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By Ian Nicolas P. Cigaral

Casinos now under dirty money watch

Posted on July 20, 2017

A MAJOR GAP in the country’s anti-money laundering defense has been closed after President Rodrigo R. Duterte signed into law a measure putting casinos under watch.

The new law “plugs a critical gap” in the country’s anti-money laundering defense and “will significantly strengthen our ability to prevent the entry of illicit money into our economy.” -- Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. -- BW FILE PHOTO
Malacañang on Wednesday released a copy of Republic Act (RA) No. 10927, or “An Act Designating Casinos as Covered Persons under Republic Act No. 9160, otherwise known as the Anti-Money Laundering Act of 2001 (AMLA), as amended,” which Mr. Duterte signed on July 14.

The law now counts casinos -- including Internet and ship-based casinos “with respect to their casino cash transactions related to their gaming operations” -- as “covered persons” under AMLA.

Internet-based casinos refer to those facilities that allow persons to participate by using the Internet, telephone, television, radio or any other kind of technology for facilitating communication.

It also set the threshold amount for coverage at a minimum of P5 million, or its  equivalent in any foreign currency, per casino transaction.

In comparison, the threshold of other covered transactions under RA 9160, as amended, is over P500,000.

The development comes more than a year after the February 2016 heist of some $81 million from Bangladesh Bank’s accounts with the Federal Reserve Bank of New York that eventually found its way into the Philippines and much of which disappeared after being used to play in casinos here.

Of the total that found its way into the Philippine system, only about $15 million has so far been returned to Bangladesh.

Philippine lawmakers had ignored as early as four years ago calls by the Paris-based Financial Action Task Force to include casinos among entities watched by the Anti-Money Laundering Council (AMLC), arguing that doing so would scare away investors and stunt a gaming boom.

RA 9160, among others, formed AMLC and gave it powers “to freeze any monetary instrument or property alleged to be proceeds of any unlawful activity.”

Under Section 4 of RA 10927, the Court of Appeals (CA) may issue a freeze order which shall be “effective immediately” for 20 days upon petition by the AMLC and “after determination that probable cause exists.”

Within those 20 days, the court will conduct a summary hearing to “determine whether or not to modify or lift the freeze order, or extend its effectivity.”

“The total period of the freeze order issued by the Court of Appeals under this provision shall not exceed six months,” the new law read.

“[If] there is no case filed against a person whose account has been frozen within the period determined by the Court of Appeals, not exceeding six months, the freeze order shall be deemed ipso facto lifted…provided, further, that this new rule shall not apply to pending cases in the courts.”

The newly signed law also directed the AMLC, the Philippine Amusement and Gaming Corp. (PAGCOR) and “other government regulatory agencies” to “jointly” draft implementing rules and regulations (IRR) within 90 days from its effectivity on Aug. 3.

In a text message to reporters yesterday, Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla, Jr., who heads the AMLC, said the President’s approval of RA 10927 is “a very welcome development.”

“It plugs a critical gap in our legal framework. It will significantly strengthen our ability to prevent the entry of illicit money into our economy,” Mr. Espenilla said.

Asked if the AMLC would need additional manpower, Mr. Espenilla said the agency’s secretariat is already in the process of “building its manpower complement in line with the expanded scope.”

“The IRR of the new casino law will be fast-tracked and should be in place by year-end at the latest. The IRR will be developed in coordination with casino regulators, notably PAGCOR.”

Senator Francis Joseph “Chiz” G. Escudero -- chairman of the Senate Committee on Banks, Financial Institutions and Currencies -- noted that RA 10927 was enacted “right in time” for the July 17-21 Asia-Pacific Group on Money Laundering (APG) annual meeting in Colombo, Sri Lanka.

“Now that we have already complied with the guidelines, we are hopeful that the country will no longer be put in the blacklist,” Mr. Escudero said in a statement.

“AMLC was able to update the APG during their annual meeting in Sri Lanka that we have already passed the law. But according to them, the APG will still be monitoring the country until the law is already in force.”

The AMLC charter was last amended in February 2013 to include foreign exchange dealers, pawnshops and pre-need companies as entities that should be monitored.

A US State department report, “International Narcotics Control Strategy Report, Money Laundering and Financial Crimes 2017”, in March tagged the Philippines as a “major” money laundering site in 2016, noting that “[c]riminal groups use the Philippine banking system, commercial enterprises, and particularly casinos, to transfer drug and other illicit proceeds from the Philippines to offshore accounts.” -- with Melissa Luz T. Lopez and Mario M. Banzon