The Anti-Money Laundering Council’s (AMLC) appeal for new legislation to strengthen the crackdown on money launderers ignores the elephant at the center of current legislative investigations.
At the September 5 Senate hearing into Philippine offshore gaming operators (POGOs), AMLC Investigation and Enforcement Department Deputy Director Adrian Arpon said lifting the predicate-offense requirement for freeze order applications would hasten investigation and forfeiture proceedings.
First things first: Republic Act No. 10365, signed by then-president Benigno Aquino III on February 15, 2013, already strengthened RA 9160 or the Anti-Money Laundering Act of 2001.
The new law increased anti-money laundering predicate offenses from 14 to 34. It expanded reporting entities. These reforms helped the country get out of the gray list in 2013. The country’s latest inclusion in the gray list came in 2022, following a POGO boom under then-president Rodrigo Duterte.
Wrong diagnosis, wrong prescription: It’s not the predicate-offense requirement that hobbles money-laundering efforts. The culprit is the inky vortex where law enforcement and regulatory actions intersect with crime.
Dismissed Bamban, Tarlac mayor Alice Guo started acquiring land in 2019 for the 36-building Baufu POGO complex. The AMLC did not go after her and others linked to global internet fraud, human trafficking, and the narcotics trade until the Presidential Anti-Organized Crime Council (PAOCC) raised the complex in March 2024 and the Senate investigation.
Small slice of huge web
Law enforcers in June filed qualified trafficking complaints against Guo and 13 others. The Court of Appeals then issued of a freeze order on her assets, as well as those owned by six others, including Chinese national Hongjiang Yang, brother of Duterte’s economic advisor Michael Yang. These developments prompted Guo to flee the country.
On August 30, the AMLC, PAOCC, and the National Bureau of Investigation (NBI) filed money laundering complaints against Guo and 34 other individuals, including Cassandra Ong of the Lucky South 999 POGO in Porac, Pampanga.
Guo sent hundreds of millions of pesos to family-owned QJJ Farm and QJJ Generics. These companies, in turn, used the money to pay for the power bills and other expenses of HongSheng Gaming Technology and its successor, Zun Yuan Technology.
Rappler reports that in July 2020, QJJ Farm deposited P100 million to Baufu in just two days. Even split into 10 transactions, each deposit far exceeded the law’s P500,000 reporting threshold for banks and other covered institutions.
The money flow from 2020 to 2024 also shows Guo did not divest from POGO-linked interests before, during, or after her successful 2022 mayoral run.
The complaint represents a small part of a huge money-laundering web, covering at least P7 billion, the Baufu complex’s estimated cost of construction. A four-committee probe at the House of Representatives estimates that Guo shuffled almost P30 billion worth of funds.
Hard lessons
Arpon says chasing after money-launderers is hard because the AMLC needs to establish that funds come from illegal sources and activities, and that subjects must have knowledge of this.
Dropping the predicate-offense requirement would take away a safeguard aimed at protecting persons and corporations from, say, politically-motivated prosecution.
Administration after administration have told citizens to accept draconian measures. Again and again, we are told these bitter pills are good for us.
But we’ve seen the anti-cyber crime law used for political persecution and personal revenge. We’ve seen the military resort to anti-terror designations or anti-terror financing cases when courts dismiss trumped-up charges against activists. We’ve seen other methods of lawfare aimed at the demise of enemies of the powers-that-be.
In the case of the POGOs, blame should be placed on negligence or collusion by government and private sector frontliners.
Consider: There has been only one suspicious transaction report on Guo and her companies, in 2019, involving a land sale. That hints that banks handling the accounts Guo may have been remiss in their reporting duties.
Left hand, right hand
The lone suspicion transaction report on Guo languished in an intelligence wasteland.
AMLC has a Financial Intelligence Unit (FIU) that receives and examines suspicious transaction reports and other information related to money-laundering, and works with members of the interagency Financial Action Task Force.
The law mandates coordination among financial and securities bodies, law enforcement units, the military (for anti-terror financing, especially), and other agencies tasked to monitor and stop the crimes that fuel money-laundering.
Had these agencies fulfilled their mandates, the AMLC could have confronted non-compliant banks.
Then there’s the Philippine Amusement and Gaming Corporation (Pagcor).
In 2020, Pagcor issued a Casino AML risk-rating system to help spot early warning signals, including inefficient boards and supervisors, and weak internal controls and audit. Its duties include physical checks on POGO premises and auditing financial reports.
It should have tracked the monies from QJJ Farm and QJJ Genetics, which are not registered service providers for POGOs. That would have led to Guo, Baufu’s representative in its 2020 application for a Letter of No Objection (LONO).
Police raided HongSheng in February 2023 for operating a cryptocurrency investment scam. Instead of taking a forensics dive into the POGO’s books, PAGCOR gave a provisional license for Zun Yuan — still HongSheng in everything but name — until the March 13, 2024 raid.
The Senate and House hearings feature a monstrous Gordian Knot of crime, with top law enforcers and elected politicians peeking out of every fold.
Drug money built the POGOs, which laundered funds and provided new infrastructure for narcotics kingpins. Police served as security escorts and enforcers.
Lawmakers say PNP units reported only a fraction of seized drugs. They disbursed a portion to fund rewards. The bulk found their way back to the streets or to warehouses in fortresses guarded from prying eyes
If the government and citizens want to stop money laundering, the first step is ensuring the use of existing accountability mechanisms — and there are many — against the lords of this land. – Rappler.com
