16 years to close glaring loophole

It took a long time to bring the Philippines’ Anti-Money Laundering Law fully up to international standards. Sixteen years after Congress passed the original measure, an amended version finally came into force with the signing of its implementing rules and regulations last week.

The key amendment was relatively simple: the inclusion of casinos operating in the country, whether a gaming venue of the conventional variety, or ship-based, or a newfangled gaming one on the internet. But its importance cannot be overstated.

Simply put, the new regulation closes a glaring loophole that made the local financial system an attractive choice for the perpetrators of last year’s $81-million cyberheist on the central bank of Bangladesh.

With the negligence or complicity of key officers of Rizal Commercial Banking Corp. and other external actors, the stolen money promptly disappeared into the opaque world of Philippine casinos. Only $15 million has been recovered, and the chances of the Bangladeshi government’s recovering the balance grows dimmer by the day.

No one has yet been held to account for the crime, and only one proverbial fall guy — in this case, a former branch manager of the bank — has been charged in court.

But one positive development that came out of this sordid white-collar crime is a renewed commitment by policymakers and regulators to shut down this avenue for financial malfeasance that may have been exploited by money launderers for many years before the Bangladesh-RCBC caper was uncovered.

After last year’s marathon hearings in the Senate, lawmakers got down to work to impose restrictions on the rapidly growing Philippine casino industry which, unsurprisingly, did not resist the new regulations as vigorously as it did over a decade ago.

Under the new scheme, casinos must report to authorities any suspicious transactions worth P5 million and above, as well as implement know-your-customer processes on their clients, especially so-called “high rollers” who fly in on private jets and bet millions of dollars at the gaming tables in one sitting. The price for noncompliance is steep.

Going forward, the Anti-Money Laundering Council has hopefully learned valuable lessons from the Bangladesh cyberheist. When the crime was first brought to authorities’ attention last year, it took the AMLC all of a month to issue a freeze order on the bank accounts of suspects, and only after the Inquirer broke the story.

In today’s world, where hundreds of millions of dollars move from bank to bank and country to country in fractions of seconds, the AMLC will have to do much better than its performance in 2016.

At the same time, the private sector will have to be more vigilant. From banks to money changers to casinos, all have been put on notice about the heavy financial and reputation-related price that will have to be paid by the party caught in money-laundering activities.

A bank official, a money changer or a casino operator will now have to think twice — maybe thrice — whether the profit from facilitating the traffic of illegally sourced funds is worth putting one’s business’ good name or career on the line.

But a word of caution to stakeholders who think closing this loophole will put a definitive end to this kind of financial crime in the country: Money laundering is a slippery big fish not easily caught. Its would-be perpetrators are quick-witted criminals with significant resources at their disposal. As we speak, they are busy devising and discovering new ways and avenues to traffic illicit funds from the dark recesses of the underworld into legitimate-looking undertakings.

From the banking system decades ago to casinos until last year, money laundering has evolved to adapt to conditions on the ground. Already, the battle between cat and mouse has begun between criminals to find and exploit the next loophole and for regulators to close it down.

No one should be lulled into believing that adding a few words in the law, signing a new document, and announcing it to the media will end the scourge. In a world where financial technology is evolving faster than regulations, vigilance is key, now more than ever.