A Hole in the Global Money-Laundering Defense: Philippine Casinos

An organ of international monitoring of money laundering Philippines warned that there was a hole in their defenses against persons illegally moving money around the economy: the casinos in the country.

Now this gap could eventually lead to higher charges for Filipinos working abroad when sending money to their families and damage the reputation of the banking industry.

These days, financial investigators attempting to locate and recover $ 101 million stolen in February from the account of Bangladesh to the New York Fed in a cybertheft complex dollars were frustrated by the fact that casinos are not covered by Law against money laundering of the Philippines. "

When the Philippines strengthened the law in 2013, which eventually decided not to add casinos to the list of entities listed, as recommended by the Working Group based in Paris Group of Financial Action Task Force (FATF), an oversight body multiparty government.

The group had distinguished industry to attract attention in its latest review of the defenses against money laundering in the Philippines three years ago. But lawmakers wanted the nascent casino industry and the jobs it promised to create, develop.

The exemption from the law means that the authorities can not require casinos to report operations or specific players to help their investigations, even if officials against money laundering believe that some of the capital of Bangladesh stolen was used to buy gambling chips in Manila.

In testimony before the Senate this week Philippines Julia Bacay-Abad, Executive Director of the Anti-Money Laundering Council of the Philippines, said the evidence that the board has collected shows that millions went to a casino and a business game online, where apparently they exchanged for gambling chip.

"The money trail ends there, with casinos," the official said, adding that the Council has appealed to the Federal Bureau of Investigation and their counterparts in Hong Kong, where a portion of the funds can -Be gone.

The FBI is investigating the theft of account Bangladesh, according to people familiar with the matter.
Philippines has managed to return only a small fraction of that $ 81 million was allocated to bank accounts in the country throughout South Asia $ 70,000 according to a central bank official close to the investigation Bangladesh.

However, about $ 20 million of the stolen funds were channeled Sri Lanka, but the transfer was considered suspect by the management of the bank and counteracted by the financial authorities.

Approximately $ 81 million in Bangladesh money was sent to accounts in Rizal Commercial Banking Corp. in February, according to officials of the two countries close to the investigation.

A lawyer and executive Rizal bank to the Senate this week that a branch manager of Manila, Maia Santos Deguito, had ignored the order to freeze the accounts, and instead transfer the money to them. Ms. Deguito, who testified before the Senate at a hearing behind closed doors this week and facing a Justice Department investigation, declined to comment on the charges against her, invoking the right not to testify at hearings. A lawyer for Ms. Deguito said his client is innocent of any wrongdoing.

President PhilRem, the cash back local firm that facilitated the transfer of $ 81 million in accounts RCBC, testified before the Philippine Senate this week that $ 29 million were paid to the account of a gaming operator Weikang curd identified as Xu at Solaire Resort & Casino, while approximately $ 30 million was awarded to Mr. Xu effective.

Another $ 21 million, the president said PhilRem, was transferred to a game online local company called Eastern Hawaii Leisure Co.

A lawyer confirmed Xu solar payments, but Xu could not be reached immediately for comment. A lawyer for the owner of Hawaii of the East told the Senate that his client Sin Kam Wong was not immediately able to testify because he is in Singapore for medical treatment. He added that Mr Wong will attend the next hearing scheduled for March 29.

The Philippines is not the only country whose laws against money laundering does not cover casinos. Similar laws in two dozen countries, including India, Mexico and Cambodia does not cover casinos.

But the Philippines combines the casino industry booming with the existence of several money transfer services established for overseas workers, increasing their vulnerability for use as a center for money-laundering.

Tuesday, Cristino Naguiat Jr., president of recreational and gambling Philippines Corp., which regulates casino operations, said he would welcome the inclusion of casinos under the Money Laundering Council. However, he expressed doubt that the change to the laws against money laundering could prevent an incident like this.

He described the movement of funds from Bangladesh to the Philippines as a "systemic failure at the level of the banking system because banks are the main guardians against illegal transactions."

Central bank governor Amando Tetangco Philippines said Friday that the central bank will work with Congress to improve and "fill the gaps" in the law by extending its powers to cover casinos and maybe even real estate companies.

If the Philippines does not act to fix the lagoon casino soon, experts say that the Philippines regulations could risk a collapse by the FATF, the multi government working group at its next review, which has not yet been scheduled. If the Philippines is hit to a lower range, which point to greater exposure to the risk of money laundering which could increase the cost of sending money to the country, kitchen and amount of money sent by large diaspora from the Philippines some 10 million foreign workers who pay about $ 24 million annually.
Filipinos have already faced problems sending or receiving money because of the FATF warning flags about how terrorist groups could move money in and out of the southern Philippines where Muslim militant groups still operating.

The amendments of laws against money laundering have tried to solve this problem, but fears of funds channeled activists, however affected funds transfer services to the restoration of Filipinos.

Susan Ople, Blas F. lawyer and president Ople Policy Center and Training based in Manila of migrants, he said, even before the investigation of the stolen funds Bangladesh began a series of money transfer operations in 17 countries Philippines , including Spain, Germany and Ireland had their bank accounts closed.

He also warned that if the government does not quickly plays to change the laws, Filipinos working abroad should have more foreign banks often "charges and generally offer lower exchange rate."

Bansan Choa, CEO of transferring money from Manila iRemit, told the Wall Street Journal that the study of his company found that closing the bank accounts of companies in Philippines remittances as part of foreign banks "derisking" in money laundering prone countries, it could cost the economy around $ 1.4 billion per year due to higher costs and less favorable exchange rates.

Remittances have remained strong and sustained weight Filipino consumer spending the main engines of economic activity.

Senate President Franklin Drilon said this week that the expansion of legislation against money laundering to include casinos will be one of the first major challenges for the next president of the Philippines. The country must carry out national elections on May 9 to choose a successor to President Benigno Aquino III, ending his single term of six years.

At least one of the candidates, Sen. Miriam Defensor Santiago warned that if the casino sector remains outside the laws against money laundering in the Philippines, and "the Philippines may become the world capital of laundering money ".