THERE IS A SOLUTION

Even if casinos are not covered by anti-money laundering law, the problem could have been minimized had AMLC chaired by the BSP Governor engaged internal control and systems experts to design a control system that will capture money laundering transactions where these have to unavoidably pass -- the banking system. It is in the banking system where the particular type of laundering takes place.  Dirty money has to be successfully deposited in banks. Thereafter, once the dirty money is successfully withdrawn from banks, it is already clean.  Therefore, what BSP has to do is to issue a central bank circular providing control measures over deposits emanating from casinos and other dubious sources.  BSP should strengthen the banking system's KNOW YOUR CLIENT rule. It should ask the banks to have CASINOS implement their own KNOW YOUR CLIENT (or player) RULE,  otherwise deposits from casinos will not be accepted by banks.  

For example, please note that there was a major failure in the implementation of KNOW YOUR CLIENT RULE in RCBC Jupiter Branch, so that three accounts in the name of bogus depositor where successfully opened, from which withdrawals were successfully done likewise. 

What I am saying is analogous to what I recommended to Dept of Energy (DOE) and Energy Regulatory Commission (ERC) on the power industry.  The power generation industry (power plants) is deregulated but power distribution (Meralco) is regulated. Thus, Meralco buys power from its sister companies in the power generation industry on a negotiated contract basis, at probably higher rates.  Only its supply shortfall is sourced from non-affiliated power generators, at less favorable terms.  What I recommended was for ERC to issue a rule that it will not approve Meralco's power rates unless it conducts competitive bidding for its power purchases, participated in by all interested power generators, so that if there are lower offers from non-affiliated companies, Meralco will be compelled to buy from them, not from their sister companies at higher rates. 

My recommendation was emailed on Feb 7, 2015, supplemented by letters personally transmitted to DOE and ERC.  Before he left DOE, Sec. Petilla issued a DOE circular implementing my recommendation.  ERC subsequently issued its own circular that affirmed the DOE circular in about second half 2015 . 

It turned out that an NGO filed a petition to ERC in Dec 2014 praying for what I recommended a little later, but ERC was taking forever to approve it.  When Sec. Petilla jumped the gun on ERC and stole the thunder from it, ERC was constrained to likewise approve it.

I intend to write BSP and AMLC about the above but I am extremely busy at present. Maybe in a week or so, I'll do it.

MLT

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Isn't it stupid why casinos have been exempted from AMLC laws, when it's common knowledge that casinos are notorious venue for money laundering?

Philippine Star--Editorial

Senators reportedly want to “dig deeper” into the money laundering scandal involving several casinos and a bank. Congressmen, apparently hit by publicity envy, have announced plans to conduct their own probe. The congressional inquiries, ostensibly in aid of legislation, could be stretched all the way to election day.

With just three months left before incumbent officials finish their terms, can any piece of legislation even be proposed in connection with this probe? One measure needed to prevent a repeat of the scandal has been sought by authorities since the Anti-Money Laundering Act was passed in 2001: an easing of bank secrecy laws, which are among the toughest in the world. But every Congress has brushed aside the proposal. Will the ongoing probe make a difference?

Last Friday, as senators worked overtime to grill the personalities involved in the laundering scandal, the Bangko Sentral ng Pilipinas and the Bureau of Internal Revenue again pushed for the easing of bank secrecy laws. BIR officials said the measure is needed against tax evasion – a crime, incidentally, that remains exempted from the coverage of the Anti-Money Laundering Act. Are lawmakers willing to add tax evasion, finally, to the predicate crimes covered by AMLA?

The senators want to find out how $81 million hackers stole from the Bangladesh central bank deposited in the US Federal Reserve found its way to several casinos and a bank in the Philippines and then vanished. The perpetrators clearly were aware that Philippine casinos are exempted from money laundering laws, and exploited this weakness.

Senators have admitted that they kept casinos out of AMLA coverage to encourage more investments in the gaming industry. Are senators willing, finally, to include casinos among the crimes covered by AMLA?

With the time constraints, it’s unlikely that Congress can hammer out any of these proposals for enactment by President Aquino before he bows out in June. The congressional probe at least has highlighted the fact that this national embarrassment could have been prevented – if the measures sought by the anti-money laundering police had been approved a long time ago.

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