'Casinos lobbied for exclusion from AMLA'

RG Cruz, ABS-CBN News

Posted at Mar 02 2016 08:02 PM

MANILA - A seemingly harmless amendment excluding casinos from the revised Anti-Money Laundering Law (AMLA) in the 15th Congress amid lobbying by casino operators has now become the source of headaches in the country's fight against money laundering.

Fixing this apparent loophole will now be up to the next administration.

READ: PH casinos get a pass in anti-money laundering law

Congressional records show that Senate Bill 3123, authored by Senators Sergio Osmena III and Teofisto Guingona III, and House Bill 6565, authored by Speaker Sonny Belmonte, Majority Leader Neptali Gonzales II and then Minority Leader Danilo Suarez, as filed originally covered banks, quasi banks, trust entities, foreign exchange corporations, money changers, money payment, remittance and transfer companies, insurance companies, pre-need companies, securities dealers, brokers, salesmen, investment houses, casinos, internet casinos, real estate agents, dealers in precious metals, dealers in precious stones, trust ad company service providers, buying and selling of real estate, managing of client money, securities or assets, management of bank, savings or securities accounts, organization of contributions for the creation, operation or management of companies and creation, operation or management of juridical persons or arrangements and buying and selling business entities.

The bills were meant to amend Republic Act 9160 passed under President Gloria Macapagal Arroyo in September 2001, which didn't include casinos under the anti-money laundering law.


It was Manila Representative Amado Bagatsing, then chairman of the House Games and Amusement Committee, who proposed the exclusion of the casinos amid lobbying by casino operators.

ABS-CBN News went through the transcripts of the plenary deliberations on House Bill 6565.

During the period of interpellations and debate at the plenary on December 4, 2012, Bagatsing said: "Let me just manifest that this representation is the chairman of the games and amusement committee, and this representation through this committee was given a position paper by the gaming industry where they would like this representation to propound their anxieties, their fears, so that their fears will be properly addressed."

Bagatsing told the plenary that in a trip to Macau, he discovered that Macau's casinos are not covered by anti-money laundering laws. 

"Let me rephrase or let me state the kind of question I asked of this big operator. I asked them: 'How is the anti-money laundering act doing here in Macau?' I got the biggest surprise of my life when in jest the person answered: 'What AMLA?' In other words, ang tanong ko sa kanila - ano ba ang pangyayari dito sa AMLA dito sa inyo, sa Macau. At ang sagot sa akin, anong AMLA?

"Are these countries seriously following what is being agreed upon?”

Bagatsing also told the plenary that the casinos had a position paper questioning the proposed inclusion of the casinos in the AMLA coverage. 

"How can we comply with the AMLA when anything beyond US$10, 000 we have to report? Ang sabi ng mga casino eh yung $10,000 magkano lang iyon sa mga big rollers? Maski na hindi high rollers pero ang mga mayayaman na nasa bansa tulad ng Singapore, China, Japan huwag na iyong mga nasa Europa at sa Amerika ang mga nagsusugal karamihan ay nasa Asya, to them $10,000 is not even enough to pay for a Louis Vuitton bag," Bagatsing said.

"Sasabihin nila 'Ano ang ibig ninyong sabihin? Lahat ng transaksyon ng casino sa bawat player ay ire-report namin? Papaano namin gagawin iyon? That is a nightmare. According to them, they are already being regulated and policed by the Central Bank of the Philippines o Bangko Sentral ng Pilipinas. So I was wondering, Mr. Speaker, because I saw in the bill that the casinos are included, is it not sufficient that these companies are already being regulated and monitored by the Bangko Sentral ng Pilipinas, ergo, we might as well just remove them here because they are already being supervised and monitored?"


The bill’s sponsor, then House Committee on Banks chair Sergio Apostol, said he was open to the proposal. Thus, in the subsequent period of committee amendments, Apostol moved for the deletion of casinos, including Internet casinos, real estate agent and persons who provide services for the buying and selling of real estate, in the proposed bill. The amendment was later approved.

However, more deletions came when the period for individual amendments came. Suarez also moved for exclusion of dealers in precious metals from AMLA coverage, an amendment which was accepted.

Moments later, the bill was approved on 2nd reading in a viva voce vote.

The next day, December 5, 2012, the bill was approved on 3rd reading as it was certified as urgent by the President.

The final vote was 141 in favor, 7 against and 1 abstention.

Bagatsing said that as chairman of the House games and amusement committee, he had to look at the bigger picture due to the number of investors coming in. 

