BSP cautions banks against illegal online gambling

Published February 9, 2021, 6:40 PM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) has issued an advisory warning banks and non-banks to be alert and detect clients or customers that are engaged in illegal online gambling and to report these activities to the proper government agencies including the central bank.

BSP memo (Circular Letter No. CL-2021-012) reminded all BSP-supervised financial institutions (BSFIs) to transact only with licensed and registered online gambling operations and for all banks to have sound risk management practices.

BSP Deputy Governor Chuchi G. Fonacier, who signed the circular memo on February 6, said BSFIs are cautioned to “deal only” with gambling and/or online gaming businesses that are “authorized/licensed by or registered with the appropriate government agency duly empowered by law or its charter to license or authorize entities or businesses to engage in such activities, and file suspicious transaction reports as warranted.”

Fonacier said in the memo that unlicensed online gaming or betting operators transact through banks, or non-banks such as remittance transfer companies, virtual currency exchanges, electronic money issuers and operators of payment system as “conduits of funds or the collection of bets and remittance of winnings for their illegal operations.”

“BSFIs are cautioned to strictly observe …customer due diligence, ongoing monitoring, and reporting of suspicious transactions,” said Fonacier.

She also reminded banks specifically to ensure their risk management policies and practices to manage risk exposures from online gambling are fully in place as per BSP Memorandum No. 2018-002. The two-year old memo emphasized on banks’ proper reporting and monitoring of risks when dealing with clients or customers engaged in online gambling.

The BSP memo reiterated the Philippine Amusement and Gaming Corporation (PAGCOR) numerous public warnings and press statements against illegal online gambling by unscrupulous individuals and groups that use social media platforms.

“PAGCOR warned the public not to patronize these illegal gambling activities due to risk of being scammed and falling prey to identity theft and credit card fraud. The warning also emphasized that no person or organization other than those licensed by PAGCOR and other government agencies may operate gambling in the Philippines,” said Fonacier.  

“It is illegal for any person or organization without a license to, in any manner, directly or indirectly take part in any unauthorized gambling activities, including online, internet, or remote gambling,” she added.

In 2018, after the Casino Implementing Rules and Regulations (CIRR) of Republic Act No. 10927 (“An Act Designating Casinos as Covered Persons under Republic Act No. 9160, otherwise known as The Anti-Money Laundering Act of 2001, as amended) was released, the BSP immediately issued BSP Memorandum No. 2018-002.

The BSP guidelines are for banks to have appropriate policies and procedures on Money Laundering and Terrorist Financing Prevention Program to ensure that money laundering (ML) and terrorist financing (TF) risks from dealings with customers engaged in gambling and/or online gaming business are effectively identified, assessed, monitored, mitigated and controlled.

The 2018 memo focused on how banks should strictly implement customer due diligence to make sure that they will not be used as channel for ML/TF activities. “

The CIRR was approved by the Anti-Money Laundering Council on October 2017, with PAGCOR, Cagayan Economic Zone Authority, and Aurora Pacific Economic Zone and Freeport Authority.