As long ago as 2013, a global body responsible for bolstering the fight against worldwide money laundering warned the Philippines government there was an “outstanding deficiency” in that state’s rules on anti-money laundering and combatting the financing of terrorism in relation to casinos.
In February that year the Paris-based Financial Action Task Force mentioned specifically the risks associated with the exemption of casinos from the country’s Anti-Money Laundering Act.
On Thursday it was reported by business news outlet Bloomberg that US$100 million in stolen money allegedly laundered recently via Philippines casinos was linked to an attempt to steal nearly US$1 billion from Bangladeshi government reserve accounts held at the U.S. Federal Reserve.
The Bloomberg report outlined that some public officials in the countries caught up in the alleged international plot are pointing fingers at each other.
Bangladesh’s Finance Minister, Abul Maal Abdul Muhith, this week accused the U.S. Federal Reserve of “irregularities” that led to the unauthorised transfer of US$100 million from an account at the Federal Reserve Bank of New York. A Fed spokeswoman was indirectly quoted by Bloomberg as saying there were no signs its systems had been hacked, and that instructions to make the payments from the Fed’s account followed standard protocol – which could hint at a highly sophisticated plot.
The Bangladesh central bank previously claimed hackers had stolen the funds and that some of the money had been traced to the Philippines.
According to Bloomberg, a Bangladesh central bank official who is part of a panel investigating the disappearance of the funds said on Wednesday that the Fed had blocked a separate transfer of US$870 million.
The Philippine Daily Inquirer newspaper has led reporting on the alleged laundering of the US$100 million reportedly stolen. Its coverage has included a suggestion that stolen cash may have entered the Philippines via a Makati, Manila, branch of Rizal Commercial Banking Corp (RCBC). The money was then allegedly converted by some party or parties into Philippine pesos and deposited in the account of an unidentified Chinese-Filipino businessman said to operate a junket business bringing VIP gamblers to the Philippines.
The funds were allegedly used to buy casino chips or pay for gambling losses at three casinos in the capital Manila. The venues named were: Solaire Resort and Casino, operated by Bloomberry Resorts Corp; City of Dreams Manila, operated by a unit of Melco Crown Entertainment Ltd; and Midas Hotel and Casino, majority-owned by Leisure and Resorts World Corp.
There was no suggestion in the report that the banks or casinos named were complicit in any improper movement of funds.
Bloomberg quoted a statement from RCBC’s chief executive, Lorenzo Tan, condemning “any insinuations that the top management of the bank knew of and tolerated alleged money laundering activities in one branch.”
Leo Venezuela, director of investor relations for Bloomberry Resorts, said in an email to GGRAsia on Thursday, the company had “no comment at this time” ahead of an official investigation.
On March 3, a spokeswoman for Melco Crown told GGRAsia by email “City of Dreams Manila does not utilise the facilities of RCBC for its banking requirements. Also, City of Dreams Manila has no knowledge of the transactions described in the said news report.”
The Philippine Amusement and Gaming Corp, also known as Pagcor, that country’s casino regulator, said in a statement on March 2, that it had asked the casinos named in the report for their responses to the allegations.
The Pagcor statement added: “As a matter of regulation, Pagcor requires casinos to employ strict internal control policies on funds movements and issuances of playing chips.”
The gaming regulator subsequently suggested the country’s banking regulator should take the lead on the investigation, on the basis that the allegedly illicit funds had entered the country via the banking system.
Nonetheless this month the 2016 International Narcotics Control Strategy Report from the United States’ Department of State said: “International experts and observers note that the Philippine casino industry is a weak link in the country’s AML/CFT regime.” That was a reference to anti-money laundering and combatting the financing of terrorism.
The exclusion of casinos from AML obligations specifically under the country’s Anti-Money Laundering Act was at the request of some lawmakers and Pagcor, Senator Teofisto Guingona said in February 2013, following the approval of a revision of the act.
“[They] excluded casinos from coverage because [some lawmakers] warned it would deter investors. That’s the number one reason. And number two, Pagcor,” the senator was quoted saying in media reports.
The Financial Action Task Force, also known as FATF, had said in February 2013 it had “concerns that the casino sector in the Philippines continues to be unregulated for AML and CFT purposes and is still not subject to AML/CFT requirements and urges the Philippines to promptly and effectively address this outstanding deficiency.”
On March 2 this year, Teresita Herbosa, chairman of the country’s Securities and Exchange Commission was quoted by The Standard newspaper as warning that the Philippines risked being added to the FATF’s so-called “grey list” of countries with strategic anti-money laundering deficiencies.
“We already have warnings” from the FATF, Ms Herbosa told reporters. “If the reports coming out were true, it really shows the consequences. I don’t think they have any reason now to oppose the bill that casinos should be covered,” she added, referring to Philippines lawmakers and some amendments to the Anti-Money Laundering Act 2001, proposed as long ago as 2013.
The FATF was set up in 1989 at a meeting of the G-7, a body made up of the finance ministers of seven industrialised countries, including the U.S., the U.K. and Japan.
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