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Philippines Addresses Casino Money Laundering Amid FATF Concerns

The Philippines' persistent presence on the Financial Action Task Force's (FATF) gray list has put a spotlight on the need to reinforce Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) controls related to casino junkets. This issue stems from the country's failure to exit the FATF gray list as of October 2023, and a crucial aspect of addressing this involves enhancing controls and supervision mechanisms in the casino sector, particularly concerning activities linked to junket operators.

Casino Money Laundering FATF Concerns

The journey towards fortifying AML compliance in the casino industry commenced in 2017 when casinos were formally designated as covered entities under the Anti-Money Laundering Act. The amendment, made during the administration of former President Duterte, marked a significant regulatory shift, subjecting casinos to AML regulations that were previously not mandatory. The subsequent issuance of the Casino Regulatory Manual (CRM) by the Philippine Amusement and Gaming Corporation (PAGCOR) in 2018 served as a comprehensive guide for casinos, laying out stringent guidelines with a particular emphasis on the supervision of junket operators.

However, despite these regulatory strides, the FATF has identified shortcomings in the Philippines' AML/CFT controls, especially concerning casino junkets. The FATF's call for "effective risk-based supervision" and a demonstration of the use of AML/CFT controls to mitigate risks associated with junkets has prompted a closer examination of existing protocols.

Banking & Payment Solutions

In response to the FATF's classification, PAGCOR has taken proactive steps, including the issuance of the Junket Assessment Risk (JRA). This assessment gauged the overall risk of junket operations as medium, indicating progress in supervision and risk mitigation since the regulatory changes post-2018. However, the JRA also pinpointed areas requiring improvement, prompting PAGCOR to direct casinos to update and address their AML/CFT programs.

The outlined risk areas include the limitation of cash transactions, the enhancement of due diligence on junket operators and clients, and an emphasis on training. Addressing challenges related to cash transactions in casinos, with their intrinsically cash-intensive nature and high transaction volumes, is a key focus. Additionally, the stress on due diligence and training aligns with efforts to ensure a robust AML/CFT framework.

PAGCOR's response has extended to the enforcement of heightened protocols against AML/CFT tailored for casino junkets. This anticipatory initiative is designed to address concerns raised by the FATF, showcasing the Philippines' commitment to strengthening its regulatory environment. President Ferdinand Marcos Jr. has also directed the immediate implementation of a national strategy covering 2023-2027 to expedite the country's removal from the FATF gray list.

The broader impacts of the FATF's gray list on the gaming industry are noteworthy. The inclusion has triggered a comprehensive reevaluation of AML/CFT protocols, heightened scrutiny from regulatory bodies, and potential challenges in financial transactions for casinos. PAGCOR's phased approach, incorporating risk assessments and targeted protocols, reflects a strategic response to navigate these challenges effectively.

Beyond immediate concerns, the successful implementation of these measures positions the Philippines as a stable and secure destination for foreign investors, including gaming operators. The regulatory advancements and proactive responses are pivotal in attracting investments, fostering job creation, boosting tourism, and establishing the Philippines as a reliable player in the international gaming landscape. As the country endeavors to exit the FATF gray list, the collective efforts toward AML/CFT compliance are poised to yield broader economic and regulatory dividends.


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