US government report highlights proxy betting as AML loophole

Share this article

A recent report by the US government identified the continued tolerance for proxy betting as an issue in the Philippines’ anti-money laundering infrastructure.

Proxy betting in the Philippines has been highlighted as one of the “ongoing deficiencies” in the country’s anti-money laundering (AML) system in a recent report by the US government.

The criticism came in the 2018 edition of the US Department of State’s International Narcotics Control Strategy Report, published in March.

“Although the Anti-Money Laundering Act now covers casinos, ongoing deficiencies include the high (US$100,000) single-transaction reporting threshold, the non-inclusion of junket operators as covered entities, and the exclusion of non-cash transactions for AML reporting purposes,” the document stated.

The report singled out proxy betting, which permits a gambler to place bets via telephone or the internet rather than going into a casino, as a risk to AML efforts.

“I agree with the State Department criticism that casinos in the Philippines offering proxy betting do not meet AML and KYC compliance requirements,” explained Shaun McCamley, a partner at Global Market Advisors.

“The reason why this is happening is that currently all casino operators allow junkets to come into the property and provide their own proxy betting platform and solution, this is done through the normal leased room arrangements.

“By allowing proxy betting under these conditions the casino has no control over who the players are, where they come from and what financial arrangements have been put in place.”

The 2016 cyber-heist on the New York Federal Reserve Bank led the Philippine government to modify and expand an existing anti-money laundering law, aiming to update its legal framework to comply with global norms.

The move targeted financial loopholes that allowed thieves to launder $89m stolen from accounts belonging to Bangladesh Bank – the central bank of Bangladesh – held at the Federal Reserve through casinos in the Philippines.

Macau’s regulator, the Gaming Inspection and Coordination Bureau (DICJ), decided to ban “remote gambling” – the use of telephones by those sitting at VIP gambling tables – in May 2016.

Despite this, proxy betting continues to grow in popularity across Asia, particularly in Cambodia, Vietnam, and the Philippines, where regulations do not specifically prohibit the activity.

Indeed, it is growing at such a pace that in 2017 junket operator Suncity attributed 80 percent of its business in the Philippines to proxy gambling, with just 20 percent from customers travelling to casinos for live table games.

“Proxy betting is very popular with players and agents alike,” McCamley continued. “Apart from Macau, proxy betting can be found in most other SE Asia locations and business volumes are growing.”

Share this article