San Beda University

Manila
GRADUATE SCHOOL OF LAW

Anti-Money Laundering: Law and Jurisprudence

Vincent L. Salido
Professor

2nd INDIVIDUAL REPORT/REACTION PAPER

(to groups 3 and 4 Reports)

submitted in partial fulfilment of the requirements in the course/subject of

“ANTI-MONEY MONEY LAUNDERING: LAW AND JURISPRUDENCE”

Submitted by: Edgardo D. Gonzales

July 24, 2020,
Zamboanga City for Manila
 2nd Individual Report/Reaction Paper
to groups 3 and 4 Reports

I. Distinctions in the Risk-Based Approach among the following

covered persons: Banking Sector; Securities Sector; Insurance
Sector; Trust and Company Service Sector Providers; and Dealers in
Precious Metals and Stones.

In 2007, the Financial Action Task Force (FATF) had introduced a guidance called
“Risk-Based Approach to combating Money Laundering and Terrorist Financing” outlining
the importance of implementing the risk-based approach as part of the AML program in
banking and other industries.1 The following table illustrates the distinctions of the
Risk-Based Approach in the different covered person:

Risk-Based Approach Banking Sector Securities Sector Insurance Sector Trust and Company Dealers in Precious
Service Providers Metals and Precious
Stones
Purpose T0: =Support a common =Support the
=Outline the principles Same Same understanding of a development of a
invo0lved in applying RBA for TCSP; common
the RBA approach to =Assist countries, understanding of that
AML/CFT; competent RBA involves;
=Assist countries, Same Same authorities and TSCPs =Outline the high-level
competent authorities in the design and principles involved in
and banks in the implementation of a applying the RBA;
design and RBA to AML/CFT; =Indicate good
implementation of a =Recognized the practice in the design
RBA to AML/CFT by difference in the RBA and implementation of
providing general for different TCSPs an effective RBA.
guidelines and who are establishing
examples of current trusts, companies or
practice; Same Same other legal entities;
=Support the effective =Outline the key
implementation and elements involved in
supervision of national applying a RBA to
AML/CFT measures, by AML/CFT related to
focusing on risks and TCSPs;
on mitigation =Assist FI and DNFBPs
measures; and Same Same in their role as
=Support the directors or trustees
development of a of a legal person, etc.;
common =Assist countries,
understanding of what competent
the RBA to AML/CFT authorities and SRBs
entails. in the
implementation of
FATF
recommendations
with respect to R.
TCSPs, particularly
Recommendations
22, 23 and 28;
=Assist countries,
SRBs and private
sector to meet the

