Analysts believe that the Philippine Anti-Money Laundering Council (AMLC) has been calling for new laws to strengthen the fight against money launderers, but has overlooked the central issue of current legislative investigations. At the Senate hearing on September 5 regarding Philippine Offshore Gaming Operators (POGO), Adrian Arpon, Deputy Director of the AMLC's Investigation and Enforcement Department, stated that eliminating the predicate offense requirement for freezing order applications could expedite investigations and confiscation processes. However, the case of Guo Huaping shows that it is not the predicate offense requirement that hinders anti-money laundering efforts, but rather the weakness of law enforcement and regulatory actions intertwined with crime, leading to today's events.
Since 2019, Guo Huaping has been acquiring land for the Baufu POGO complex consisting of 36 buildings. It was not until March 2024, when the Presidential Anti-Organized Crime Commission (PAOCC) intervened and the Senate got involved, that the AMLC began to take action against her and others involved in global network scams, human trafficking, and drug trafficking.
Prior to this, Guo Huaping transferred billions of pesos to her family-owned QJJ series of companies. These companies, in turn, used the funds to pay for electricity and other expenses for HongSheng Gaming Technology and its successor, Zun Yuan Technology. According to reports, in July 2020, QJJ Farms deposited 100 million pesos into Baufu within two days. Even though the deposit was split into ten transactions, each deposit far exceeded the legal threshold of 500,000 pesos for banks and other regulated institutions. Meanwhile, the flow of funds from 2020 to 2024 shows that Guo Huaping did not withdraw from interests related to POGO before, during, or after her successful mayoral campaign in 2022. Yet, all these outrageous actions went unnoticed by the anti-money laundering department, raising questions about the underlying issues.
Arpon stated that tracking money launderers is difficult because the AMLC needs to prove that the funds come from illegal sources and activities, and also must prove that the accused knew the source of these funds. Therefore, eliminating the predicate offense requirement would benefit the speed and efficiency of the process.
However, some analysts believe that in POGO cases, many issues would not have occurred if the laws and systems were strictly enforced. For example, since 2019, Guo Huaping and her companies received only one suspicious transaction report involving a land sale. This indicates that the bank handling Guo Huaping's accounts may have been negligent in fulfilling its reporting duties, and this single suspicious transaction report was left unattended in an intelligence wasteland for a long time.
The AMLC has a Financial Intelligence Unit (FIU), responsible for receiving and reviewing suspicious transaction reports and other information related to money laundering, and cooperating with member agencies of the Financial Action Task Force (FATF). Legal requirements mandate coordination among financial and securities institutions, law enforcement agencies, the military, and other agencies responsible for monitoring and combating money laundering crimes. If these agencies had fulfilled their duties, the AMLC could have taken action against non-compliant banks, preventing such situations.
The Philippine Amusement and Gaming Corporation (PAGCOR) also has issues. In 2020, PAGCOR introduced a casino anti-money laundering risk rating system to help detect early warning signals, including ineffective boards and regulators, weak internal controls and audits, and responsibilities including on-site inspections and financial audits of POGO sites. PAGCOR should have tracked the fund flows of the QJJ series of companies, as these companies were not registered POGO service providers. If done, this could have traced back to Guo Huaping, as she was the representative for Baufu's 2020 application for a "no objection letter."
In February 2023, the police raided HongSheng for allegedly operating a cryptocurrency investment scam. However, PAGCOR did not conduct an in-depth investigation of its accounts but instead granted its successor company, Zun Yuan, a temporary license until the raid on March 13, 2024.
In summary, the Philippines does not lack laws or systems, but lacks people who truly believe in these measures and can implement them step by step. Negligence or collusion by frontline and backend personnel in the government and private sectors is the root cause of today's predicament. Senate and House hearings have revealed a vast network of crime, showing the public the helplessness and sadness behind the scenes.
