2nd National Risk Assessment on Money Laundering
The Philippines has undertaken the 2nd National Risk Assessment on Money Laundering and Terrorist Financing (TF) for the period 2015-2016, which it concluded in 2017. In 2016, the country concluded its 1st NRA for the period 2011-2014. In that NRA, ML threats were identified as emanating from predicate offenses such as drug trafficking, investment scam, corruption, among others. It also identified the instrumental sectors such as banks, securities, remittance agencies and foreign exchange dealers. Insurance companies, among others, are considered as “covered persons” for money laundering supervision. The 1st NRA also led to the creation of the Anti-money Laundering Division in the Insurance Commission in 2015.
The National Risk Assessment is a government-wide assessment of the overall exposure of the country to money laundering and its related predicate offenses, terrorism and terrorist financing. This is in accordance with Recommendation 1 of the Financial Action Task Force (FATF) which requires countries to identify, assess and understand the ML/TF risks, and take actions in mitigating the risks effectively. Data from the industry was derived through surveys (2013-2016), Annual Reports, and key statistical data with the Commission.
The principal objectives of the 2nd NRA are: a) assess and understand the level of proceeds of crime generated in or coming into the country and the threat posed by ML and TF; b) determine the vulnerability of financial institutions and designated nonfinancial businesses and professions (DNFBP); and c) appreciate the most efficient way to allocate resources for the detection, prevention, investigation and prosecution of ML and TF. In other words, it is to evaluate, assess, and analyze the weaknesses (vulnerability) in controlling MF/TF and to come up with proposed action plans to address these weaknesses. The proposed action plans were discussed and presented during a workshop held on August 25-26, 2017.
Identification of the National Vulnerability uses risk assessment tools (or modules) designed by the World Bank (WB). The WB tool uses a combination of Bayesian network and weighted average to determine the degree of dependence or correlation among variables. The assessment of vulnerability uses a 5-level scale with categories Low, Medium Low, Medium, Medium High, and High. The assessment was done by the National Risk Assessment Insurance Sector Sub Working Group.
Insurance sector vulnerability THE Insurance Sector is composed of covered persons under the jurisdiction of the Insurance Commission
The National Risk Assessment is a government-wide assessment of the overall exposure of the country to money laundering and its related predicate offenses, terrorism and terrorist financing. This is in accordance with Recommendation 1 of the Financial Action Task Force (FATF) which requires countries to identify, assess and understand the ML/TF risks, and take actions in mitigating the risks effectively.
composing the insurance industry, the pre-need industry, and the Health Maintenance Organizations (HMO) industry. As of October 2017, there were a total of 242 CPS comprising life companies (27), non-life companies (60), MBAS (35), insurance brokers (62), composite insurers (4), professional reinsurer (1), servicing insurance companies (9), pre-need companies (16), and HMOS (28).
each of the industry’s rating (insurance, pre-need and MBA) was given corresponding weights according to the premiums collected per industry cluster (life insurance, non-life insurance, MBAS and preneed). The premiums collected from each industry cluster were used as a gauge to determine the weight of contribution of each industry vis-àvis the entire insurance sector. This approach allows a fair exposure of each industry cluster from the insurance and pre-need industry in determining the insurance sector’s overall vulnerability. Thus, the industry weight was determined as follows: Life (75.97 percent), Nonlife (14.71 percent), Pre-need (6.55 percent), and MBAS (2.77 percent).
In the 1st NRA Report covering the period 2011-2014, the vulnerability of the Insurance Sector to ML risk was rated Medium-low. In the 2nd NRA, the rating of the vulnerability of the Insurance Sector to ML risks remained at Medium-low.