Philippines’ Casino Junket Sector Gets Flagged For Money Laundering In AMLC Report

Summary:

• AMLC report identified multiple junket activities with potential links to money laundering
• Some of the junkets in question are operating at integrated resorts
• The agency says stronger AML controls are needed in the casino industry

The Philippines’ casino junket sector has come under the spotlight following a report recently released by the country’s anti-money laundering (AML) watchdog. The agency is calling for stronger AML controls within the casino industry after analyzing thousands of suspicious transaction reports (STRs) associated with junkets that are potentially linked to money laundering and terrorism financing.

Junket-linked STRs Highlight Money Laundering Risks at Integrated Resorts

The Anti-Money Laundering Council (AMLC) report recognized four typologies in junket operations that could assist casinos in detecting possible money laundering and terrorism financing activities.

These include the non-reporting of transactions to casino operators which is a breach of existing agreements; involvement in criminal conspiracy; purchase of chips with small denomination currency followed by modest gambling actions; and conduct of financial transactions not commensurate with the declared source of funds.

The AMLC analyzed over 7,400 STRs from its database, split into two datasets. Dataset 1 involves 3,308 STRs with the keyword “junket” in the narrative field, while dataset 2 covers 4,110 STRs filed by four integrated resorts that were identified to have the highest risk for money laundering and terrorism financing. Both sets of data involved transactions amounting to PHP17.79 billion (US$325.8 million) and PHP17.59 billion respectively.

The AMLC report said casino junkets processed a very high number of suspicious transactions and high value amounts thereby exposing the casino junket system significantly to terror financing risks and money laundering. Integrated resorts hosting junkets also become more vulnerable to money laundering risks due to the heavy use of physical cash by casino patrons and the junket operators’ failure to report suspicious transactions, the report added.

Junkets Violating AML Laws

The AMLC highlighted that certain junket operators had not been fully compliant with the country’s anti-money laundering laws, with two junkets in particular misleading the casino operator regarding suspicious transactions in their activities at the establishment.

The AMLC report also detailed how a Malaysian player was able to purchase PHP1.5 million worth of gaming chips using small-denomination currency. It was followed by modest gambling actions, with the customer redeeming a portion of his money via a separate cage to avoid getting the same PHP100 bills he used to purchase the gaming chips.

The player then returned to the casino the next day and gambled PHP1.1 million on various casino games. He went on to win PHP1.31 million and his winnings were transferred to a cage associated with a junket operator.

Despite the Malaysian customer being the subject of five similar STRs, there was no further information as to the source of the player’s gambling funds.