Safeguarding the Philippine FinTech Sector from Terrorism Financing

The Philippine Financial Technology (fintech) industry is the second largest in Southeast Asia, next only to Indonesia’s. The Bangko Sentral ng Pilipinas (BSP), the country’s Central Bank, had already been pushing for a digital shift in the country’s financial services in view of its aim to achieve financial inclusion by promoting financial technology and digitization. The Philippine fintech industry enjoys distinct and multiple advantages: a supportive international policy environment, clear policy guidance from the Bangko Sentral ng Pilipinas (BSP), and a strong access to foreign capital. The Philippine fintech industry is poised to become a major engine of the country’s economic growth. The BSP has issued several policies that have an impact on the Philippine FinTech Alliance. However, the absence of an enabling law on fintech may hamper the growth of the industry. New laws, such as the Anti-Terrorism Act of 2020, feature penalties for the material support of terrorism covering all types of financial instruments. The authors present five recommendations: (a) the crafting of an enabling law for the fintech industry; (b) adding a section on Countering the Financing of Terrorism in Financial Technology in the National Security Strategy, 2022-2028; (c) guaranteeing the independence of the Financial Intelligence Unit; (d) giving specialized training for law enforcement, judicial and prosecutorial staff; and (e) establishing public-private partnerships. These recommendations strengthen efforts to disrupt illicit finance actors and support a sustainable fintech ecosystem that is able to deal with, and prevent, the use of fintech for terrorist financing purposes.