AMLC seeks tighter controls in casinos

MANILA, Philippines — The Anti-Money Laundering Council (AMLC) has stressed the need to strengthen the anti-money laundering/combating the financing of terrorism (AML/CFT) controls in the casino sector, as the Philippines remains in the gray list of global dirty money watchdog Financial Action Task Force (FATF).

In an analysis of suspicious transactions with casino junkets, the country’s sole financial intelligence unit said the suspicious transaction reports (STRs) filed by high-risk integrated resorts echo the need to strengthen the AML/CFT controls of casinos operating in the country.

“The heavy use of physical cash by casino players, coupled with the non-reporting of covered and suspicious transactions by certain casino junket operators, contributes to the vulnerability of high-risk integrated resorts to money laundering risks,” the AMLC stated in the 21-page report.

Prior to its reinclusion in the FATF’s gray list, the Asia Pacific Group on Money Laundering (APG) had three recommended actions concerning casino junkets in the Philippines in its 2019 mutual evaluation report.

While the FATF recently recognized the steps taken by the Philippines in combating money laundering or terrorism financing, the Paris-based watchdog cited the need to continue implementing the Philippines’ action plan to address its strategic deficiencies.

One of the issues raised pertains to the need to demonstrate that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets.

Casino junket, otherwise called casino-based tourism, is an arrangement between casinos and junket operators under which the latter promise to usher in prospects into the casinos.

It is more commonly known as an organized gaming tour for wealthy gamblers or high net clients, who travel to casinos primarily to gamble.

In order to attract clients, casino junket operators typically offer an all-inclusive luxury service, which may include all-expenses-paid international trips, exclusive gambling experience, top-tier hotel accommodations and other personalized services.

In turn, casinos and junket operators earn a certain percentage from the money rolled in by junket players during their visit.

Data showed a total of 3,308 STRs valued at P17.79 billion were filed by various covered persons between September 2018 and January 2023.

A majority of the sample STRs came from commercial banks/non-expanded commercial banks and land-based casinos, which accounted for 71.58 percent and 27.66 percent, respectively.

In terms of value, however, land-based casinos outrank commercial banks at 60.6 percent or P10.78 billion to 39.4 percent or P7 billion.

The STRs were filed by four covered persons on 11 Filipinos, four Chinese, and two South Koreans who were allegedly involved in a criminal syndicate being investigated for a Ponzi or pyramiding scam, had cash-in and chips redemption transactions but did not participate in any gaming activities; performed bank transactions that were not commensurate with their profile; or lacked documents to support the legitimacy of their transactions.

The largest spike was seen in 2022, where the aggregate amount of junket-related STRs reached P9.68 billion or 54.42 percent of the total value of STRs reported during the period analyzed.

This sudden increase in the value of STRs in 2022 was attributed to 13 STRs, pertaining to safekeeping of playing chips, valued between P100 million and P300 million, with the Casino Treasury Division.

In its second data set, the AMLC said a total of 4,110 STRs were filed by four integrated casino resorts, of which 703 STRs with transaction values totaling P9.6 billion involved at least one junket operator.

Amidst the rapidly evolving operations in the casino sector in the Philippines, the AMLC pushed for the dissemination of the report among external stakeholders, such as relevant law enforcement agencies, supervising authorities, other government agencies, covered persons with a public-private partnership agreement with the AMLC, and other financial intelligence units.

The financial intelligence unit also wants to disseminate the full version of this report among internal AMLC groups/divisions and to publish a redacted version of this report on the AMLC website.

According to the AMLC, there is also a need to expand the analysis on casino junkets through a subsequent study by considering information from covered transaction reports.