Duterte says POGOs 'clean,' but AMLC warns of dirty money

MANILA, Philippines – President Rodrigo Duterte has repeatedly downplayed the alleged crime links of Philippine offshore gaming operators (POGOs), but a study by the Anti-Money Laundering Council (AMLC) paints a different picture.

"Under my oath of office as President of the Republic, as elected by you, 'yang POGO na 'yan, malinis 'yan (those POGOs are clean). Laro lang 'yan para sa kabila (It's just a game for the other side), but it employs something like 20,000 in Manila," Duterte said in a speech on Tuesday, March 10.

However, AMLC found an "increasing level of threat" of dirty money flowing in and out of POGOs.

From 2017 to 2018, the gaming sector raked in P216.5 billion. Of this figure, 2.5% or P4.3 billion came from internet-based casinos. (READ: Online gambling: Good for whose business?)

AMLC's sectoral risk assessment covered 59 POGOs licensed under the Philippine Amusement and Gaming Corporation (Pagcor) and their 218 service providers (SPs); 3 gaming laboratories; and the Cagayan Special Economic Zone's 24 interactive gaming licensees and 18 interactive gaming support service providers.

While AMLC was attempting to conduct on-site compliance checking of POGOs, it encountered the following problems:

Address problems. Offices of the POGOs, local gaming agents, and authorized representatives do not exist in the registered addresses provided by Pagcor. Their SPs, however, are operating in those addresses.

"It must be noted that SPs are distinct from POGOs. SPs are those who offer services, such as gaming software, content streaming, and other components of gaming operations, to qualified POGOs," AMLC said.

No representatives. There are no actual local agents and/or authorized representatives in the Philippines.

"A foreign-based operator is required to appoint a local gaming agent, who will represent the said foreign-based operator in the Philippines. In turn, these local agents or authorized representatives are obligated to complete the documentary requirements during application for gaming operations," AMLC said.

Compliance officers of the POGOs could not be located and contacted at the given addresses. AMLC said the SPs were also unaware of the existence of these compliance officers.

Low level of awareness of rules. AMLC concluded that the industry has a low level of awareness of Anti-Money Laundering and Counterterrorism Financing Rules.

AMLC said POGOs are a "lesser threat" compared to their SPs, since they are supervised by Pagcor. SPs are "merely accredited and not licensed by Pagcor."

Unregulated or unsupervised SPs. AMLC said that as not all SPs are within the realm of supervision, they are prone to abuse and exploitation by criminal organizations. 

"In 2019, local authorities shut down around 200 Internet-based casinos and SPs, illegally servicing online gaming operations," AMLC said.

"In the same year, the local government also ceased the operations of one of the largest SPs for internet-based casinos. The said SP was allegedly linked to an individual and entity subject of an [anti-money laundering] investigation in relation to the Bangladesh Bank heist," it added.

High level of anonymity. AMLC said that since gaming accounts are not closely regulated by POGOs, accounts may be used for money laundering and other fraudulent activities.

Duterte on POGOs

Despite the red flags found by AMLC, Duterte defended POGOs for their economic contributions.

"Why? Because it gives us P2 billion a month. Kaya sabi ko para muna (That's why I said let's pause first)," Duterte said, referring to criticism against POGOs.

Presidential Spokesperson Salvador Panelo even asserted that the income from POGOs can be used to fund efforts to contain the novel coronavirus. (READ: Panelo defends Duterte's decision to keep POGOs running: 'Hindi naman masama')

On Monday, March 9, Duterte also claimed "every centavo" from POGOs is "accounted for." This remark is inaccurate. (READ: [ANALYSIS] Duterte and the POGO dilemma)

The Department of Finance has already slammed POGOs for failing to pay over P50 billion in taxes.

In 2019, the Bureau of Internal Revenue (BIR) was able to collect P6.4 billion in taxes, 169% higher than the P2.4 billion collected in 2018. However, the bureau aimed to collect P2 billion from these companies a month.

Duterte has defended the industry, even though government agencies cannot agree on basic data about it.

The BIR estimates there are around 103,000 foreign workers in the POGO industry, but the Department of Labor and Employment counted only over 86,000. Meanwhile, Pagcor said there are more than 93,000 workers.

Industry estimates, however, pegged the number of workers at as high as 470,000. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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