Police Memo Links PH’s Exit from Money Laundering ‘Grey List’ to Activist Crackdown Allegations

By Carmela Fonbuena

Philippine Center for Investigative Journalism

This Philippine Center for Investigative Journalism report was produced in partnership with the Northern Dispatch

Philippine efforts to exit the global money laundering “grey list” finally succeeded, an accomplishment that will enhance the country’s credibility in the global financial system, making it more attractive to investors.

It also sets the stage for the government’s next goal: a possible credit rating upgrade.

The Financial Action Task Force (FATF) announced last Friday, February 21, that the Philippines has met its compliance requirements, a month after members of the global money laundering and terrorist financing watchdog visited the country.

The country’s exit from the FATF grey list is expected to benefit millions of Filipinos—including overseas workers—by speeding up and reducing costs of  international business transactions and remittances.

FATF recognized the Philippines’ progress in curbing the flow of illicit funds through its casinos and shutting down offshore gaming operations. It was the result of collaboration among national agencies.

However, the Philippine government’s success and the FATF process itself are marred by allegations that the grey list exit campaign became the latest pretext for the crackdown and red-tagging of activists and human rights workers.

Ephraim Cortez, president of the National Union of Peoples’ Lawyers (NUPL), said the government has used the FATF process to file a spate of terrorist financing cases against civil society organizations (CSOs) with the ultimate objective of stamping out dissent in the country.

“It’s a double-edged sword. This is what they want to stifle—dissent and what they call legal fronts. Terrorism laws, both the Terrorism Financing Prevention and Suppression Act of 2012 (TFPSA) and the Anti-Terrorism Act (ATA), are now being weaponized for this purpose,” Cortez said.

“It is like hitting two birds with one stone, they get to comply with the FATF and neutralize the mass movement and development NGOs,” he said.

NUPL represents a number of non-profit organizations facing terrorist financing charges.

The Defend NGO Network, which includes the NUPL, recorded at least 59 development workers in NGOs facing terrorism-related charges and harassment, including 55 staff from 19 organizations who are accused of financing or supporting terrorists.

Karapatan recorded more. It said that at least 166 individuals were “arbitrarily” charged or faced complaints regarding alleged violations of the ATA and TFPSA, all based on their alleged links with communist rebels and designated terrorists under ATA.

New York-based Human Rights Watch (HRW) has chimed in and also called out “baseless terrorism-financing charges” filed against groups in the country.

The Philippine government “appears to be stepping up terrorism financing prosecutions to get off of FATF’s ‘grey list’ and its potential financial cost,” Bryony Lau, HRW deputy Asia director, said in a report released on February 11.

National Task Force to End Local Communist Armed Conflict (NTF-Elcac), the government anti-insurgency task force behind the red-tagging of activist groups, dismissed their complaints.

NTF-Elcac executive director Ernesto Torres Jr. said these are “desperate attempts” to “vilify and malign efforts by the government to unmask the true identities of the members, financiers, and collaborators” of the Communist Party of the Philippines, its armed group New People’s Army, and political wing National Democratic Front, he said in a statement to the Philippine Center for Investigative Journalism (PCIJ).

Torres cited indictments and convictions on terrorist financing charges, which he said are “testaments to the strength and fairness of our country’s justice system.”

The country’s Anti-Terrorism Council gave CPP a terrorist designation in December 2020.

‘Project Exit the Greylist’

Money laundering and terrorist financing are related but distinct crimes. The first conceals origins of illicit funds to make it appear legitimate. The latter provides funds or resources to support terrorist activities, whether the money comes from legal or illegal sources.

The FATF requirements, to a certain extent, are quantitative. The criticism against the FATF process involves the requirement to “demonstrat[e] an increase in the identification, investigation and prosecution of terrorist financing cases.”

Critics said it has driven terrorist financing charges  against activists, journalists, and human rights workers.

A confidential police memorandum obtained by PCIJ directly links the FATF process to at least one case filed against an activist.

Issued by a regional field unit of the Criminal Investigation and Detection Group (CIDG) of the Philippine National Police based in La Union province, the memo directed the “intel section” of the Ilocos Sur police to provide the profile and “holdings” of a person accused of violations of the Terrorism Financing and Suppression Act of 2012.

“Project Exit the Greylist” and “Filed cases on terrorism financing” were typed as references in the memo.

Carlos Conde, HRW Asia senior researcher, said there has always been a suspicion that terror cases are filed against activists so that the government can “claim to FATF that the Philippines is doing something about terror financing.”

Conde said combating terrorism is a legitimate and necessary function of the government, but it should respect human rights and follow legal due process.

However, he said national security agencies have demonstrated a pattern of bypassing due process, particularly against red-tagged individuals, raising serious concerns.

“Red tagging has been the primary action taken against activists. However, there has been a shift towards using terrorist financing allegations, with designations as the basis,” said Conde.

NUPL said the police memo “suggests that, rather than being the result of genuine financial investigations, cases are being pre-configured and arbitrarily filed to serve a political agenda that prioritizes FATF compliance over justice.”

