GGRAsia – Banking laxity tagged in Philippine casino launder probe

Banking laxity tagged in Philippine casino launder probe

Mar 30, 2016 Newsdesk Latest News, Philippines, Top of the deck

A Philippines Senate hearing – into allegedly massive money laundering that exploited the nation’s casino industry – heard on Tuesday that even transactions of US$400 million or more could be handled by bank branch offices in that country without raising red flags with senior bankers.

The Philippines’ banking secrecy laws, allegedly lax practices in its banks’ anti-money laundering procedures and the exclusion of the country’s casino industry from its Anti-Money Laundering Act, were all topics raised during the hearing.

It was seeking to find out how at least US$81 million – that unidentified hackers allegedly stole from Bangladesh central bank accounts held at the Federal Reserve Bank of New York – entered the Philippines and mostly disappeared.

According to the country’s Anti-Money Laundering Council (AMLC), of the US$81 million in stolen funds, US$63 million allegedly found its way collectively into the Midas Hotel and Casino in Manila, a property majority-owned by Leisure and Resorts World Corp; and Solaire Resort and Casino in Entertainment City, Manila, a property developed and operated by Bloomberry Resorts Corp. There the money mostly disappeared in exchange for gaming chips, it was said during the hearings.

There is no suggestion that the managements of those casinos were involved in the allegedly illegal transfers or had knowledge of them.

About US$7.8 million out of the US$81 million stolen from Bangladesh’s central bank remains in local casinos and may still be recovered, the Philippines Senate heard in testimony on Tuesday, the third day of such hearings.

But how stolen money allegedly got to those casinos in the first place was a key topic of discussion at Tuesday’s senate hearing.

Macau, Beijing ‘connection’

Several Chinese people connected to casinos and casino junket business in either the Philippines or Macau have been drawn into the inquiry.

One Chinese person that appeared in person at the hearing – Kam Sin Wong, also known as Kim Wong – was described as a president and general manager of Eastern Hawaii Leisure Co Ltd, a casino operator in the northern Philippines.

The AMLC has already filed a criminal complaint naming a junket operator called Xu Weikang and Cagayan-based Chinese businessman Mr Wong for alleged involvement in money laundering. Mr Wong denies such involvement.

The AMLC claims Mr Wong assisted in setting up several bank accounts – that utilised allegedly fictitious identities – with the Rizal Commercial Banking Corp, enabling the US$81 million to land in the country. Mr Wong said a bank branch manager created the accounts and that he only helped with translation.

Mr Wong blamed two other Chinese men – named as Gao Shu Hua from Beijing, and described as a man linked to casino junkets; and Ding Zhize, described by the Associated Press as a “Macau resident” – for causing the money to be imported.

Mr Wong told the hearing that he had known Mr Gao for eight years but only met Mr Ding in February. He said he acted as interpreter for them when they opened the bank accounts.

In an interview shown on the Philippine television network ABS-CBN on Monday, Mr Wong had described himself as a “victim” in the saga. On Tuesday Mr Wong said he was willing to return as much as US$14.3 million he received from the two Chinese nationals.

Ultimate beneficiary

Julia Bacay-Abad, executive director of the AMLC, told the senate on Tuesday that it appeared that Mr Wong was one of the ultimate beneficiaries of the theft and that he knew the money was the result of illegal activity.

Citing their investigation, regulators said Mr Wong withdrew a total of PHP1.3 billion (US$28.2 million) from an Eastern Hawaii Leisure account and his own personal account with Philippine National Bank between February 10 and 26. Both accounts were ordered frozen by the country’s Court of Appeals on March 1, regulators said.

The Wall Street Journal newspaper reported on Tuesday that Mr Wong, now in his 50s, had left his native China as a boy to live in the Philippines, later opening a series of restaurants before in 2001 testifying in a Philippines Senate inquiry into narcotics smuggling. That hearing reportedly cleared Mr Wong of any involvement in illegal activity. He went on to run the Eastern Hawaii casino.

At the hearing, Rizal Commercial Banking’s president Lorenzo Tan was criticised by some senators for not acknowledging the transactions as suspicious until the money was gone.

Mr Tan told the hearing that even transactions of US$400 million or more could be dealt with by branch offices without raising red flags with senior officials at headquarters.

Citing the country’s strict banking secrecy laws, a lawyer for Rizal Commercial Banking said the bank could not reveal anything about the accounts, even though it had been established that they had been opened using false documents.

The Bangladesh authorities also turned over to the senate committee a list of 30 other suspicious transactions that the Federal Reserve Bank of New York did not execute. The list showed another US$850 million would have been transmitted to the fake-name accounts in the Philippine bank had those transfers not been stopped.