‘Close supervisory attention needed on POGOs’

MANILA, Philippines — The Anti-Money Laundering Council (AMLC) has stressed the need for close supervisory attention on Philippine offshore gaming operators or POGOs, company service providers, jewelry dealers as well as lawyers and accountants.

In its 2021 risk review on AMLC-registered Designated Non-Financial Businesses and Professions (DNFBPs), the financial intelligence unit issued a medium high vulnerability assessment on offshore gaming operators and service providers.

Data gathered from responses indicate a high level of vulnerability in the offshore gaming operators-service providers sector due to lack of anti-money laundering/combating the financing of terrorism (AML/CFT) controls, the AMLC said.

“Money laundering and terrorism financing risks are not identified by the sector and there is low level of oversight by management, particularly on AML/CTF compliance,” it reported.

It added the quality of customer due diligence processes implemented by the sector lacks appropriate measures to determine risk levels of clients, while client risk profiling is not practiced despite the verification system to determine legitimacy of clients.

The AMLC added the screening or verification on whether a client is in any way related to a politically exposed person is not considered.

Likewise, the financial intelligence unit observed low level of awareness on AML/CTF obligations in the sector as a majority of the players have not established AML/CTF policies and procedures.

The AMLC lamented that the sector is not reporting covered and suspicious transactions as part of preventive measures and awareness of AML/CTF obligations.

Latest data showed the Philippine Amusement and Gaming Corp. has issued licenses to 41 POGOs and 133 service providers.

“The high value of services offered by the sector reaching above P100 million or its equivalent in foreign currency makes it an attractive venue for money laundering,” the AMLC warned.

The AMLC reported that there were no jewelry dealers, dealers in precious metals and stones, accountants, company service providers that have been involved in money laundering cases investigated from 2019 to mid-2021.

It added only one case, where a lawyer was involved in fraud, has been investigated. Almost all crimes involve funds coming from fraud, tax crimes and corruption that are identified by industry players as high-risk and may be coursed through the DNFBP sector.

Funds from smuggling were also identified, particularly for the jewelry sector.

During the period, the AMLC said accountants, company service providers and jewelry dealers filed 4,369 covered transaction reports with only 18 suspicious transaction reports (STRs) between 2019 and June 2021.

“For the period 2019 to 2021, only suspicious transactions coming from the jewelry sector were reported to the AMLC. In 2021, 18 STRs were reported identifying fraud and illegal exactions and transactions as the predicate crime related to the transaction,” it added.

The financial intelligence unit lamented that only 11 percent of the total 35,752 DNFBP industry players are registered with the AMLC as of end-June last year.

To address this, the AMLC said it would enter into agreements with other government agencies and local government units to enhance registration and engage the cooperation of the supervising authorities or appropriate government agencies, industry association to ensure the reach of the Anti-Money Laundering Act and the Terrorism Financing Prevention and Suppression Act.