CIDG chief Major General Nicolas Torre told PCIJ the police memo is a confidential document that should not have been made public. But he was unapologetic about the investigations that his units conducted.

“We don’t really care about what [these groups] have to say. For us, what matters is that terrorism financing is stopped,” Torre said.

He said the CIDG is “just one of many” government agencies in the Project Exit the Grey List team. “We just provide the legs on the ground.” 

AMLC: ‘Numbers na lang po’

The country’s Anti-Money Laundering Council (AMLC) explained to finance committee chair Sen. Grace Poe the process to exit the grey list during a budget hearing in August 2024.

“Numbers na lang po sa terrorist financing (It’s just the numbers on terrorist financing),” AMLC said during the hearing in the Senate.

Transcript:

Sen. Poe: Ano na lang ang kulang?

AMLC: No. 1 is PAGCOR. Immediate Outcome 3.2 tungkol po sa junket operators. ‘Yun po ang naiiwan pang isa. No. 2 terrorism financing prosecution with is Immediate Outcome 7.3. We need to file more terrorism financing cases until the end of this cycle, which is this month.

Sen. Poe: It’s just a matter of the number of cases being filed?

AMLC: Numbers na lang po sa terrorist financing. Ang pangatlo ay implementation of cross border measures, ang in charge po dito ang ating BOC. ‘Yan na lang po naiiwan na action items.

“We are hopeful that we will comply with all these action items by October of this year. Once we have complied with these actions, by early next year, which is January, there is a big probability that an on-site visit [will happen],” AMLC said in August.

The succeeding events followed the timeline presented in the budget hearing.

Two months after the budget hearing, during FATF’s October 2024 plenary meeting, the international watchdog said the Philippines has “substantially completed” its action plan against money laundering and terrorism financing.

The site visit was conducted in January 2025.

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. himself flew to Paris  to represent the country at the FATF Plenary and Working Group Meetings from February 17-21.

The country’s exit from the grey list was announced on Feb. 21.

A tool of authoritarian governments

Stephen Reimer, associate fellow at the London-based Royal United Services Institute’s (RUSI) Centre for Financial Crime & Security Studies, told PCIJ the quantitative requirements in the FATF process can lead to “unintended consequences.”

“I don’t agree that having a high number of TF (terrorist financing) prosecutions is necessarily an indication of an effective CTF system,” Reimer told PCIJ.

He said governments “facing pressure to quickly identify and pursue TF investigations” in order to satisfy the FATF requirements “may do so against higher-profile individuals or organizations in civil society where there’s some loose suspicion that they’re financing or supporting terrorist groups.”

“This is operationally expeditious for meeting the requirements of the FATF compared to, say, long-term and resource intensive investigations into some of the terrorist groups mentioned in the mutual evaluation as being dominant in the threat landscape,” he said.

There were cases filed against alleged Islamic State followers, too, but the numbers are not available.

Reimer, when he was a fellow at RUSI, published a special report that shows how authoritarian governments have abused the FATF process to stifle dissent: Weaponization of the FATF Standards: A Guide for Global Civil Society.

The RUSI study identified five major types of abuse:

• Intelligence fishing and scraping.
• Strategic bank account freezing.
• Harassment and prosecution of organizations.
• Politically motivated (pre-trial) detention.
• Lawfare for transnational repression

However, Reimer said it is “hard to determine” whether or not the cases filed by the Philippine government were meant to crack down on civil society groups.

“Whether it’s a pretense to target civil society that the government wants to suppress as well is hard to determine… it might be about meeting FATF expectations more than suppression, or equal, or maybe it’s a genuinely unintended consequence,” he said.

NUPL’s Cortez said it’s the latest tool in the government campaign against activists and human rights workers, which escalated from the time of former President Rodrigo Duterte.

“It’s just an old dog with a new collar. Before, it was subversion, illegal possession of firearms. Now, this is the new thing: terrorism or financing terrorism,” he said.

The problem with charges related to terrorism is they are “treated like they are confidential cases,” he said. It’s harder to obtain records.

NTF-Elcac was organized in 2018, during the Duterte administration. United Nations special rapporteur Irene Khan joined groups in calling for the abolition of the task force but President Ferdinand Marcos Jr. rejected the proposal.

Marcos is “not as rabid” as Duterte, said Cortez. “But you have to take note that the same people, the same policies, and the same security sector” are in place “doing the dirty work.”

‘I’m just an ordinary citizen’

The accused in the police memo that revealed the PNP’s “Project Exit the Greylist” is Myrna Zapanta, a 66-year-old resident of Ilocos Sur. Now retired, she occasionally volunteers at the Ilocos Region Ecumenical Council (IREC), participating in relief operations in disaster-stricken areas and church gatherings.

In her younger years, Zapanta actively advocated for farmers’ rights in the Ilocos region through her work with the Iglesia Filipina Independiente. She thinks this is the only explanation for the terrorist financing allegations against her.

