Philippines’ Gambling Sector Faces Challenges Amidst Reform Efforts

The Philippines’ gambling sector faces a host of challenges as it seeks to address money laundering schemes and illegal gambling operations that have operated with impunity for decades by exploiting regulatory loopholes. Despite recent reforms, analysts and lawmakers warn that protecting the country’s financial and social systems and ensuring its permanent removal from international watchlists would require further action.

Illegal Operators Use Evolving Strategies

The ban on internet casinos targeting overseas gamblers, implemented toward the end of 2024 during the Ferdinand Marcos Jr. administration, has not fully mitigated money laundering risks. Black market operators continue to take advantage of murky legislation to conduct their illicit activities and undermine the regulated market. These activities also often coincide with other types of organized crime, presenting additional challenges.

A recent Bloomberg report sought the opinion of Choon Hong Chua, head of Moody’s financial crime practice group for Asia Pacific and the Middle East. Chua was adamant that underground gambling operations remained deeply entrenched in the Philippines, warning that such entities often operated under the guise of legitimate businesses, making enforcement difficult.

There are still inherent risks, and it’s not just the underground online gaming. We’ve seen examples in the past when some of the scam centers were masquerading as call centers and data centers.

Choon Hong Chua

Despite updated legislation, the Philippines still struggles with enforcement. The country’s Bureau of Immigration has intensified its crackdowns on alleged scam centers and illegal gaming facilities while organized crime groups adopt increasingly sophisticated tactics to avoid detection. Chua noted that authorities must remain one step ahead of these developments to remain effective.

Consistent Enforcement Remains Paramount

The recent legislative updates correlate with the Philippines’ ongoing efforts to exit the Financial Action Task Force (FATF) gray list. The FATF has recognized the country’s substantial progress in mitigating risks related to unlicensed operators. However, the authority remained cautious, noting that a lapse in enforcement could jeopardize the progress so far.

Experts stress that regulatory oversight must extend beyond banks and target corporate entities often dealing with high-risk clients. Such organizations face less strict oversight and could present an avenue for illegal gambling operations to avoid regulations. Fortunately, Philippines lawmakers appear open to feedback and are considering dozens of amendments to bolster the nation’s regulatory and enforcement framework.

Across the region and in fact across the world, traditionally the corporate organizations are not as regulated as the financial institutions.

Choon Hong Chua

While Chua acknowledged the Philippines’ progress, he cautioned about the dangers of complacency, drawing attention to other nations that have fluctuated between compliance and lapses, leading to repeated inclusion on international watchlists. Sustained action remains vital to protecting the broader public and enhancing the country’s financial integrity.