Duterte backs lifting bank secrecy in fight vs money laundering

President Duterte has agreed with the Department of Finance (DOF) that moves to strengthen legislative measures to fight money laundering and lifting bank secrecy must be given priority amid concerns that Philippine offshore gaming ope­rators (Pogos) were being used to launder dirty money, a DOF official said on Wednesday.

Assistant Finance Secretary Tony Lambino said the DOF was pushing for amendments to the 19-year-old Anti-Money Laundering Act (Amla) so that the government would have “stronger monitoring and enforcement tools.”

“That includes not only money laundering but also lifting of bank secrecy and automatic exchange of information with other jurisdictions (countries). That is one package that we really want to advocate,” he said at a press briefing in Malacañang.

“When [Finance] Secretary [Carlos] Dominguez [III] reported this to President Duterte, the President agreed that these are priority measures,” he added.

Lambino said the certification of these measures as urgent would only be made if there were reports by the relevant congressional committees. The measures could all be contained in one law or in complementary laws, he added.

Lambino said the DOF would like to work with Congress on these measures.

He also said these new laws would be crucial to proving whether there were any links between Pogos and the money being brought into the country.

Connect the dots

“The dots have to be connected, and in order to connect all of these dots we need to amend those laws and we need to lift absolute bank secrecy and institutionalize the automatic exchange of information,” he said.

Lambino said huge amounts of foreign currencies were being brought into the country, and while the undeclared cash had been seized, the declared amounts had been allowed to enter the country because there was no law saying the money was illegal.

The amounts, however, were still reported to the Anti-Money Laundering Council (AMLC), he said.

Sen. Richard Gordon, who has opened an investigation of the “inordinate amount of money” that had been brought into the country over the past six months, said more than $633 million had been hand-carried by Chinese and Filipino dollar couriers. He strongly believes the money will be laundered in the country.

In a recent study, “Understanding the Internet-Based Casino Sector in the Philippines: A Risk Assessment,” the AMLC said Pogos “may pose a potential threat and may increase the risk [of] money laundering.”

Based on reports of suspicious transactions from 2013 to 2019, the value of such proceeds from internet-based casinos and service providers was estimated to be about P14 billion, the study said.

In 2017, President Duterte signed Republic Act No. 10927, known also as the “casino law,” designating casinos, including internet- and ship-based opera­tions, as covered by the Amla.

The AMLC said the casino sector poses “a high level of risk to money laundering.”

Pogo earnings

The sector’s gross gaming revenue rose by 22.5 percent from 2017 to P216.5 billion in 2018. Earnings from Pogos represented about 2.5 percent of the total revenues from 2017 to 2018.

Lambino said the DOF supported a bill filed by Albay Rep. Joey Salceda that would categorically state that Pogo operations registered with the Philip­pine Amusement and Gaming Corp. (Pagcor) would be subject to a 5-percent franchise tax.

Some Pogos had contested this on grounds that they were offshore and therefore outside Philippine jurisdiction, Lambino said.

But the DOF rejected that argument.

“By virtue of the registration with Pagcor, that means they have operations here in the Philippines,” Lambino said.

He also said the tax collections from Pogos have increased in the first two months of the year, but he could not immediately provide figures.

P2-B monthly tax take

In 2019, the government collected P6.4 billion from these internet-based gaming operations, 169 percent higher than in the previous year.

He said an earlier statement that Pogos failed to pay some P50 billion in taxes was based on a “very rough estimate.”

The government projects a P2-billion monthly collection in withholding taxes from Pogos, so they still have to pay an additional P17.6 billion to cover their shortfall for 2019, according to Lambino.

He said the government’s Task Force Pogo would continue shutting down those that did not pay taxes.

Pogos are under scrutiny in the Senate following allegations that their presence has given rise of prostitution and sex trafficking, corruption in the Bureau of Immigration, and money laundering.

But the President has come to their defense, saying links to money laundering were just speculations.

Presidential spokesperson Salvador Panelo also played down the crimes linked to Pogos, saying they have been happening here even before Pogos came to the country.