The Anti-Money Laundering Council (AMLC) published the 2022 Terrorism and Terrorism Financing Risk Assessment, and covers the following salient points:

Terrorism Threat, in the 2022 Global Terrorism Index (GTI) Report, the Philippines placed 16th with a score of 6.790, the lowest score the country has achieved since 2017 but still within the High category based on the GTI scale. While there appears progress in the GTI score for 2022, the Philippines remains one of the countries with the highest GTI scores in the Asia-Pacific Region for the period 2016-2021.

Use of social media, according to the Financial Action Task Force (FATF), terrorist organizations increasingly use social media to raise funds from sympathetic individuals. The proliferation of social media creates a vulnerability to terrorist financing due to the ease by which propaganda and fundraising can be circulated and promoted.

Foreign funding – External Threats Assessment using Suspicious Transactions (STRs), the study conducted by the AMLC entitled An Assessment of the Philippines’ Exposure to External and Internal Threats based on Suspicious Transaction Reports for 2018 to 2020, used 1,186 suspicious current account/savings account (CASA) transactions in relation to Terrorism Financing (TF), amounting to PhP324.9 million. This showed a substantial increase in the number of STRs from the previous assessment, with only 396 STRs for the years 2013 to 2017.

Use of Cryptocurrency, the Philippines’ central bank (Bangko Sentral ng Pilipinas) issued Circular No. 1108 which provides rules and regulations governing the operations of Virtual Asset Service Providers (VASPs) entities that facilitate financial services via blockchain, Bitcoin, crypto assets, and digital currencies to cover new business models and activities. The new VASP regulatory framework is aligned with the fintech industry’s best practices and consistent with risk management standards set by international standard-setting bodies such as the FATF to combat the traffic of illicit funds.

Range of STR values, while there is an increase in the number of STRs filed in 2021 and 2022, the majority (about 56%) of the said STRs are below PhP5,000.00. A red flag indicator, which states that multiple transactions of low value with no specific pattern, mentioned in the 2021 Terrorism and Terrorism Financing Risk Assessment, still applies in the STRs received from 2021 to the first semester of 2022. There is an overriding principle that states that TF transactions are not risk-sensitive thus even small amounts associated with TF are of high importance.

Effectiveness of Suspicious Transaction reporting, monitoring, and analysis, the large STR values reported in 2021 pertained to the transactions of the Money Service Businesses allegedly involved in facilitating the proceeds of the ISIS-linked Maute group. It should be again noted that covered persons file STRs based on referrals from the AMLC, and/or other law enforcement agencies, adverse news, rejected transactions, and pursuant to Anti-Terrorism Council designations despite having no transactions at the time of reporting. Thus, the total reported value of the STRs may not necessarily represent the total value of completed/consummated financial transactions.

Threats posed by Proliferation Financing of Weapons of Mass Destruction (WMDs), in combating this threat, the FATF has developed specific requirements to give effect to and implement relevant United Nations Security Council Resolutions (UNSCRs). FATF Recommendations 1 and 7 include requirements for identifying, assessing, understanding, and mitigating risks, and targeted financial sanctions (TFS) on the proliferation of weapons of mass destruction and its financing.

2019 Mutual Evaluation Report (MER), Progress Reports, the Philippines underwent its Third Mutual Evaluation and was rated then non-compliant for Recommendation 7 on TFS related to proliferation citing the Philippines’ lack of specific measures to implement TFS related to the proliferation of WMD. Among the reasons cited were the lack of TFS framework, lack of mechanisms/procedures relating to designation, listing/delisting, and freezing/unfreezing or access to funds, no authority mandated to ensure and monitor compliance with TF/PF; and low awareness among FIs/DNFBPs of the UNSCRs.

Philippines’ Initiatives in addressing proliferation financing

RA No. 10697 or the Strategic Management Act, the Strategic Management Office (STMO) has issued for the information, guidance, and compliance of all persons who engage or intend to engage in the trade of strategic and/or unlisted goods, which prohibits covered persons from engaging in any trade with various listed individuals and entities, falling under the UNSC Consolidated List.

Republic Act No. 11521, or an Act further strengthening the AMLA, adding new predicate offenses and covered persons under the AML/CTF framework. Violation of Section 9(a)(3) of RA 10697 in relation to the proliferation of weapons of mass destruction (WMDs) and its financing pursuant to UNSC Resolution Nos. 1718 of 2006 and 2231 of 2015 were included as a response to criminalize proliferation financing of WMDs and intensify the TFS framework on PF.