The International Monetary Fund (IMF) has lauded the inclusion of casinos under the Philippine anti-money laundering (AML) rules but said the system could be strengthened further if the bank secrecy law is also amended.
“Staff welcomes the recent amendment to the AML law to include casinos,” the IMF said in a statement.
It noted that following last year’s Bangladesh Bank heist where $81 million was funneled through a Philippine bank and laundered through casinos, the Asia-Pacific Group on Anti-Money Laundering reiterated its recommendation to include gaming establishments in AML legislation.
The country’s Anti-Money Laundering Act was subsequently amended in July to cover casinos, including internet and ship-based gaming sites, that are now required to perform customer identification and record keeping obligations, and report all single casino cash transactions above P5 million.
“Notwithstanding this notable progress, the AML/CFT (Combating the Financing of Terrorism) framework could be strengthened further by amending the bank secrecy law and making tax evasion a predicate crime,” the IMF recommended.
The lifting of the Law on Secrecy of Bank Deposits is included in the government’s proposed Comprehensive Tax Reform Program.
The bank secrecy law was put in place in 1955. It provides for the confidentiality of all types of bank deposits, except upon written permission of the depositor, in case of impeachment proceedings, upon order of the court in cases of bribery or dereliction of duty of a public official, or where the deposit is the subject of litigation.
The law seeks to encourage people to deposit their money in banking institutions and discourage private hoarding so that money can be used by banks for lending.
In 1981, the law was amended to allow the examination of bank records when authorized by the Monetary Board or when the inspection is made by an independent auditor hired by the bank itself.
The government-run National Tax Research Center (NTRC) has been pushing for the bank secrecy law amendment to give government agencies a chance in going after persons involved in tax evasion, money laundering and other financial crimes.
Only the Philippines, Lebanon and Switzerland still have restrictive banking laws that make it difficult for authorities to go after tax evaders and money launderers, the think tank has said.
“The Philippines is the only country in the Asia-Pacific region with a highly restrictive law that explicitly prohibits the Anti-Money Laundering Council from sharing data with the BIR (Bureau of Internal Revenue),” the NTRC noted.
The lack of access to information on bank accounts for tax purposes has led to inaccurate tax assessments, weak evidence in tax evasion prosecution, and inability of the tax authority to determine the true liability of taxpayers, it claimed.