In Key Audit, Macau Gets Glowing Report Card For Efforts To Fight Dirty Cash

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Casino hub Macau’s bid to reinvent itself as a family-friendly tourist destination was given a boost after a respected international body handed the city a glowing report card at the end of a key audit of its anti-money-laundering and anti-terrorist-financing regime.

As the only place on Chinese soil where casino gambling is legal continues its struggle to shake off its reputation as a “Wild East” city of sin and shady dealings, monetary chiefs in the former Portuguese enclave have hailed the result of the audit as “remarkable”, though critics fear the official reaction fails to address deep-rooted problems which have led some to label Macau Asia’s biggest “washing machine” for dirty cash.

Carried out by a team made up of member nations of the Asia-Pacific arm of the Financial Action Taskforce on Money Laundering (FATF), the audit – or “Mutual Evaluation Report” in official parlance – forms a key part of the task force’s aim of ensuring compliance with internationally agreed strategies to deter, report and punish those involved in what law enforcement agencies say is a multitrillion-dollar crime.

The report rated Macau’s “effectiveness” in supervising its anti-money laundering regime as “substantial”, a measure officials from the Monetary Authority of Macau said was the result of “tremendous and continuous” efforts by the authority and the financial sector as a whole.

In a statement, the authority said the report, which was endorsed earlier this month at the 20th Annual Meeting of the Asia/Pacific Group on Money Laundering in the Sri Lankan capital, Colombo, but has not yet been published by the FATF, also meant that in some aspects of its anti-money-laundering work, the city is now ranked among the best in the world.

“Macau SAR has achieved a ‘substantial’ rating in the assessment on the effectiveness of supervision. This makes Macau SAR the second jurisdiction in the Asia-Pacific region and the sixth globally to achieve such a remarkable result – the other five being Canada, Cuba, Ireland, Malaysia and Spain,” the statement said.

“This achievement can be accredited to the tremendous and continuous efforts devoted by the Monetary Authority of Macau and the financial sector in the combating of money laundering and countering the financing of terrorism and proliferation of weapons of mass destruction.”

A gaming industry executive, who requested anonymity, said most of the landmark anti-money-laundering initiatives taken by the Macau authorities – such as new anti-money-laundering guidelines, a new anti-money-laundering law, a border cash-declaration rule and the recent introduction of facial recognition technology in all the city’s ATMs – came into effect this year, after the FATF reporting team had left Macau late last year.

“They have indeed done a lot … the crackdown on hand-held mobile payment devices, the ATM controls, the cash declaration system, these are all good,” the executive said.

“But when 85 per cent of government tax revenues come from an industry that is dominated by junkets, who have no Know Your Customer controls whatsoever, it’s hard to understand how they can be considered any kind of success. To be fair, they are obviously circling the junkets, trying to figure out how best to curb them without bringing down the whole house,” he added.

News of the audit report comes as junket operators – the often opaque “entertainment businesses” who bring big-spending gamblers from across Asia, but mostly from mainland China, on lavish packages to casino VIP gambling rooms – have come under renewed scrutiny.

Earlier this month, official data from the city’s Gaming Inspection and Coordination Bureau revealed that between April and June this year, VIP rooms for baccarat – the game of choice for big-spending gamblers – raked in US$4.46 billion in gross revenue, up 34.8 per cent year on year.

The VIP revenue surge comes almost three years since President Xi Jinping visited the city and spelled out a clear desire for China’s only other special administrative region next to Hong Kong to clean up its gaming industry and end an overreliance on VIP revenues.

It is widely believed that for years the VIP operations have been conduits for dirty money flooding out of China. That has made the junket operators who bring in super-rich customers on lavish packages to spend millions in VIP rooms a prime target for Beijing’s continuing anti-corruption drive.

A big part of the central government’s plan for Macau involves transforming the city’s gaming industry into a more family-oriented, mass-market destination. But the latest official data shows a significant jump in the very VIP revenues Beijing wants to curtail, sparking fears that the world’s top gaming hub could face a fresh crackdown on dirty cash.

Next up for scrutiny is Hong Kong, which along with Macau is a member of the Financial Action Taskforce on Money Laundering, and is slated to welcome an evaluation team later this year.

Source: SCMP

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