MANILA The Philippine Central Bank on Tuesday warned that the country would face tough sanctions from its trading partners, including the suspension of sensitive financial transactions, if Congress does not pass an anti-money laundering law next month.

Central Bank Governor Rafael Buenaventura said some foreign correspondent banks, particularly in the United States, have threatened to turn down processing transactions from Philippine banks if the anti-money laundering law was not passed.

"Some correspondent banks have said they may start declining the business if a law is not passed soon," he said. "After September 30, if we don't have a law yet, foreign banks may eventually ban certain transactions."

The Paris-based Financial Action Task Force has given the country until the end of September to legislate a law against money laundering. Otherwise, the Philippines will be retained in a list of 17 countries deemed uncooperative.

The task force was created in 1989 by the Group of Seven highly industrialized countries to monitor movements of funds from drug cartels and other crime syndicates, which are being laundered through banks and investment institutions.

Buenaventura warned the country's trade relations may be even be impaired if financial transactions would be subjected to undue scrutiny.

"If the pressure intensifies, our foreign transactions would take longer, they would require more documents and eventually, it would become more expensive for our local banks," he said.

Under the anti-money laundering bill now pending in the Congress, bank deposits amounting to 500,000 pesos (10,000 dollars) and above will be excluded from the bank secrecy law if these are suspected to have been illegally acquired.