AML laws seen lacking teeth

Casino operators in the Philippines now have to comply with the country’s new anti-money laundering regulations, though some industry experts say the rules are still are not strong enough.

President Rodrigo Duterte signed the amended Anti-Money Laundering Act (AMLA) of 2001 to include casinos under the definition of “covered persons” when it comes to AML in July last year. This includes land-based, ship-board and online operations. The rules came into force in January.

The changes follow the audacious 2016 heist that saw $2 billion stolen from Bangladesh’s central bank. From that amount $81 million found its way into accounts at the Rizal Commercial Banking Corporation (RCBC) in the Philippines before disappearing into the casino industry.

According to investigators from the National Bureau of Investigation, the perpetrators likely chose the Philippines because of the weakness of its money laundering laws.

NTRC proposes entrance fee hike

The Philippines’ national tax think-tank has recommended an increase in the entrance fees required for players to enter casinos in the country, and to make their collection compulsory. In a research report titled “Proposed Imposition of Casino Entrance Fee.”, the National Tax Research Center (NTRC) said that an amendment and enforcement of the Executive Order (EO) No. 48 issued in 1993 would be all that is needed to impose a casino entrance fee in the country. According to the EO, Pagcor has been authorized since 1993 to collect a qualifying fee from casino players of not less than P100 per player, gathered in the form of coupons. However, the fee has been viewed as optional.

CEZA woos investors with infrastructure pledge

Cagayan Economic Zone Authority (CEZA) CEO Raul Lambino says CEZA is implementing initiatives and various infrastructure support projects in an effort to attract investment to the zone. He told a forum late last year that the authority wants to promote the zone as a new growth center for the North and the next transhipment and logistics hub in the Asean region. Lambino said he will jump start the construction of a multi-storey corporate center; a world class medical center; a boutique hotel and duty free premium outlets, as well as a power plant, expressways; IRs; water, sewerage and waste services. The move comes amidst a shakeup of online regulation in the Philippines, with the government clamping online companies with CEZA licenses in practice operating out of Manila.

Now, under the amended AMLA law, gaming operators must report any single casino cash transaction that involves more than PHP5 million (US$100,000) or its equivalent in any other currency. Each individual casino will also be required to establish internal programs for the prevention of money laundering to match ones currently implemented by financial institutions.

According to Senator Francis Escudero, chairman of the Senate committee on banks, the new law will put more teeth into the existing AMLA.

However Ben Lee, managing partner at IGamiX Management & Consulting,doubted the amendment will have much effect.

“The AML threshold is over high for a relatively low volume market. The threshold is similar to Macau’s but the level of bets and volume are vastly different. It’s merely a cosmetic band-aid for all the reasons above. The AML should be lower and in line with the banking AML requirements,” he said.

Casinos will have three months after the new anti-money laundering act comes into force to join the Anti-Money Laundering Council’s reporting system.

Arnold Salvosa, vice-president of PAGCOR is confident the new rules won’t affect future profits. “The entry into the Philippines in the coverage of the AML is still only one aspect in the gaming industry. The prediction is that the Philippines will grow by more than 9 percent in combined gross gaming revenue especially as Entertainment City continues to open up,” he said.

Mel Georgie Racela, executive director of the AMLC Secretariat pointed to the fact that introducing new AML frameworks in other jurisdictions had not harmed profit.

“I want to cite the study done by PricewaterhouseCoopers. In Singapore in 2013 when they adopted the Casino Control Act, their gaming market amounted to $5.8 billion it then grew to $7 billion. I think the Philippines will be the same- no negative impact,” he said.

According to PAGCOR, this amendment won’t have a big impact on the casinos of Entertainment City as most of the international operators already have their own in-house system guarding them against money laundering in accordance with their head offices.

“We already had comprehensive KYC systems in place, even prior to the new AML law coming into effect. There will be more administrative work, but the additional costs aren’t material,” a Solaire spokesperson said.

Salvosa says that it’s the state-owned PAGCOR affiliated casinos that will have to adjust.

Casinos will first be asked to establish policies and procedure in accordance with AMLA, which will be written into their respective programs. The casino boards of directors are the ones ultimately responsible for ensuring compliance with AMLA. The appropriate government agencies will be there to test if casinos are cooperating. AMLC can also wield authority to conduct their own compliance check.

Salvosa said one the main concerns from players is the requirement to divulge information before being able to gamble.

“We have to take measures to soften the impact. We will implement an information drive where we will inform our players that they have nothing to fear and that their information would be safeguarded and not unnecessarily disclosed. There will initially be questions and reluctance,” he said.

Another concern from casino operators and customers is the requirement for customer identification. “Casinos in the Philippines are located inside or in striking distance of restaurants or shops, unlike the set up in Singapore where you cannot enter the gaming area without passing through a certain door.

We will now require customer identification documents upon entry. We are trying to discuss this with our government agencies as to how we can address this concern,” Racela added.