The recent ban on Philippine Offshore Gaming Operators (POGOs) may have a significant impact on the country’s efforts to exit the Financial Action Task Force’s (FATF) “gray list” of jurisdictions under increased monitoring for money laundering risks.
The ban, ordered by President Ferdinand R. Marcos Jr., aims to address ties between POGOs and illicit activities such as financial scams, money laundering, prostitution, and human trafficking. According to Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr., the ban will help reduce money laundering activities and potentially aid the country in exiting the gray list.
The FATF kept the Philippines on its gray list for a third straight year due to ongoing deficiencies in anti-money laundering and counter-terrorism financing controls. The POGO ban is seen as a step in the right direction by experts, who believe it will encourage more “legitimate” investments to enter the country and help the Philippines re-strategize for fulfilling more legal and moral entertainment investments.
The ban is also expected to boost tourism as gamblers from China will be forced to travel to the Philippines and gamble in big casinos instead. However, some experts argue that there are still many other sources of money laundering aside from POGOs, such as online gambling within the Philippines and physical casinos.
Meanwhile, Fitch Ratings has assessed that the Philippine financial system is resilient enough to withstand the spillover effects of the POGO ban, with banks having ample buffers to absorb potential losses. The agency also expects that property-related losses due to closures from the ban will be “relatively contained”.
In a related development, the Philippine Senate has introduced a bill aiming to ban POGOs from operating in the country. Senate Bill No. 2752, also known as the “Anti-POGO Act”, proposes to repeal the existing law taxing POGOs and enforce a complete ban on their operations. The bill aligns with President Marcos Jr.’s directive to eradicate POGOs from the country.
The legislation would revoke all existing POGO licenses and require operators to cease their activities within 30 days of the law’s enactment. Failure to comply could result in severe penalties, including imprisonment and fines. The bill also grants the Bureau of Internal Revenue authority to collect unpaid taxes from POGOs, ensuring the government secures any fiscal dues.
However, concerns have been raised about job losses, with an estimated 40,000 Filipino workers likely to be displaced by the POGO closure. In response, the Department of Labor and Employment has launched a Workers Transition Program to assist affected workers in transitioning to new employment opportunities.
Senator Robin Padilla has also proposed Senate Resolution 1091, calling for an inquiry into the government’s plans for the displaced workers. The resolution highlights the need for transparency and proactive planning to mitigate the economic and social fallout from the ban.
On a separate note, CEZA (Cagayan Economic Zone Authority) CEO Katrina Ponce Enrile has stated that there are no Philippine offshore gaming operators (POGOs) operating in CEZA. This comes after the President’s ban on POGOs was announced on July 22nd. The ban order requires all POGO operations to wind down by the end of the year.
CEZA is a special economic zone located in Cagayan Valley in northeastern Luzon, which has been operating since 1995. It is known for its freeport facilities and has been designated as a hub for online gaming companies. However, despite being outside of Pagcor’s jurisdiction, CEZA has not been involved in POGO-related crimes and has been losing clients since POGO operations were allowed in the Philippines in 2017.
Katrina Ponce Enrile’s father, Chief Presidential Legal Counsel Juan Ponce Enrile, publicly backed President Marcos Jr.’s decision to ban POGOs, calling them a “money laundering operation”. He also expressed support for CEZA’s operations.
In fact, CEZA has been trying to rebrand itself as a legitimate gaming hub, focusing on online gaming companies that adhere to regulatory standards and contribute to economic growth. CEZA has also been working on developing its infrastructure and attracting foreign investments.
The outcome of these legislative efforts will have a significant impact not only on the gaming sector but also on the broader socio-economic landscape of the Philippines.
