$100M laundered?
A CONFIDENTIAL inquiry into a possible money-laundering activity involving the Philippine banking system and three casinos—first reported by the Inquirer last week—has exposed the country’s failure to address a remaining loophole in its drive against the crime.
Financial regulators are probing what may be the biggest single money-laundering activity ever uncovered in the Philippines: $100 million was remitted to the banking system, then sold to a black market foreign exchange broker, transferred to three big local casinos, sold back to the money broker, and then moved out to overseas accounts, all within a few days. The suspected illicit funds are believed to be part of the money reportedly stolen by Chinese computer hackers from the accounts of a bank in Bangladesh.
As a result, the Philippines is now in danger of being returned to the “gray list” of the Paris-based antimoney-laundering watchdog Financial Action Task Force (FATF). Securities and Exchange Commission Chair Teresita Herbosa has earlier warned that the Philippines could be demoted to the FATF “gray list” of noncompliant countries due to the local legal constraints in the monitoring of casinos, which, in other parts of the world, are tightly regulated. The Philippines is one of the very few countries that exclude casinos from the purview of their laws against money laundering.
The Philippines’ Anti-Money Laundering Act of 2001 (Amla) has been amended four times to expand the list of predicate crimes and institutions covered by the law, in response to the FATF threat to put the country in its “blacklist” of countries being used as money-laundering havens. Despite being told by the Anti-Money Laundering Council (AMLC) in 2013 that casinos are known conduits of money laundering—anyone can claim they earned money through gambling—these were still excluded from the list by Congress. The amended Amla just added money changers, dealers of jewelry and precious metals, real estate companies and preneed firms to the list of entities required to report to the AMLC suspicious transactions for purposes of catching money launderers and terror financiers. Previously, only banks and some professionals were required to report such transactions to the AMLC.
The Senate had wanted to include casinos in the list of covered institutions, but the House of Representatives, with lobbying from the state-owned Philippine Amusement and Gaming Corp., insisted on removing casinos from the coverage of the law. It was argued then that big casino operators were about to set up shop in the Philippines and it would be detrimental to their operations, as well as the tourism and revenue potential for the country, if the government would be looking into the activities of its gaming clients. What a flimsy excuse, considering that players with “clean” money would not be afraid to gamble here even with the Amla in place.
It is good news that the oversight committee on the Amla will conduct an inquiry this week into the suspected money-laundering activity. Sen. Sergio Osmeña III, chair of the Senate committee on banks, financial institutions and currencies and a member of the oversight committee, indicated that he was particularly interested to find out the source of the funds that entered the country through a remittance company called Philremit. The oversight committee chaired by Sen. Teofisto Guingona III has invited officials of the AMLC and representatives of the money changer and banks that were reportedly involved in the transactions.
Casinos should definitely be included in the coverage of the Amla since international experts have found that one of the easiest ways to launder money is through these gambling havens. The Philippines should not wait for the FATF to call its attention to include casinos in the coverage of the Amla, under pain of being put in the “gray list” or “blacklist” of noncompliant nations. The FATF had urged the government as early as 2013 to address this “deficiency” in the revised law.
As Osmeña pointed out, the exclusion of casinos has served as a loophole for criminals, and the government wouldn’t want to develop a reputation that the Philippines is a rogue country as far as money laundering is concerned. Otherwise, all the economic achievements of this administration will just come to naught.
