An improved economy demands a more active control

Written By:, and on FORENSIC ACCOUNTING NEWS, LITIGATION SUPPORT, OPERATIONAL & FINANCIAL DUE DILIGENCE

The re-blooming Economy of Macau, following the “difficulties” and uncertainty that struck the gaming sector in 2017 and 2018 appears to be in full swing, with more visitors trying their luck at the Baccarat tables and slot machines. The latest statistic of Macau Gaming Inspections and Coordination Bureau (DICJ) and Financial Services Bureau indicated for the first 5 months in 2018

  • the gaming sector of Macau has generated an accumulated gross revenue of MOP127,727 million (equivalent to HKD124,007 million), surged more than 20% compared to last year; and
  • direct taxes revenue from gaming received by the Macau government is as high as MOP44,707.4 million (equivalent to HKD43,405.2 million), constitutes 83% of the total government revenue.

However, the environment is not as rosy as it might appear. The return of gamblers and increasing growth in gaming was tainted by an increase in the number of suspicious transactions. There is no doubt the gambling market is very important to Macau however, casinos have always been regarded as a good conduit for money laundering. In 2017 the GIF, otherwise known as “Gabinete de Informação Financeira”, the bureau that helps to fight money laundering in Macau, recorded a total of 3.085 participations of suspected money laundering and/or terrorist financing transactions, up more than 32% since 2016.

suspected money laundering and/or terrorist financing transactions, up more than 32% since 2016

Gaming activity was responsible for around 67% of the total reported suspicious transactions with financial institutions and insurance companies making up a further 24%. GIF claim credit for the increased number of reported transactions due to a more diligent government striving to fight foul play within Macau borders and the continual growth of dissemination programs lead by the GIF. However new laws and border controls that demand that cash or any bearer negotiable instruments above MOP120.000 be declared and the Macau government’s commitment to taking real and strong strides in the hope of showing to the international community that this city is a place for leisure and fun not a hub for money laundering and terrorism financing must also be given credit.

In Instruction No. 1/2016 issued by the DICJ in April 2016 and enacted in May 2016, gambling operators have to adopt a risk-based approach to ensure that they have chosen the appropriate safeguards and allocate their resources effectively and efficiently. Gambling operators should also identify, evaluate and understand the risks they encounter with in every 2 years. The Instruction emphasises “know your customer”, and gambling operators should conduct customer due diligence (CDD) and enhanced due diligence (EDD), especially when it comes to “politically exposed persons” (see our update on Macau’s revised guidlines on preventative measures on money laundering). Moreover, the Instruction adopts a threshold of MOP500,000 (or equivalent) for casinos to report to the authority as large sum transactions.

How can gambling operators mitigate their risks?
  • Customer due diligence & Enhanced due diligence: sets up detailed CDD and EDD requirements and procedures, to both customer(s) and the beneficial owner(s); and
  • Prepare an up-to-date risk assessment: maintain an up-to-date risk assessment, especially when there is launch and use of new product and technology, seek professional assistance when needed.

How can JLA assist?
Our team comprises of a diverse group of experienced professionals from various backgrounds, and experienced in casino and junket operations. We can assist gambling operators and regulators to:

  • identify and detect suspicious transactions and activities that may involve in money laundering;
  • conduct and assist in CDD and EDD; and
  • provide opinion on risk assessments and risk management.

Contact our Experts