The Philippines' Anti-Money Laundering Council (AMLC) said it will move against illegal casino operators that disguise gambling proceeds as ordinary business sales, including payments routed through merchant accounts belonging to beauty salons and bakeries.

"Their activity gives them away," the AMLC told BusinessWorld in an e-mail. "A salon that receives thousands of small payments after midnight is transacting in amounts not commensurate with its business, with no apparent economic justification."

While the council said it cannot disclose specific cases, it assured the public that it will act on any report of illegal online casinos operating in the country.

"The AMLC does not confirm or discuss specific reports, intelligence, or investigations; Section 8-A of the AMLA (Anti-Money Laundering Act) requires that such information be kept confidential," it said. "Where such activity is detected or reported, the AMLC, together with the competent authorities, will act to identify, investigate, and address the risks involved."

How the Scheme Surfaced

The warning follows a September disclosure by the Bangko Sentral ng Pilipinas (BSP), which flagged thousands of illegal businesses on local payment platforms, including online casinos posing as small mom-and-pop stores, according to a Bloomberg report.

The scheme came to light after the BSP identified several merchants processing thousands of small payments, some worth as little as P50, during the early hours of the day. Authorities later determined the transactions to be online casino bets.

According to the AMLC, such arrangements conceal both the operator and the source of funds, placing illegal casinos outside the reporting regime that covers licensed casinos under the AMLA. The law designates only licensed physical and online casinos as covered persons obligated to report to the council.

That gap, the state financial intelligence unit said, makes banks, electronic money (e-money) issuers, and payment operators central to detecting suspicious merchants. Because those operators sit outside the reporting regime, the anomalies that routine monitoring picks up are effectively the first indication that disguised gambling is underway.

"Illegal operators that hide behind merchant accounts sit outside that regime by design," it said. "Detection therefore falls to the banks, e-money issuers, and payment operators that onboard and monitor those merchants."

FATF Monitoring at Stake

The AMLC noted that the prevalence of illegal casinos alone will not determine whether the Philippines risks a return to the Financial Action Task Force's (FATF) "gray list" of jurisdictions under increased monitoring.

"Schemes like these do not, by themselves, decide how the country is rated," the council said. "What the assessors will examine is how the system responds: whether covered persons detect and report the activity, whether the AMLC turns those reports into intelligence that authorities use, and whether supervisors and law enforcement act on it."

"A scheme that is detected, reported, and shut down is evidence that the system works," it added.

The Philippines was placed on the FATF's gray list for "dirty money" risks in June 2021 and remained there for more than three years. It was removed in February 2025 after passing the watchdog's evaluation. The global dirty money watchdog is set to reassess the country in 2027, when it will verify whether the country's anti-money laundering measures are being sustained and remain in place.

Staying off the list, according to the AMLC, requires consistency in the government's and institutions' anti-money laundering efforts, including continued vigilance in addressing emerging risks.

"Any jurisdiction can return to the grey list if its ME (mutual evaluation) results fall short, and the Philippines is no exception," it said. "The key question is not whether online gambling, corruption, and fraud exist, but whether our AML/CTF/CPF (anti-money laundering, countering the financing of terrorism, and countering proliferation financing) system is capable of responding to them effectively: whether authorities identify the risks, investigate and prosecute offenders, and recover the proceeds."

National Risk Assessment Findings

In its third and latest National Risk Assessment, published late last year, the AMLC said the Philippines remains under heightened threat of money laundering as it continues to confront financial crimes such as drug trafficking, financial fraud, and tax evasion.

The assessment nonetheless found that the country faces only "medium" vulnerability to money laundering risks, spread across sectors including banks. The AMLC also noted that the Philippines carries "medium" risks from terrorism financing and proliferation financing.

By sector, banks hold a medium residual vulnerability to money laundering, while e-money issuers carry a medium net vulnerability "with high inherent risk moderated by regulatory oversight and improving controls." That sector-level finding carries added weight given how the current scheme surfaced: through merchant activity on local payment platforms.

Push to Cover Virtual Asset Providers

Separately, the council is pushing amendments to the AMLA as part of efforts to strengthen the country's existing framework and align the law with FATF standards. The proposed changes include expanding the AMLA's scope over virtual assets, particularly by explicitly designating virtual asset service providers (VASPs) as covered persons.

"The AMLC continues to strengthen its oversight of virtual asset activities through risk-based supervision and close coordination with the BSP and the Securities and Exchange Commission," the AMLC said.

"On legal authority, the AMLC supports amendments to the AMLA," it added. "There are several pending bills which include measures that would expressly designate VASPs as covered persons under the AMLA. Express designation would ensure that every provider of virtual asset services is covered by the AMLA, whichever agency licenses it, as FATF Recommendation 15 requires."

Under existing provisions, only BSP-supervised VASPs are considered covered persons.

Based on the National Risk Assessment, VASPs' inherent dirty money risk is high due to the "speed, cross-border reach, and pseudonymous nature of virtual assets." Their overall net money laundering and terrorism financing risk, however, stands at medium-high.

In late September, AMLC Executive Director Ronel U. Buenaventura noted that at least five Senate bills containing the proposed amendments are pending before the Committee on Banks, while nine House bills are pending before the counterpart committee. With the measures still awaiting committee action in both chambers, the markers to watch are their progress through the legislature and the FATF's 2027 reassessment of whether the country's safeguards hold.