Inside Asian Gaming

inside asian gaming May 2016 34 time Solaire was getting ready to open early in 2013, there was a real fear the country would be blacklisted by the Financial Action Task Force (FATF), the policy-making and standards-setting body for the international AML/CFT community. This would have made it tougher to move money in and out of the country, raising the cost of financial transactions and dealing a body blow to an economy that is heavily reliant on remittances from Filipinos working abroad. So there was a rush in Congress to beef up provisions of the existing Anti-Money Laundering Act (AMLA), which dates back to 2001. Casinos, a “Designated Non-Financial Business” under FATF guidelines on money laundering, were not included in the original act. They were added to the revised legislation. But then they were pulled, mainly, or so it appeared at the time, at the behest of the national gaming regulator, the Philippine Amusement and Gaming Corp. (PAGCOR), which operates under direct control of the office of the president. Solaire, the largest single home-grown gaming investment in the country’s history, was going to open that March as the first of four destination resorts planned for a special zone the government had carved out of Manila Bay to boost the country’s economic fortunes by attracting foreign tourists and tourism-related investment from abroad. PAGCOR was overseeing development of the reclamation area, called Entertainment City. There was concern at the time that imposing AMLA controls on the industry would impede the desired investment and scare off the VIPs that PAGCOR was hoping would pour in from China and elsewhere. It wasn’t a hard sell. The Anti-Money Laundering Act reforms were passed that February, with the gaming industry exempted again. And in June, the Financial Action Task Force removed the Philippines from its watch list, citing the country’s “significant progress in improving its AML/CFT regime.” The accompanying report, however, made note of a “full range of AML/CFT issues” that remained to be addressed – “in particular, regulating the casino sector for AML/CFT purposes and making it subject to AML/CFT requirements.” Teresita Herbosa, who heads the Philippines Security & Exchange Commission and is co-chair of the Anti-Money Laundering Council, is warning that the country’s FATF status is in danger again. She is urging the government to act swiftly to bring the gaming industry into the scope of the Anti-Money Laundering Act. Two of the five candidates running for president in the May 9 elections – Senator Miriam Defensor Santiago and former Interior Secretary Mar Roxas, who was backed by outgoing President Benigno Aquino, have spoken publicly in favor of this. A third, Davao City Mayor Rodrigo Duterte, said without giving details that he would support amendments to the AMLA and the bank secrecy laws. Even PAGCOR says it’s now on board. Herbosa rates the country’s current FATF status as “gray.” stride last year with a series of high-profile penalties. In January 2015, Trump Taj Mahal was fined US$10 million for a history of BSA violations. These included failure to implement and maintain an effective AML program, failure to report suspicious transactions and failure to properly file standard Currency Transaction Reports and keep appropriate records. In June 2015, Hong Kong Entertainment (Overseas) Investments was hit with a US$75 million civil penalty. It followed a sting operation conducted by federal agents posing as high rollers or their representatives seeking to gamble at the company’s Tinian Dynasty Hotel & Casino in the US Commonwealth of the Northern Marianas. The investigators found that not only did the casino have no AML compliance program as required by federal law; it had no interest in implementing one. In every instance where the undercover agents expressed the desire to deposit large amounts of unreported cash they were accommodated. In some cases they were even instructed by employees in how to conduct transactions to avoid scrutiny. Last August, FinCEN announced that Caesars Palace on the Las Vegas Strip had agreed to a fine of $8 million, plus $1.5 million for violating Nevada law, for allowing large gambling transactions in its VIP rooms to go unreported. In marketing its VIP services in the US and internationally, particularly in Asia, the casino also had failed to monitor large wire transfers of cash for suspicious activity, as the BSA requires. Shasky Calvery is resigning as FinCEN director the end of this month, reportedly to accept a senior compliance position at HSBC. She helped nail the banking giant for US$1.9 billion during her tenure at the Justice Department. In 2012 it negotiated an AML settlement that included an admission that drug cartels had laundered at least US$800 million through its doors. She’s the agency’s second director to joinHSBC, which has struggled since the settlement to bring its AML regime into line with US rules. Shasky Calvery was an ex-Justice Department prosecutor with a reputation for toughness. She came to her new job at the end of 2012 determined to communicate to the industry how serious the government is about compliance with the rigorous AML policies, procedures and reporting requirements set out in the law. In Focus