"I saw and I felt that it was inappropriate after inviting all these stakeholders to invest billions of dollars, they have not even taken off, you're going to tie their hands. Hindi naman ayos ito. Para bang sinubo natin yung big hotel casinos, pinapasok natin pagkatapos pinahirapan natin. Even in Macau, nag-inspeksyon kami doon. Di naman tinatanong pagdating namin dun magkano dala mo at paglabas mo hindi naman tinatanong kung nanalo ka o hindi.

"So I asked one of the executives ng isang malaking casino roon: 'How are you dealing with AMLA?' Sagot sa kin: 'What AMLA?' Obviously, they [knew] of AMLA but they don't follow their AMLA because sila tatamaan. 

"So sabi ko, ano nangyayari rito? Selective. Based on that, I stood up on the floor and requested the sponsoring committee not at this time should we include casinos because they are not yet operating and about to operate. Mane-negate ang Entertainment City, ang tourism, ang job generation nitong mga hotel casinong ito."


Bagatsing confirmed casino operators lobbied for the exclusion of their businesses from coverage. 

"Wala naman tayo tinatago diyan. I guess the stakeholders were the ones who requested for us to hear their side dahil sinabi ko nga earlier, pagkatapos mo i-entice to bring, let's say US$2 billion each up to US$5 billion eh biglang you'll tie their hands. So not for the moment, we requested it be deleted until further study. Kasi kagaya ng reportorial 10,000 US dollars. In excess of 10,000 US dollars, magrereport ka na. Eh ano ba 10,000 US dollars sa high rollers? Japanese, Chinese, every time, they bet more than 10,000 US dollars, you will be reporting to us. Probably 10,000 US dollars is a big amount but for these people, it's just peanuts. So I've had my reservation with AMLA from the beginning. I had my reservations with AMLA.

"Well, the casinos, like let's say number one would be the Solaire, Resorts World, City of Dreams, the Okada casino and the Pagcor license gaming casinos. Kasama sila because they were speaking for the industry. It was not just for one. It was speaking for the entire industry."

Bagatsing finds nothing wrong with the lobbying. 

"Palagay ko sa kuwan lang, maduduming isip, dahil kung kayo mga stakeholders, everybody is entitled to lobby because lobbying means you have to wake up and call the attention of the legislators. 'Eto tama sa amin ito. This is how it will affect our industry.' There's nothing wrong but lobbying for…para bang may favors… not necessarily, I don't really buy that. Any big industry for that matter will lobby in Congress. They lobby from the committee level to the rules, to the Speaker to the plenary. Walang masama doon eh."

READ: Pagcor launches probe into $100-M money laundering

For its part, the PAGCOR said in a statement: "In the position paper submitted by the Entertainment City licencees to the House Committee on Bank and Financial Intermediaries, the preferred position of the Entertainment licensees is to continue self-policing for suspicious transactions. But if legislation is going to be passed, the threshold amount for reporting should be consistent with the value of typical transaction sizes in the casino industry." 


Belmonte told ABS-CBN that at that time, they did not consider the possibility that casinos can be used to launder money.

"First of all, the idea that casinos could be used for money laundering was not a well known fact and to us, it seemed like a conjecture. That's the first one. The casino business was just starting to crop up in the Philippines. At that time when it took place, the casino business was virtually monopolized by the government. We saw what changes the casino business did to the economy of Singapore, to the economy of Macau itself from being a one-man casino, it beat Nevada in a short matter of time," he said. 

The Speaker said the government's attempt to attract more casino investments in the country was also a factor.

He said the government had adopted a policy of allowing competing casinos in the country to attract foreign exchange. 

"It is against that backdrop, and then of course, I for one, although I'm the principal author, this is of course deliberated upon by the committee, with or without my consent, but had I been there I would still have consented to it because the whole thing is a work in progress," he said. 


It was a somewhat different story at the Senate.

On January 30, 2013, then Senate President Juan Ponce Enrile moved to exclude casinos and internet casinos "because their inclusion would prejudice many people who have already invested huge amounts of money in establishing casinos in the country in the belief that the condition under which they started to plan their investment would not be altered,” according to the Journal of the Senate for that day. 

Guingona rejected the amendment. Enrile instead proposed a proviso that stated that "the obligation to report to the Anti-Money Laundering Council shall only arise when there is knowledge or suspicion of money laundering notwithstanding the transaction being covered as provided for in Section 3B."

According to the Journal, Enrile said casinos and Internet gaming will still be covered "but the reporting requirement will take place only when there is knowledge or suspicion of money laundering, in line with the principle of 'know your customer.'"

Enrile also pointed out that reporting such transactions, even without knowledge or suspicion, would be very tedious and would impede the competitiveness in the casino gaming market.

