The allegations surrounding former officials of the Department of Public Works and Highways have placed the Philippine casino sector under the spotlight. Records obtained by a senator revealed that five individuals linked to questionable flood control projects accumulated gross gambling losses of over PHP950 million. These losses took place across thirteen casinos located in Metro Manila, Cebu, and Pampanga. The staggering size of these transactions suggests a laundering mechanism rather than simple gambling misfortune.
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Money laundering Philippines casino scandal and its mechanics
The Anti-Money Laundering Council confirmed it would investigate the casinos that hosted these officials. The regulator will determine whether the casinos properly discharged their obligations as covered persons. Since 2017, Philippine law requires casinos to verify customer identity, maintain records, and report cash transactions of PHP5 million or more. They must also submit suspicious transaction reports whenever patterns or behaviors indicate possible laundering. In this case, the sheer volume of gambling activity, linked to individuals under suspicion for irregular public works projects, raises multiple red flags that should have triggered monitoring and reporting.
By channeling illicit gains from anomalous contracts into gambling activity, the former officials may have engaged in layering and integration stages of laundering. Placing funds into casino systems, exchanging them for chips, gambling, and recording losses or cashing out, creates a transactional trail that can obscure the illicit origin of money. The scale of PHP950 million across multiple venues demonstrates how casinos can be exploited as conduits for high-value laundering when oversight fails.
Casino covered persons’ obligations under Philippine law
Casinos became covered persons under Republic Act No. 9160 as amended by Republic Act No. 10927. This amendment was introduced in response to international criticism after the 2016 cyber-heist involving Bangladesh Bank funds laundered through Philippine casinos. The law imposes obligations on casinos equivalent to those of banks and other financial institutions.
The obligations include customer due diligence, requiring casinos to verify identities through government-issued documents. Record-keeping rules mandate retention of all customer and transaction records for at least five years. Casinos must submit covered transaction reports for cash dealings that exceed PHP5 million and must submit suspicious transaction reports when patterns suggest illicit behavior. The Casino Implementing Rules and Regulations, which came into effect in 2017, also require compliance programs, the designation of compliance officers, and internal systems designed to detect and prevent laundering.
The AMLC has the authority to impose administrative sanctions on casinos that fail to comply. Penalties may include substantial fines, suspension, or revocation of licenses. In serious cases, criminal liability may also attach, with imprisonment ranging from seven to fourteen years and fines that can reach twice the value of the funds involved. In the flood project case, investigators must determine whether the casinos filed required reports and whether their compliance frameworks were strong enough to detect abnormal activity of this scale.
AMLC reporting obligations and enforcement challenges
The AMLC relies on transaction reports from covered persons to identify suspicious activity. Casinos are required to file covered transaction reports within five working days and suspicious transaction reports within twenty-four hours of detecting unusual activity. These deadlines are strict, and failure to meet them can lead to administrative penalties.
The case demonstrates how enforcement can be undermined by weaknesses in monitoring systems or inadequate compliance staffing. Gambling establishments often handle massive volumes of cash that can conceal illicit funds. Without robust monitoring, large deposits and losses may pass undetected. The officials involved in this scandal spread their activity across thirteen casinos, a strategy that complicates detection further. By diversifying their gambling, they reduced the likelihood that a single venue would notice the full scope of their transactions.
The AMLC must now analyze whether reports were filed, whether red flags were ignored, and whether casinos carried out proper customer due diligence. If deficiencies are found, sanctions could extend beyond fines to reputational damage and loss of licenses. This case also highlights the importance of inter-agency cooperation, as the proceeds under scrutiny allegedly originated from anomalous public works contracts. The link between corruption and laundering in casinos reinforces the need for both preventive and punitive measures.
Final thoughts on lessons from the flood project laundering case
The scandal reveals structural vulnerabilities in the Philippine anti-money laundering system. Despite reforms that brought casinos under regulation, the sheer scale of losses recorded by a handful of individuals demonstrates that risks remain significant. The connection between alleged graft in infrastructure projects and laundering in casinos illustrates how predicate crimes fuel broader financial crime.
For regulators, the case is an opportunity to strengthen oversight and enforcement. For casinos, it is a warning that compliance obligations cannot be treated as procedural formalities. Properly applied, the framework requiring customer due diligence, record retention, and reporting can detect and disrupt laundering before it escalates. The PHP950 million scandal underscores that ignoring obligations not only exposes casinos to penalties but also erodes trust in the country’s financial integrity.
Related Links
- Republic Act No. 9160 Anti-Money Laundering Act of 2001
- Republic Act No. 10927 Amending AMLA to Cover Casinos
- Casino Implementing Rules and Regulations 2017
- AMLC Revised Implementing Rules and Regulations
Other FInCrime Central Articles About the Philippines
- Philippines SEC Launches Major Crackdown on Illegal Crypto Platforms
- President Marcos Officially Celebrates Philippines’ Exit from FATF Grey List
- Philippines Exits FATF Grey List and Unveils Plans to Strengthen AML Compliance
Source: GGR Asia
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