The CIDG unit filed six complaints against Zapanta for allegedly violating the Terrorism Financing and Suppression Act of 2012—three counts each under Sections 7 and 8. She denied the allegations.

She was accused of being the CPP’s regional finance officer and having facilitated funds to supposed alleged front organizations Katinnulong Daguiti Umili ti Amianan, Inc. (KADUAMI) and Ilocos Center for Research, Empowerment and Development (ICRED).

Zapanta was shaken by the case. “I never expected to be accused of terrorist financing since I am just an ordinary citizen,” she said.

“I can’t help but fear for my safety, because, for example, when you’re walking, you don’t know if someone is following you or if you’ll just be grabbed and killed.”

Charges against Zapanta underscored the new pattern in the country’s anti-insurgency campaign, according to activists.

The same witness and narrative against Zapanta were also used by the CIDG to file multiple complaints under the same provision against KADUAMI’s Lenville Salvador and Petronila Guzman.

They also contested the allegations.

NTF-Elcac: Convictions confirm legitimate cases

NTF-Elcac and CIDG were unapologetic in filing cases against civil society groups that they say are “secretly financing the enemies of the State.”

NTF-Elcac’s Torres said it is the government’s job to inform the public “about individuals and organizations who continue to hide under the guise of legal activism.”

“Those who support or engage in terrorist activities will inevitably face the full force of the law,” Torres said.

CIDG’s Torre said due process is followed when they conduct investigations.

“First and foremost, the investigation ensures that human rights are protected and respected. The process is actually non-violent,” said Torre.

He rejected claims that the cases are bogus. “Hindi lang number of cases ang parameter diyan. At the end of the day, kung ma-dismiss ang cases, not counted din ‘yan,” he said.

“They have all the time and opportunity to refute evidence that we present. They even have better lawyers,” he said.

Torres said the convictions the government secured are proof that the cases are legitimate.

“All told, these indictments and convictions of terrorism financiers and collaborators are testament to the strength and fairness of our country’s justice system,” he said.

In 2023, a court in Iligan City in Central Mindanao issued the first conviction under the Terrorism Financing Prevention and Suppression Act of 2012.

Angeline Magdua, one of the cashiers of the Catholic Rural Missionaries of the Philippines (RMP), pleaded guilty to being accessory to the terrorist financing cases filed against her and 15 others.  Prosecutors said she received donations from foreign organizations that were later diverted to the CPP-NPA.

The conviction was secured through a plea bargain and without trial.

Torres also cited the terrorist financing case against the Community Empowerment Resource Network, Inc. (CERNET), which was accused of giving P135,000 to the NPA South Eastern Front for their logistical needs. The Department of Justice (DOJ) found probable cause to file criminal charges against the humanitarian group based in Cebu.

In both the RMP and CERNET cases, the AMLC froze the organizations’ bank accounts before the cases progressed in court, adversely affecting their operations.

NUPL’s Cortez said the process is “tilted against us.”

“Baka hindi fair ang playing ground. Masyadong powerful ang ating kalaban, ang pressure exerted by the NTF-Elcac (Maybe the playing field isn’t fair. Our opponent is too powerful—the pressure exerted by the NTF-Elcac),” he said.

Frenchie Mae Cumpio

NUPL does not expect the government to ease up on activists following the successful exit from the grey list.

“That’s wishful thinking. Aside from exiting the grey list, there really is a stamping out of dissent,” Cortez said.

The ongoing trial of journalist Frechie Mae Cumpio for terrorism financing under the Terrorism Financing Prevention and Suppression Act of 2012 has heightened concerns among lawyers.

It could set a precedent, they said, noting that the outcome could either deter or embolden security forces to pursue similar cases.

“We are anxious because this appears to be the first full-blown trial on terrorism financing. They could be using this as a pilot test,” said Cortez.

“They cite previous convictions, but those were from individuals who pleaded guilty. This is the first time a case has gone through a full-blown trial, leading to a promulgation of judgment in a terrorism financing case,” he said.

Cumpio, a news anchor at Aksyon Radyo Tacloban and executive director of the Eastern Vista news website, reported on alleged human rights abuses by security forces. She has been detained since February 2020 on charges of illegal possession of firearms and terrorism financing.

Cumpio’s case was filed before the Anti-Terrorism Act of 2020 was enacted (July 2020) and before the Communist Party of the Philippines (CPP) was designated as a terrorist organization (December 2020).

She testified at the Tacloban Regional Trial Court in November 2024. Cortez said they expect the presentation of evidence to be completed in a few months, after which a ruling will be issued.

“It will be decided within the year,” Cortez said.

Cortez said that the FATF should pay attention to how its rules are being applied.

The evaluation of the global watchdog is conducted regularly. After announcing the country’s exit from the grey list, FATF said the Philippines will continue to work with FATF’s Asia Pacific Group (APG) on money laundering and will prepare for the next evaluation.

“The Philippines is expected to sustain the implementation of the reforms and, importantly, to do so in a way that is consistent with the FATF standards,” said FATF President Elisa de Anda Madrazo. – PCIJ.org