MANILA (Dow Jones)--The Philippines will remain on an international blacklist of countries with insufficient safeguards against money laundering for the time being and still faces sanctions if a recently passed anti-money laundering law doesn't meet global standards. The Paris-based Financial Action Task force, or FATF, which is backed by most industrialized nations, told Dow Jones Newswires that it will assess legislation passed late last month "so that a final decision can be taken on the issue of counter measures and the Philippines."
"In any case, the Philippines remains on the...list," said FATF Executive Secretary Patrick Moulette. Moulette said the passage on Sept. 29 of the Anti-money Laundering Act of 2001 suspended the implementation of countermeasures by FATF members against the Philippines.
Manila had a Sept. 30 deadline to pass a long-awaited anti-money laundering bill. Russia and the Pacific island of Nauru also faced the same deadline. The FATF has told Nauru that it must beef up its anti-money laundering legislation.
With regulators around the world stepping up efforts to cut funds to terrorists following the Sept. 11 terror attacks on the U.S., failure to pass the bill would likely have led to swift counter measures from some countries.
Task Force Affiliated To OECD
The FATF has 29 country members and is affiliated to the Organization of Economic Cooperation & Development.
Moulette didn't say when the task force would reach a decision on whether the Philippine legislation would be sufficient to remove it from the blacklist.
Philippine officials are optimistic that the law meets international standards and - if it doesn't - time will be given to amend the legislation to avoid sanctions.
President Gloria Macapagal Arroyo has said new law will enable the government to chase down terrorist funds, including some of the millions of dollars the Abu Sayyaf Muslim rebel group has amassed by ransoming kidnapped tourists.
The key feature of the new law is the creation of an anti-money laundering council with the power to freeze suspicious funds of over 4 million pesos ($1=PHP51.742). Below that, a court order is needed to investigate suspect bank accounts.
Banks must also report suspicious transactions to the authorities.
Central bank Governor Rafael Buenaventura said in an interview with BusinessWorld Tuesday that the council will begin operations in November after the completion of the law's implementing rules. These, he said, "will spell out the way by which we will examine accounts, the frequency of reporting required, as well as the sanctions that will be imposed on erring institutions and parties."
-By Alastair McIndoe, Dow Jones Newswires; 632-885-0288; alastair.mcindoe@dowjones.com