FATF impotent in gambling industry

What is the point of the FATF?



Internet casinos moving from Makati (Philippines)

The 03-Nov-2017 article titled, "Makati office space void to grow as online gaming firms eye city exit" states (in part), "(an unnamed PAGCOR source) estimated that around 120 to 150 gaming businesses to leave Makati in 2018". Our consultants undertake several annual audits of live casino studios against requirements of a European jurisdiction and have done so for several years.

FATF includes casinos in its AML/CFT recommendations

The Asia Pacific Group on Money Laundering (APG) is the Financial Action Task Force (FATF) Style Regional Body (FSRB) responsible for mutual evaluations which contrast Philippine compliance with FATF recommendations, the most recent report is published as Mutual Evaluation Report - Anti-Money Laundering and Combating the Financing of Terrorism - Republic of the Philippines (MER). This report describes the FATF understanding, through the APG, of the gambling (and other) industries in the Philippines.

FATF doesn't know these gambling businesses exist

Paragraph 974 of the MER states (in part), "There are no internet casinos in the Philippines...", paragraph 139 states (in part), "The casinos and internet gaming establishments granted authority by PAGCOR to operate are 130 (see Table VIII in Annex 5)". Anybody with half an idea about remote gambling knows the Philippines has been a centre for internet casinos long before the MER publish date, and Table XIII in Annex 5 is silent relating to any gambling.

Casinos exempt from AML laws

This 2009 MER also states that AML laws will include internet casinos and "internet gaming establishments"; yet we learned in 2016 that Philippine casinos were exempt from AML statutes - yes exempt, see The Wall Street Journal, "A Hole in the Global Money-Laundering Defense: Philippine Casinos" as just one of the many articles relating to this. Thus in 7 years casinos and gambling were exempt from AML laws and thus FATF recommendations.

Bringing casinos under AML laws (kind of)

In an apparent response to the incident referred to in "The Wall Street Journal" article above, the Philippine Government appeared to act to "plug the 'hole' caused by its casinos". However, examination of the 25-Jul-2016 the Senate and House of Representatives evidence (to the effect), "an Act designating casinos as covered persons... under the Anti-Money Laundering Act 2001" indicates, "... casinos including internet... with respect of their casino cash transactions..."!

Actually not bringing remote casinos under AML laws

"Cash transactions!". It seems that internet casinos (which the FATF consider do not exist, but 120 to 150 are moving from Makati) still are not captured by Philippines' AML laws.

Try as you may, now that many computers do not have a floppy disk or DVD drive it is not possible to get cash into a computer, much less across the internet to an internet casino. In the main, internet casinos do not deal in cash (some exceptions might be where customers can deposit cash into an internet casino account through a High Street outlet).

Inconsistent FATF MER findings reward non-compliance

Thus it seems Philippine live-studios remain exempt from AML statutes, at the same time as many countries try their best to implement effective AML laws in their gambling industries. Make no mistake increased regulation and monitoring has an associated cost to industry, meaning countries which comply with FATF recommendations have a more costly remote gambling environment than countries that do not comply.

If the APG is so inept to not know that internet casinos exist then why does the FATF bother?

If the internet casinos remain exempt from AML laws, why does the FATF bother?

Many European gambling jurisdictions get around AML obligations in their online gambling industries by permitting licensed operators to establish B2B relationships live-studios. Many of which are invisible to the FATF and which are exempt from AML laws. Why does the FATF exist in the gambling space?

What is the point of the FATF?

Published 2017-11-04