(STORY UPDATED TO CORRECT P80.6 TRILLION ECONOMY WITH P18.6 TRILLION)
THE Anti-Money Laundering Council (AMLC) on Tuesday said it has flagged the Philippine Offshore Gaming Operators (POGO) industry for being a “high risk” for money laundering.
At a Senate Labor committee hearing, AMLC Executive Director Georgie B. Racela revealed this was the outcome of their risk assessment on the industry, which was done in December 2019.
“We conducted our risk assessment and the risk assessment discovered that there is low level awareness to [government] regulations among POGOs. There is also an increasing level of threat in money laundering,” Racela told the Senate panel, chaired by Sen. Joel Villanueva.
The assessment covered the bank transactions of POGOs from 2015 to 2019.
In an ambush interview, Racela told the BusinessMirror they got “intelligence leads” indicating some POGO-related firms may be involved in irregular operations.
He cited their experience with two POGO-related companies which they learned, after inspection, were not found in their declared office addresses.
“In such case, we recommend proper action,” he said.
BSP advises banks
The Bangko Sentral ng Pilipinas (BSP) Managing Director Lyn Javier said they are already aware of such risks, and have already asked all banks to exercise due diligence in monitoring the transactions of their POGO accounts.
“If they detected certain suspicious transactions from the banking system, they have to report to authorities,” Javier said.
Racela also pointed out the apparent high number of unregulated service providers for licensed POGOs.
As of January 2020, the Philippine Amusement and Gaming Corp. (Pagcor) said there are 59 POGO licensees nationwide—of which 48 are foreign-based and 11 are based locally.
In the same period, it said there were also 229 accredited service providers for such firms.
To help minimize these issues, AMLC recommended increasing the level of effectiveness of compliance with government regulations among POGOs through training and workshop; revisiting supervision of Internet-based casinos and service providers; and reevaluating the licenses of Internet-based casinos.
Worst-case scenarios
AMLC also disclosed before lawmakers the result of their study on the possible economic impact, if the POGO industry will suddenly disappear, in terms of the country’s financial flow.
Racela noted that the POGO industry only contributed P52 billion of cash inflows and outflow in the country. Its net inflow, he added, is even smaller at only P7 billion.
” . . . . based on our records, the total flow of funds is approximately P54 billion only, combining inflows and outflows. If we deduct outflows from inflows, the net inflow is only approximately P7 billion. Comparing this to our P18.6 trillion economy, the P54 billion represents only 29%, and if we use Figure 7B, this represents only 0.04% of the economy,” Racela said.
BSP also presented the results of its “stress test” for the real property sector, which showed it could weather the potential departure of the POGO industry, at least, for now.
“In the event of cancellation of POGO license, the property sector is still expected to continue to be supported by other demand drivers such as the traditional BPOs, government agencies, engineering and construction firms and flexible work space operators,” Javier said.
BSP, she said, also implemented a “stress test” for local banks, and required them to presume a 25-percent write-off for loans related to real properties.
“Based on the latest stress test that was conducted by the Bangko Sentral, the banks have actually met the minimum capital requirement even after the required write-off. That is how we monitor the real-estate exposure across the industry to ensure that the banking system is cushioned in terms of losses that it might sustain from this,” Javier said.
Senator Sherwin “Win” Gatchalian stressed the importance of government preparations for such a scenario given the “volatile” policy situation of POGOs.
“China is saying POGO is illegal. We are actually promoting an illegal activity in the eyes of China. So if one day, China would say no more to this activity, all of these companies [tied up with the POGO sector], we have to be ready,” Gatchalian said.
Image credits: Asia Times
1 comment
The money laundering problem was present for a long time and there was no proper action taken. Reading this article, I think finally the officials are acting up strictly. Thank you so much for the information. You have provided a great piece of news to me.