Offshore Gaming Ban Could Help Philippines Exit Money Laundering Grey List

The Philippines could potentially remove itself from the “grey list” of jurisdictions at risk for money laundering through a new ban on offshore gaming. The country has been on this list, which is compiled by the Financial Action Task Force (FATF), since 2021.

Since June 2021, the Philippines has been identified as a high-risk country for financial crimes on the global “grey list.” A ban on Philippine Offshore Gaming Operators (POGOs) is now seen as a measure that could facilitate the country’s removal from this list.

The FATF updates the grey list and the notorious blacklist three times a year. According to its website, being on the list “damages a country’s reputation and reduces its international standing.” This can deter foreign investors, including global banks, and make obtaining credit more difficult.

The FATF has set out 18 action items for the Philippines to complete before it can be delisted. Outgoing FATF president T Raja Kumar noted at a June press conference, “The Philippines has actually taken action on 15 of the 18 action items that it needed to act on.” Despite this progress, the listing was maintained pending further improvements.

Kumar emphasized that “the Philippines should quickly address the remaining three action items,” which include “demonstrating that supervisors are using anti-money laundering and counter-financing of terrorism (AML/CFT) controls to mitigate risks associated with casino junkets.”

On 22 July, Philippine President Ferdinand Marcos Jr. announced a POGO ban to take effect by the end of the year. In his state of the nation address, Marcos accused the industry of financial scamming, money laundering, and other crimes. He stated that POGOs have been linked to “prostitution, human trafficking, kidnapping, torture and even murder,” declaring, “The grave abuse and disrespect of our system must stop.”

Eli M Remolona Jr., governor of Bangko Sentral ng Pilipinas, hailed the POGO ban. Since taking office in July 2023, Remolona has advocated for systems to strengthen financial stability. He told BusinessWorld that the ban could lead to “a drop in money laundering, which should help us exit the grey list.”

Chester B Cabalza, president of International Development and Security Corp of Manila, noted that the ban would attract more “legitimate” investments. “The Philippines may be relieved [of] the grey-list tag,” he wrote, opening the market to “more legal and moral entertainment investments for the inclusive growth of the country.”

Research consultant Bienvenido S Oplas Jr. said the ban would increase traffic to land-based casinos in Manila and other locations. “When POGOs are banned, then gamblers from China will be forced to travel to the Philippines and do their gambling in big casinos,” he observed.

Political scientist Alex Magno previously commented on the Philippines’ struggle to exit the grey list, noting a lack of political will. “We have been trying to graduate from the grey list, to little avail,” he wrote. “We continue to wallow in financial purgatory. Even as a great toll is taken on our economic progress, our legislators continue to drag their feet on reforms.”

Despite these challenges, the FATF’s pressure can prompt positive change by compelling countries to address deficient financial protocols. In February, Barbados, Gibraltar, Uganda, and the United Arab Emirates exited the list. Remolona predicts that the Philippines will join them next year. “In October, [FATF] will decide whether we have fulfilled the 18 action plans,” he said. “And then between October and January, they check. January is the exit date.”

Currently, the grey list includes:

- Bulgaria

- Burkina Faso

- Cameroon

- Croatia

- Democratic Republic of Congo

- Haiti

- Kenya

- Mali

- Monaco

- Mozambique

- Namibia

- Nigeria

- Senegal

- South Africa

- South Sudan

- Syria

- Tanzania

- Venezuela

- Vietnam

- Yemen

The blacklist includes People’s Republic of Korea, Iran, and Myanmar.

By fLEXI tEAM