Gambling and money laundering

“There could really be a substantial number of illegal drugs trafficked through POGO, and indeed, dirty money is laundered via online routes despite the absence of complaints.

One broadsheet reported that the authorities looking into the Philippine online gambling operators (POGO) phenomenon did not realize how these could be used as a money laundering vehicle.

That’s understandable. Money laundering involves two crimes. One is obvious and must first be established before the second crime can be identified. Absent one, then there is no money laundering.

The other accusation on these POGO was their connection to the illegal drug trade. It is not as readily apparent how POGO can be a vehicle for drug trafficking.

In both, the criminal linkages might be direct and causative but because of the sophistication of cybercrime and the ease of the digital universe in protecting identities and operations as data is transmitted globally, inherent criminalities may not be readily visible to law enforcement agencies.

Allow us to cite verbatim the exact report as it appeared.

“Law enforcement authorities are in the dark over the possible use of (POGO) in the illegal drugs trade and its potential of being used in money-laundering by organized crime groups… The Department of the Interior and Local Government (DILG) has not considered Surigao del Norte Rep. Robert Ace Barbers’ speculation that organized crime syndicates might be using POGO to launder dirty money in and out of the Philippines.”

The foregoing statement from the DILG which has supervisory control over the Philippine National Police (PNP) is based on the absence of official complaints that relate to illegal drugs and money laundering to POGO.

The PNP must realize that the fact that the absence of protestations does not mean there are no illegal drugs trafficked through POGO or that the POGO are not involved in money laundering.

This is a situation where we can easily relate the PNP statement to the idiomatic expression that a tree that crashes in a forest where no one hears its crash does not make a sound. There could really be a substantial number of illegal drugs trafficked through POGO, and indeed, dirty money is laundered via online routes despite the absence of complaints.

The challenges faced by the PNP in the absence of official dissonance behooves that we explain why both illegal drugs and money laundering, together or separately, fit like a glove in the case of online gambling.

On the issue of trafficking in illegal drugs, while there may not have been squawks identifying online gambling operators as drug traffickers, there have been instances where drug usage proliferates in enclaves and living quarters used by POGO. The anecdotal evidence is increasing despite the absence of charges. Where the authorities have raided illegal POGO in gated residential communities, in some instances there have been reports that illegal drug use proliferated.

The illegal drug trade actually operates along an economic value chain that starts from production at one end and is consummated at the final market end by drug users. It is conceivable that the illegal drugs can travel the supply chain provided by the online linkages of a POGO network.

Where there’s smoke, there’s fire. Already we’ve seen illegal drug usage among POGO so much so that it requires little brain power to conceive that drugs were supplied by domestic operators who only supply POGO with amenities from organized lodging, to food, to bank accounts and transportation without which POGO would be helpless.

The money laundering link to POGO is easier to understand. It has been raised recently by the mainland Chinese authorities who informed us of the ways that online gambling has been deemed illegal in China despite it being legal and operational in the Philippines.

The operant word between gambling and POGO is “online.” The clearest example of gambling’s direct linkage to money laundering was the Bangladeshi Central Bank heist where billions were transferred via a series of digital debits and credits through online systems, and upon being converted to cash, these co-mingled with other funds in a casino, there laundered as either gambling winnings or losses.