers, who make up a tenth of the country’s population, stand to benefit because their hard-earned remittances will now be processed faster and with lower fees.

A senator cited the permanent banning of the Philippine offshore gaming operators (POGOs) as a good decision since this industry is notorious for being a hub of criminal operations. The finance secretary said that the improved financial governance will allow the Philippines to “attract more foreign direct investments and expand more trade partnerships.”

But human rights advocates pointed out that the measures enforced by the Philippine government led to the weaponization of the FATF standards to suppress dissent and undermine the work of people’s organizations at the grassroots.

The National Union of Peoples’ Lawyers (NUPL) flagged the surge in “fabricated” terrorism financing cases, “arbitrary” asset freezes, and instances of financial exclusion targeting civil society leaders and organizations.

For instance, there were only 14 terrorism financing cases in 2023 but this went up to 66 in 2024. Bank accounts of at least 17 non-governmental organizations have been frozen. Among the accused were groups and their networks engaged in human rights and disaster-preparedness training, agrarian reform advocacy, environmental protection, and the delivery of humanitarian and development aid in conflict areas. The freezing of accounts resulted in the non-delivery of crucial services and capacity-building activities for poor rural and indigenous communities.

NUPL said the overbroad measures initiated by the government represented “a concession to an unjust global financial order.” It also belittled the Philippines’ exit from the “grey list” of the FATF.  “This so-called achievement has been built on a foundation of political repression,” it said in a statement.

NUPL compared the aggressive filing of cases against activists and development workers with the perceived reluctance to pursue charges against the backers of POGOs who are linked to money-laundering operations involving billions of pesos.

“The state’s eagerness to prosecute trumped-up charges of financing terrorism while ignoring financial crimes committed by politically connected elites exposes the hypocrisy of this so-called victory,” NUPL said.

Human rights group Karapatan highlighted that the heavy-handed approach of authorities “preys on people’s organizations critical of the misdeeds of government and development NGOs that provide services for poor communities.” For example, an investigative media report featured a police order linking the FATF compliance with the filing of a case against an activist.

Human Rights Watch urged FATF to engage with civil society. “FATF should not stay silent while the government is misusing its terrorism financing recommendations to harass civil society groups and activists,” it said in a statement.

FATF did not directly address these concerns but its country report reminded the Philippine government that measures should be “appropriately applied” and that they should neither discourage nor disrupt legitimate activities of people’s organizations.

It remains to be seen whether the FATF decision will actually lead to the upgrading of the country’s financial status or if the government will reconsider the terrorism financing cases it filed against development workers and people’s organizations. It is a timely reminder that standards imposed by global institutions could have broad consequences, and sometimes governments can wield these policies to roll out a different agenda with serious ramifications on the people’s civil liberties and well-being.