1
Risk Based Approach - Compliance Assist, available at: https://www.complianceassist.co.uk.
 requirements
expected of them,
particularly under I0.3
and IO.4;
Support the effective
implementation and
supervision by
countries of national
AML/CFT measures,
by focusing on risks as
well as preventive
and mitigating
measures.
Basis under FATF 40 FATF Recommendation FATF FATF FATF FATF
Recommendations Nos. 1, 2, 5, and 26. Recommendation Recommendations Recommendations Recommendations
Nos. 1, 10, 13, 17, 19, Nos. 1, 10, 12, 17, Nos. 1, 10, 11, 12, 17, Nos. 1, 5,6, 8 to 12, 13
20 and 26. 18 and 26. 19, 20, 21, 22, 23, 24, to 15, 24, and 25.
25 and 28.
Content Consists of three Consists of three Consists of three Consists of four Consists of three
sections: Section I, sections: Section I, sections: Section I, sections: Section I, sections: Section I,
sets out the key sets out the key sets out the key sets out introduction provides for the
element of the RBA; elements of the RBA; element of the RBA; and the key concepts; background and
Section II, Provides Section II, provides Section II, provides Section II, Key context, purpose,
guidance on the specific guidance to guidance to life element of the RBA; benefits and
effective securities providers insurers and Section III, Specific challengers of RBA, key
implementation of a and intermediaries insurance guidance to TCSP and; elements of RBA;
RBA to banking and Section III, intermediaries IV, guidance to Section II, guidance for
supervisors and; provides for the providing life supervisors of TCSPs public authorities
Section III, Specific effective insurance and other on the effective which include
guidance on the implementation of a investment-related implementation of a provisions on high-
effective RBA to supervisors of insurance products RBA. level principles for
implementation of a the securities sector. and; Section III, creating RBA and its
RBA to Banks. provides guidance implementation, and;
to supervisors. Section III, provides for
extensive guidance for
dealers on
implementing a RBA.
Target Audience 1. Addresses to 1. Countries and 1. Countries and 1. Practitioners in the 1. Dealers in precious
countries and their their competent their competent TCSP sector, 2. metals and precious
competent authorities, authorities, including supervisors and Countries and their stones (which include:
including banking AML/CTF supervisors competent competent producers of precious
supervisors, and 2. of the securities authorities, 2. Life authorities, and 3. stones and precious
Practitioners in the sector, and Financial insurance Practitioners in the metals, intermediate
banking sector. Intelligence Units supervisors, 3. banking sector and buyers and brokers,
(FIUs); and 2. Other supervisors other financial cutters, polishers and
Practitioners in the or competent services and DNFBPs refiners, jewellery
securities sector authorities involved that have TCSPs as manufacturers, retail
(including securities in the AML/CTF customers. sellers and buyers in
providers and compliance of life the secondary and
intermediaries, and insurance and scrap markets; 2.
external examiners intermediaries Countries, designated
for AML/CTF and/or of life competent authorities
purposes). insurance entities and self-regulatory
part of a financial organizations(SROs)
group.
Challenges 1. Allocating 1. Allocating 1. Allocating 1. Particular 1. Identifying
responsibility under a responsibility under responsibility under challenges for TCSPs: appropriate
RBA; a RBA; a RBA: a. identifying a. Culture of information to conduct
2. Identifying ML/TF 2. Identifying ML/TF ML/TF risk, b. compliance and a sound risk analysis;
risk; risk; assessing ML/TF adequate resources; 2. Addressing short
3. Assessing ML/TF 3. Assessing ML/TF risk, c. mitigating b. Appropriate term transitional cost;
risk; risk; ML/TF risk, d. mitigation measures; 3. Greater need for
4. Developing a 4. Mitigating ML/TF developing common c. Transparency of more expert staff
common risk and; understanding of beneficial ownership capable of making
understanding of the 5. Developing the RBA; on legal persons and sound judgments; and
RBA and; common 2. Financial arrangements; 4. Developing
5. Financial inclusion. understanding of the inclusion. d. Risk of criminality; appropriate regulatory
RBA. response to potential
2. Allocating diversity of practice.
responsibility under a
RBA;
 3. Identifying ML/TF
risk;
4. Assessing ML/TF
risk;
5. Mitigating and
Managing ML/TF
RISK;
6. Developing a
common
understanding of the
RBA.
Nature of Covered Financial Institution Financial Institution Financial Institution Designated Non- Designated Non-
Persons/entity (FI) (FI) (FI) Financial Businesses Financial Businesses
and Professions and Professions
(DNFBP). (DNFBP).

II. The Easiest and Hardest to launder Money among the Covered Persons (e.g.,
banks, insurance company, jewellery dealers, company service providers.

1. The Easiest to launder money in among the covered persons

After going over some materials in Money Laundering, particularly on covered

persons, I believe that the easiest way to launder money in among the covered persons is
in the Casino.

The Casino clean method to launder money is the most opted for by criminals
because it is one of the easiest methods to launder money. Criminals can take large
sums of cash to a casino and exchange the cash for chips. This would look suspicious
and criminals are too smart for suspicious activities such as this. So, the casino syndicate
was born. What happens in more advanced cases of laundering money through casinos,
corrupt businessman purchase large sums of chips legally. This chips are then sold to
criminals for their cash and the criminals can easily exchange the chips for cash after
playing in the casino for a while, making the act seem natural and the criminal like
another high roller in the casino.2

While it is true that casinos are improving their reports and analysis of funds, which
will limit and block a player even before the transaction is made, what is more difficult is
the fact that dirty money no longer has just one jurisdiction and can easily move from one
jurisdiction/country to another. When the money is move offshore many times, it is
often difficult to trace and therefore prove as dirty.

Individuals can transfer stolen funds into an offshore account in a locale where bank
secrecy laws are very strict. These countries and territories are often referred to as tax

2
How Criminals Clean Money in Casinos, (2017),available at: ejwagner-crimehistorian.com
havens. Financial institutions, trust, shell corporations and other financial groups in
these regions may welcome money from almost anywhere and often do not require
disclosure of information regarding where the money originated from 3.

There are however disadvantages: You cannot do it for really big amount of money
and you cannot do it often. The casino will notice, and no one will believe you get lucky
every time.4

2. The Hardest to launder money in among the covered persons

Banks is among the covered persons where money laundering is easy to detect and
the hardest for the criminals to launder dirty money. Banks and other financial
institutions have extensive preventive measures in place to detect suspicious transactions
and strict reportorial requirements. While banks are still very susceptible to money
laundering, but the possibility for the launderer of getting detected is so high which makes
banks among the hardest for criminals to launder their dirty money.

3
CHARLES, Brook Satti, “It All Comes Out in the Wash: The most popular money laundering methods in
cybercrime”, (2916)available at: https://securityintelligence.com
4
BROWN, Aaron, Why are casinos considered the best way to launder money, (June 10, 2019), available at:
quora.com.