Macau (MNA) – The Macau industry will have a “painful” process to adjust to the consolidation of anti-money laundering compliance practices but the changes have largely improved the city’s image internationally, a Partner with the Fraud Investigation & Dispute Services at Ernst & Young, Manhim Yu, told MNA on Thursday during the G2E Asia 2018 Conference.

“The international image towards Macau is of a unique business style, low tax and with a very active gaming industry for a very small place. The traditional perceptions by most people in the world of the gaming industry is a high risk of money laundering […] I think the past one or two years the compliance with anti-money laundering has been getting better,” Mr. Yu told MNA.

According to Mr. Yu – a former Law Enforcement Officer with the Independent Commission against Corruption Hong Kong – the audit conducted by the Asia/Pacific Group of Money Laundering (APG) of Macau in 2016 and the consequent revision of local legislation to counter money laundering measures and financing of terrorism largely, improved the city’s standing towards international standards.

“Good in the sense that we can take that as an objective assessment result since its a global assessment standard. So wherever the assessment goes to, including Hong Kong or Macau or any APG country the same standards are applied,” he told MNA at.

For the finance fraud expert, the recent results showing that the number of suspicious transactions reported by the gaming industry in Macau had increased 34.1 per cent year-on-year for the whole year of 2017-  representing two thirds of all complaints – was a sign that the industry was making reports in a more pro-active way

“It’s a steep learning curve [after anti-money laundering law changes were enforced in 2017] with more specific requirements to concessionaires, sub-concessionaires and junket operations. But its huge progress being made,” he added.

The possibility that smaller junket operators could be pushed out of the market due to recently proposed tighter sector requirements being considered by the Gaming Inspection and Co-ordination Bureau (DICJ) was also seen as natural effects of consolidating compliance methods.

“The same process happened in the banking industry per example. Five to six years ago after the banking and financial industry was hit by the first wave of regulators imposing better controls and regulations. It lead smaller banks to not shut down, but gradually having to step up,” he added.

Mr. Yu described this a as a “painful” process where “everyone has to step up together”  with larger banks and industry players having better resources implement them.

“They have a larger clientele so higher risk, but they need at least three years to get to higher standards, whereas smaller players either will consider if its worthy to have this hefty compliance investment to justify their business revenue. If not they will just fade out. The same situation happened with the banking industry, then the securities industry and then the gaming industry,” he added.

However he was adamant that the best way for regulators to control an industry as a whole is to consolidate and keep on promoting for larger players to have better standards while consolidating the medium to smaller players, who have to “either form larger organisations that can sustain better control” or “gradually fade away”.