He would later on reveal to the plenary, according to the journal, that "it was the casino operators themselves who asked him to articulate their position. He expressed the need to prioritize the country’s interest over the need to comply with the FATF (Financial Action Task Force)”

Enrile later reminded the plenary that "casinos in the Philippines and other countries are governed by a regulatory body like PAGCOR which should regulate or supervise casinos."

He said that PAGCOR’s position is for it to be invested with the power to check suspected laundering activities in its area and to report it to the AMLC instead of AMLC directly going to casinos.

Enrile also proposed a proviso allowing the AMLC to field its intelligence officers in casinos to watch the activities on the floor.

READ: 'Senators lobbied to exclude casinos from money laundering law'

The Senate approved its version on February 4, 2013, with 15 voting in favor and no one against.

The different versions of the Senate and House went on to be reconciled by a bicameral conference committee. The Senate was represented by Senators Sergio Osmena III, Francis Pangilinan, Teofisto Guingona III, Ferdinand "Bongbong" Marcos Jr., Joker Arroyo, Franklin Drilon and Antonio Trillanes.

The House was represented by Apostol, Golez (R.), Jesli Lapus and Suarez.


What would become Republic Act 10365 on February 15, 2013 would exclude casinos, among others. 

The new anti-money laundering law would only cover:

(1) banks, non-banks, quasi-banks, trust entities, foreign exchange dealers, pawnshops, money changers, remittance and transfer companies and other similar entities and all other persons and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

(2) insurance companies, pre-need companies and all other persons supervised or regulated by the Insurance Commission (IC);

(3) (i) securities dealers, brokers, salesmen, investment houses and other similar persons managing securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close-end investment companies, common trust funds, and other similar persons, and (iii) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or regulated by the Securities and Exchange Commission (SEC);

(4) jewelry dealers in precious metals, who, as a business, trade in precious metals, for transactions in excess of One million pesos (P1,000,000.00);

(5) jewelry dealers in precious stones, who, as a business, trade in precious stones, for transactions in excess of One million pesos (P1,000,000.00);

(6) company service providers which, as a business, provide any of the following services to third parties: (i) acting as a formation agent of juridical persons; (ii) acting as (or arranging for another person to act as) a director or corporate secretary of a company, a partner of a partnership, or a similar position in relation to other juridical persons; (iii) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement; and (iv) acting as (or arranging for another person to act as) a nominee shareholder for another person; and

(7) persons who provide any of the following services:

(i) managing of client money, securities or other assets;

(ii) management of bank, savings or securities accounts;

(iii) organization of contributions for the creation, operation or management of companies; and

(iv) creation, operation or management of juridical persons or arrangements, and buying and selling business entities.

"Notwithstanding the foregoing, the term ‘covered persons’ shall exclude lawyers and accountants acting as independent legal professionals in relation to information concerning their clients or where disclosure of information would compromise client confidences or the attorney-client relationship: Provided, That these lawyers and accountants are authorized to practice in the Philippines and shall continue to be subject to the provisions of their respective codes of conduct and/or professional responsibility or any of its amendments."


For now, Belmonte isn't ready to concede that the exclusion of casinos is a loophole that needs to be plugged. He said that should it be proven to be a loophole, then it will be up to the next administration to fix it.

"Casino business was just starting in the Philippines. There was no clear indication to us even from the record of Las Vegas and Macau that it could be a big loophole and up to this time, it is still under investigation so we still don't know if it is an established fact that it is a loophole," he said. 

"The House opted that it's better for us to be able to pass this bill because in fact the money laundering organization worldwide was batting for it, demanding it from us. The fact that it was passed without the casino thing means to say that they also look forward at that some point in the future when it becomes evident and I say if it becomes evident that …that is a loophole then the Congress, next Congress, I'm very confident will do what is necessary. At any rate, we have to do it. There's also pressure being exerted on our Central Bank."

Bagatsing took a similar tone. "If we can prove that one isolated case or even two cases will wreak havoc to the gaming industry, I think then it's too shallow for me. Para sa akin, they should look at the bigger picture. Right now, Macau is having a difficult time. Other countries that have casinos are having a difficult time."

"The Philippines now is open because any tourist will have a wonderful time in the Philippines rather than in other countries. We have more to offer. This has been known to SEA up to Australia na takot sila sa Pilipinas. We have more to offer…Talagang this is part of the agenda of the others also but I'm not saying we should not run after these violators. It's up to the central bank to apply the full force of the law."

READ: AMLC investigating $100-M money laundering activity: report