Lynch Calls for Philippines to Comply with Anti-Money Laundering Standards Before TPP Consideration

Apr 21, 2016

WASHINGTON, D.C. – This week, Congressman Stephen F. Lynch (D-Boston), the top Democrat on the House Financial Services Committee Task Force to Investigate Terrorism Financing, led six bipartisan colleagues in a letter calling for the Philippines to be held accountable to international anti-money laundering standards before being considered for membership in the Trans-Pacific Partnership (TPP). Current anti-money laundering law in the Philippines does not cover the gaming industry, allowing money to flow unmonitored through the country’s casinos.

A recent New York Times report called attention to deficiencies in the Philippines’ Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime. Since the gaming industry is not covered under AML/CFT law, funds are not able to be traced once they reach a casino. This loophole is a major vulnerability for money laundering. The Financial Action Task Force (FATF), the international watchdog agency that sets international standards for anti-money laundering, has flagged this problem as having the potential to be exploited by terrorist groups.

“Our international anti-money laundering standards are a key tool in combating terrorist financing. The Philippines cannot continue to allow large sums of money to be transferred from their banking system to the gaming industry without the ability to track beneficiaries. This loophole can have grave consequences and poses a major risk for exploitation by criminal organizations and terrorist groups,” said Congressman Lynch. “I have serious concerns about the Philippines’ eligibility for membership in the Trans-Pacific Partnership if they are blatantly failing to meet established anti-money laundering standards.”

The cosigners of the letters are Financial Services Committee Ranking Member Maxine Waters (CA-43), Task Force to Investigate Terrorism Financing Chairman Mike Fitzpatrick (PA-08), Task Force to Investigate Terrorism Financing Vice Chair Robert Pittenger (NC-09), Congressman Keith Ellison (MN-05), Congressman Michael E. Capuano (MA-07), and Congressman Tom Emmer (MN-06).

The full text of the letter is below. 

The Honorable Jacob J. Lew                                                              
Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220 

Ambassador Michael Froman

Office of the United States Trade Representative
600 17th Street NW
Washington, D.C. 20508

Dear Secretary Lew and Ambassador Froman,

The New York Times recently reported that $81 million was transferred out of an official Bangladesh account at the Federal Reserve Bank of New York to the Philippines. According to that article, testimony in a Philippines Senate panel hearing suggested that most of the money from the Bangladesh account was delivered to three casino operators. Unfortunately, since the Philippines does not have an anti-money laundering law that covers the gaming industry, the funds can no longer be traced once they reached the casinos.

It is unlikely that the inclusion of casinos under the Philippines’ AML/CFT regime will occur without sustained pressure from the international community. We write to insist that Philippines’ casinos meet the Financial Action Task Force’s Anti-Money Laundering compliance standards before being allowed to join the Trans-Pacific Partnership agreement.

The key to combatting money laundering is to ensure that governments can effectively follow the money trail to track and stop the flow of illicit funds. However, loopholes like those found in the Philippines anti-money laundering law make it challenging to effectively track the movement of funds. According to the U.S State Department’s International Narcotics Control Strategy Report (INCSR), there have been efforts to legally include casinos under the Philippines Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime, but “progress has been slow,” and there is “extensive lobbying from the casino industry.”

At a time of increased trade and globalization, we must be even more diligent with enforcing international standards for anti-money laundering. Thus, we respectively ask that the Philippines should not be included in the Trans-Pacific Partnership agreement unless their anti-money laundering law is amended to include the gaming industry.

Thank you for your continuing efforts to work with members of Congress to safeguard our global financial system.

We look forward to your response.

Sincerely,

Stephen F. Lynch

Member of Congress