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Friday, 7 September, 2001, 17:13 GMT 18:13 UK
Philippines faces sanctions on money laundering
Flow chart of money laundering
Washing machine: How dirty money becomes clean
The Philippines could face sanctions from a range of industrialised countries from the end of September thanks to its failure to tackle money laundering, according to an international agency which monitors the issue.

Countries on FATF blacklist
Cook Islands
Dominica
Egypt
Grenada
Guatemala
Hungary
Indonesia
Israel
Lebanon
Marshall Islands
Myanmar
Nauru
Nigeria
Niue
The Philippines
Russia
St Kitts & St Nevis
St Vincent & The Grenadines
Ukraine
In its annual session in Paris, the Financial Action Task Force (FATF) - an independent offshoot of the 29-member Organisation for Economic Co-operation and Development - said the Philippines "has still not enacted long-awaited and necessary legal reforms" to curb the washing of hot money.

"Accordingly, the FATF renewed its call to its members to implement additional counter-measures unless the Philippines enacts significant legislation by 30 September."

The counter-measures could include deny licences to banks from Filipino banks to operate in FATF members, as well as advising companies of heightened risks of doing business there.

Island at risk

Nauru, the tiny Pacific island of 10,000 people which plays host to over 400 banks - which has been accused of being the conduit for up to $70bn a year in Russian mafia money - faces the same threat.

Legislation recently introduced by prime minister Rene Harris is not up to the mark, the FATF said, giving the island state till 30 November to improve matters.

On the other hand Russia, the last member of the trio of states who have had the threat of sanctions hanging over them, is off the hook.

The FATF said the legislation Russia had enacted over the summer was "significant", although it warned that implementation will be the true test of Russia's commitment.

And the Paris-based group said it will keep all three countries on a blacklist of those requiring special surveillance, and added Grenada and the Ukraine to the 17 jurisdictions it already regards as worthy of closer attention.

Arroyo concerned

The Philippines had hoped that a promise to expedite reforms would persuade the FATF to back off from the threat of sanctions.

The Filipino government said the FATF had effectively disrupted the transfer by the millions of Filipinos working abroad of money back to their families.

President Gloria Arroyo told a press conference that she "did not want to reach the stage where international bankers would demand more documents before processing Philippine accounts".

See also:

16 Jul 01 | Business
Russia's money laundering charges
22 Jun 01 | Business
Money laundering list gets update
23 Oct 00 | Business
Clampdown on money laundering
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