The International Monetary Fund (IMF) has urged the Philippines to enhance its anti-money laundering (AML) framework and repeal bank secrecy laws to address deficiencies ahead of the next Financial Action Task Force (FATF) evaluation. This recommendation comes amid concerns over the country’s compliance with global standards, with the IMF emphasising swift legislative action to avoid grey-listing risks.
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IMF’s Key Recommendations
The IMF has advised the Philippines to bolster its anti-money laundering efforts and lift bank secrecy provisions in preparation for the upcoming FATF review. As reported by Lenie Lectura of BusinessMirror, the IMF’s Article IV consultation report, released on 25 December 2025, highlights the need for “swift legislative action” to strengthen the AML regime.
The report specifically calls for repealing bank secrecy laws that hinder investigations into financial crimes. According to the IMF, these laws create barriers to effective supervision and enforcement, potentially exposing the Philippines to money laundering vulnerabilities.
IMF officials noted that the Philippines remains on the FATF’s “grey list” monitoring due to strategic deficiencies identified in prior assessments. The next mutual evaluation is scheduled, and failure to address these could lead to prolonged scrutiny.
Background on FATF Grey Listing
The Financial Action Task Force (FATF) placed the Philippines on its grey list in 2021 for shortcomings in AML and counter-terrorism financing (CFT) measures. As detailed by Lenie Lectura in BusinessMirror, the IMF warns that without reforms, the country risks remaining under increased monitoring.
FATF grey-listing imposes reputational damage and higher compliance costs for Philippine financial institutions engaging in international transactions. The IMF report underscores that lifting bank secrecy would enable better access to financial intelligence for regulators like the Anti-Money Laundering Council (AMLC).
Philippine authorities have made progress, including enhanced reporting requirements, but legislative hurdles persist. The IMF praises recent administrative steps but insists on statutory changes for full compliance.
Specific IMF Statements on Reforms
In its consultation findings, the IMF stated:
“The authorities should prioritise swift legislative action to strengthen the AML/CFT framework, including repeal of bank secrecy provisions that impede access to financial information.”
This quote, as cited by Lenie Lectura of BusinessMirror, reflects the Fund’s direct counsel to Philippine policymakers.
The IMF further recommended improving risk-based supervision of financial institutions and non-financial businesses. It highlighted vulnerabilities in sectors like casinos and real estate, which have been flagged in past FATF reports.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. acknowledged the IMF’s input during the consultation. As reported in BusinessMirror, Remolona committed to ongoing collaboration with international bodies to meet FATF standards.
Philippine Government Response
Philippine Finance Secretary Ralph Recto welcomed the IMF’s broader economic assessment but addressed AML concerns specifically. According to BusinessMirror coverage by Lenie Lectura, Recto stated:
“We are committed to exiting the FATF grey list through comprehensive reforms.”
The Department of Finance is pushing for amendments to Republic Act 1405 (Bank Secrecy Law) and related statutes. Legislative proposals are under discussion in Congress, with urgency building ahead of the FATF plenary in 2026.
AMLC Executive Director Matthew David emphasised inter-agency coordination. In statements relayed via BusinessMirror, David noted:
“We have intensified targeted financial sanctions and international cooperation.”
Global Context and Comparisons
The IMF’s advice aligns with similar counsel given to other grey-listed jurisdictions like Turkey and the United Arab Emirates. FATF reports indicate that bank secrecy reforms have been pivotal for countries like Panama in exiting the list.
In Southeast Asia, neighbours such as Myanmar and Cambodia face parallel challenges. The IMF report positions the Philippines’ efforts within regional trends, urging alignment with ASEAN peers who have strengthened AML regimes post-COVID.
International observers, including the Asian Development Bank (ADB), echo the IMF. An ADB study from late 2025 warns that grey-listing could shave 1-2% off GDP growth through reduced foreign investment.
Implications for Philippine Economy
Grey-list status deters correspondent banking relationships, raising transaction costs. As per the IMF’s analysis in BusinessMirror, Philippine remittances—worth over $30 billion annually—could face disruptions without reforms.
The gaming sector, including Philippine Amusement and Gaming Corporation (PAGCOR)-regulated casinos, remains a high-risk area. IMF data shows suspicious transaction reports surged 25% in 2025, straining AMLC resources.
Business groups like the Philippine Chamber of Commerce and Industry (PCCI) support lifting secrecy laws. PCCI President George Barcelon stated:
“Reforms will enhance investor confidence and competitiveness.”
Legislative and Regulatory Challenges
Bank secrecy repeal faces resistance from privacy advocates and banking lobbies. Senator Robin Padilla, chair of the Senate Banks Committee, has signalled hearings in early 2026. As reported by Lenie Lectura, Padilla said:
The Bangko Sentral ng Pilipinas issued Circular No. 1193 in 2023, expanding AML reporting, but lacks teeth without legal changes. IMF experts recommend whistleblower protections to encourage reporting.
House Speaker Martin Romualdez prioritised AML bills in the legislative agenda. Romualdez remarked:
Progress Since 2021 Grey Listing
The Philippines addressed 10 of 14 FATF action items by mid-2025, per AMLC updates. Key wins include virtual asset service provider regulations and beneficial ownership registries.
However, four deficiencies linger, including inadequate investigations and prosecutions. IMF data reveals only 15% of suspicious reports lead to charges, below global averages.
International cooperation improved, with 50+ mutual legal assistance requests fulfilled in 2025. The IMF commends this but urges faster asset recovery mechanisms.
Expert Opinions and Stakeholder Views
Dr. Ronald Holmes, Bangsamoro Transition Authority chief, linked AML to peacebuilding. Holmes noted:
“Clean finances support sustainable development in conflict areas.”
Economist Dr. Stella Quimbo of the University of the Philippines highlighted risks:
“Prolonged grey-listing hampers FDI inflows critical for job creation.”
The Bankers Association of the Philippines (BAP) endorsed reforms cautiously. BAP President Lizette Alvarez stated:
Timeline for FATF Review
The next FATF mutual evaluation report is expected in June 2026, following on-site visits in Q1. Philippine authorities aim for delisting by year-end.
Interim plenary meetings in February and April 2026 will assess progress. IMF urges submission of draft laws by January.
Should reforms stall, FATF could escalate to blacklist consideration, though unlikely per current trajectories.
Broader IMF Economic Assessment
Beyond AML, the IMF projects 6.2% GDP growth for 2026, contingent on fiscal discipline. Inflation is forecast at 3.1%, within target.
Recommendations include revenue mobilisation via sin taxes and digital services VAT. Public debt stands at 60% of GDP, manageable but monitored.
Governor Remolona hailed the outlook: “Resilient growth amid global headwinds.”