Philippine regulator says banks’ “systemic failure” led to casino laundering scandal

pagcor-naguiat-philippine-casinos-anti-money-launderingThe Philippines’ top gaming regulator says casinos are open to being included in the country’s anti-money laundering laws but insists this wouldn’t have prevented the scandal currently making international headlines.

This week saw Cristino Naguiat Jr. (pictured), head of the Philippine Amusement and Gaming Corp (PAGCOR), appear at a Senate hearing to discuss the $81m that as yet unknown hackers stole from a Bangladesh central bank account in New York last month, then transferred to Philippine banks before most of the money ended up in the hands of the local gambling industry.

Casinos were exempted from the country’s AML laws but the Inquirer quoted Naguiat telling reporters that Philippines-licensed operators had always cooperated with Anti-Money Laundering Council investigations and casinos were amenable to observing all AML practices that are on par with global industry standards.

Naguiat noted that casinos weren’t a particularly desirable method of money laundering since casinos required deposited funds to be wagered at their gaming tables, meaning a portion of the funds would most assuredly be lost by the launderers. Naguiat also noted that casinos were required to report all casino winnings to PAGCOR.

Naguiat reminded reporters that banks were a precursor to casinos receiving deposits and thus banks are “the primary gatekeepers against illegal transactions.” Naguiat said the Bangladeshi funds scandal wouldn’t have been possible without a “systemic failure at the bank level.”

Speaking of, the bank manager at the heart of the scandal reportedly believed her life would be at risk if she didn’t authorize the transfer of the stolen millions.

Thursday saw senators continue to put Rizal Commercial Banking Corp (RCBC) manager Maia Santos-Deguito on the hot seat after it was revealed earlier in the week that she’d authorized the controversial transfers despite her bank receiving a stop payment order from the New York bank the previous day.

On Thursday, RCBC customer service head Romualdo Agarrado told senators of a conversation he’d had with Santos-Deguito regarding her decision to disregard the stop payment order. Agarrado quoted Santos-Deguito saying she’d “rather do this than get killed, or my family,” although who or what was threatening her wasn’t specified.

Santos-Deguito, who has repeatedly asked for private hearings with senators so that she can properly explain her actions, “strongly” rejected Agaraddo’s testimony. Santos-Deguito also denied Agaraddo’s claim that she’d offered to provide other bank execs with lawyers to deal with the fallout.