Inside Asian Gaming

inside asian gaming May 2016 30 A spectacular cyber-theft this year highlighted the exemption of Philippine casinos from their country’s anti- money laundering (AML) law. In three articles, IAG looks at pressure now in the southeast Asian nation for change, and contrasts the situation there with the US, which has one of the world’s toughest AML regimes. “That’s where the money trail ends,” said Julia Bacay-Abad, executive director of the Anti-Money Laundering Council (AMLC), the agency tasked with enforcing the country’s AML controls. It ends there because gambling was never made subject to those controls. There’s been nothing to indicate that either of the casinos was involved in any wrongdoing. Nor were they required to report the transactions to the AMLC. It’s impossible for Philippine authorities to know on any regular basis how much money is entering the country’s casinos, which officially tallied US$2.8 billion in gaming revenue last year, not counting a sizable and similarly opaque online gaming sector. It’s also impossible for those authorities to know the money’s source or destination. There were alarms that might have been triggered further up the money trail, but the country’s stringent bank secrecy laws worked against that. It was revealed, for instance, that any Rizal bank branch can handle transactions of US$400 million or more without any red flags going up at the central office. Another intriguing element of the case is how the money was allowed to leave the branch in the first place since the Bangladesh Bank had issued an order to stop payment. The manager of the branch and an assistant were fired for this. At the time of writing it wasn’t known if they would be facing charges. It appears the manager did try to flee the country. Internal controls are only as effective as management wants them to be. In the gaming industry the AML reporting and compliance machinery of some of the biggest listed companies has often been undone by managers who are supposed to be minding the store. TANGLED UP IN GRAY Bangladesh Finance Minister Abul Maal Abdul Muhith has estimated that as much as US$70 million of the money the hackers routed to the Philippines may never be found. In Manila, the senator who led a legislative hearing into the scandal last month told Bloomberg, “This is a black eye on the entire Philippine financial sector.” It wouldn’t be the first. The nation is ranked a woeful 95th out of the 168 jurisdictions listed in Transparency International’s 2015 A Beautiful Launderette T he thieves who made off with US$101 million belonging to the central bank of Bangladesh earlier this year, in one of the most daring cyber-attacks of the young century, chose well in selecting Philippine casinos to launder the bulk of their haul. Dozens of Bangladesh Bank accounts at the US Federal Reserve Bank of New York were raided before anyone caught on. Out of US$81 million that found its way into phony accounts at a Manila branch of the Philippines’ Rizal Commercial Banking Corp, an estimated US$20 million was spirited out of the country. The rest was exchanged for pesos at a remittance service and stashed in junket and high-roller accounts, some with ties to Macau, at two casinos – Solaire resort on Manila Bay and a small venue in the capital city called the Midas. In this way, some US$50 million was able to disappear; exchanged for chips, gambled, moved among accounts, cashed out. In Focus By James Rutherford