FINANCIAL INSTITUTIONS in the Philippines have a “medium” risk of exposure to activity related to money-laundering and terrorist financing, according to a risk assessment conducted by the Bangko Sentral ng Pilipinas (BSP).
“The wide array of financial products and services, size of transactions, as well as the growing physical and digital network or delivery channels of banks are being exploited by criminals to obscure the illegal sources of their funds,” the BSP said in its third money laundering, terrorist financing and proliferation financing sectoral risk assessment report.
Among predicate crimes, the BSP flagged a high risk for funds relating to corruption, drug trafficking, investment fraud and swindling, consumer fraud, and cybercrimes.
A medium risk rating was assigned to cases involving smuggling, environmental crime, illegal firearms, human rights violations, forgery and counterfeiting, and tax crimes.
The BSP deemed as “low risk” funds related to activities like carjacking and qualified theft.
While the net risk of banks and other financial institutions was “medium,” the BSP determined that pawnshops were at low risk for involvement in dirty money.
Based on suspicious transaction reports from 2017 to June 2020, the largest volumes of illicit fund flows were connected to investment fraud or swindling (P219.034 billion). These incidents accounted for a third and 71% of the total by volume and value, respectively.
“This can be attributed, in part, to the susceptibility of Filipinos to investment scams,” the BSP said.
Meanwhile, violations of the Republic Act No. 8792 or the e-Commerce Act of 2000 including ATM skimming, unauthorized withdrawal transactions and online purchases was also notable among the violations. Suspicious transaction reports involving funds worth P29.3 billion were related to this predicate crime.
“The shift of financial transactions to electronic or online platforms has resulted in the increase in related typologies amid the COVID-19 pandemic. The main products, services, and delivery channels used involved credit card and electronic cash cards,” the central bank said.
The BSP found the banking sector’s net risk for terrorism financing to be high, mainly due to the presence of insurgent and terrorist groups in the Philippines which likely have established methods of fund raising. — Luz Wendy T. Noble