Shoes, Film Stars and Regulators

Mention the Philippines and Imelda Marcos' vast shoe collection probably springs to mind. The 3,000,000 sq. km archipelago has more recently achieved notoriety through kidnappings in remote southern islands and the indictment of the former film star turned President, Joseph Estrada, under the anti-graft laws.

Whilst these high profile stories make it to the outside world there are positive developments in the Philippines which remain largely unreported. Under the presidency of Gloria Macapagal Arroyo domestic politics appear to have stabilised, improvements have been made in government finances through privatisation and tax reform and financial legislation has been updated.

The current government has a stated aim of restoring domestic and international business confidence in the Philippines. This has been slipping since mid-1999 and was on the verge of collapse in late 2000, undermined not least by the country’s appearance on the Financial Action Task Force on Money Laundering (FATF) blacklist.

When it was first established in 1989, the G7 countries conceived FATF as a helpful, co-operative organisation. Its role was to persuade governments to combat money laundering and offer them technical assistance to do so. Then, a year ago, this global watchdog developed teeth and placed 15 countries on a money-laundering blacklist of Non Co-operative jurisdictions, one of those being the Philippines. These countries were given a 30th September 2001 deadline to implement anti-money laundering legislation or face "counter-measures", which might have barred banks in the FATF's 29 member countries from dealing with banks in the Philippines.

Whilst the Philippines met certain criteria on the FATF list, the lack of customer identification and record keeping caused some concern, as did the lack of a suspicious transaction reporting system and what was judged to be excessive bank secrecy provisions. Therefore, President Arroyo signed the Anti-Money Laundering Act 2001, which has since been endorsed by the US Treasury Department. The government is now working towards removal from the FATF blacklist by February 2002.

Wealthy Filipinos are concerned that this new legislation, whilst needed, reduces the level of confidentiality which previously existed in a country where the fraudulent acquisition of financial data can have serious consequences.

Martyn Carré, Head of FSD Business Development in Northern Asia, is a regular visitor to the Philippines and keeps very much up-to-date with all the relevant issues. In the current climate, Fiduciary structures can provide the clients with additional security and protection and Martyn would be delighted to meet professionals and their clients to discuss their Fiduciary needs.