A study by the Philippines’ Anti-Money Laundering Council (AMLC) into suspicious transactions associated with casino junkets has found multiple instances of junket operators failing to report on covered transactions, in breach of junket agreements.
The study, which aims to gain insights into the money laundering and terrorism financing threats associated with casino junket operators in the Philippines, identified non-reporting as one of four key risk areas for the sector. It also noted that “Suspicious Transaction Reports filed by high-risk integrated resorts echo the need to strengthen the AML/CFT controls in the casino sector.”
In highlighting the failure of some junkets to accurately report potentially suspicious transactions, the AMLC detailed two specific instances linked with an unnamed integrated resort, listed only as Casino A.
In the first instance, a junket agreement between Casino A and Junket Operator 1 required the junket to submit a Rove Report on a daily basis to report all covered and suspicious transactions, even if no such transactions occurred. However, Casino A’s AML team observed a peculiarity in that Junket Operator 1 constantly issued Rove Reports claiming the absence of covered or suspicious transactions.
In response, Casino A analyzed CCTV footage of the junket room in question and discovered what seemed to be cash payments and withdrawals by unknown individuals that were not mentioned in Junket Operator 1’s Rove Reports. According to the AMLC study, Junket Operator 1 claimed it had mistakenly failed to record and submit the transactions in question. These included 21 cash deposits totalling Php1.58 billion (US$29 million) to a single account between December 2021 and March 2022.
The second instance, which also included Casino A, uncovered similar instances of reportable transactions made by several individuals who were not included in the Rove Reports of Junket Operator 2. In many of these instances, large transactions made by individuals were not supported by any gaming activity, suggesting they were not in fact gaming patrons. Casino A ultimately terminated its junket agreement with Junket Operator 2 for breaching the provisions of the agreement.
According to the AMLC, Casino A submitted 507 Suspicious Transaction Reports with an aggregate amount of Php6.86 billion (US$126 million) in 2022 alone in relation to Junket Operator 2.
In outlining the conclusions of its study, the AMLC identified four key risk areas casino operators in the Philippines should watch for, namely the non-reporting of transactions in violation of junket agreements; the involvement of junket operators in criminal conspiracy; the purchase of chips with small-denomination currency, followed by modest gambling actions; and conduct of financial transactions not commensurate with declared source of funds.
“The heavy use of physical cash by casino players of covered and suspicious transactions by certain casino junket operators contributes to the [issue], coupled with the non-reporting vulnerability of high-risk integrated resorts to money laundering risks,” the AMLC said, noting that further study is required into the findings of its report.