Are Chinese laundries thriving in casinos?

According to a story in the Compliance Exchange, Chinese launderers are making use of Las Vegas casinos, in particular slot machines, to clean the proceeds of crime. The filthy lucre in question is US$670m in funds missing from the IPO of a former NASDAQ listed Chinese company.

Details on this alleged laundry are scant, so far, but laundering through casinos is a familiar cycle to the anyone with a pile of cash to clean.

Casino clearance

As cash rich enterprises, casinos are highly attractive to organised criminals or tax evaders who want to tie their funds to a legitimate source. The Mob built Las Vegas in the 1940s expressly to clean and hide the proceeds of crime. Although global anti-money laundering standards have concentrated efforts in the past five years on stemming the flow of dirty money through casinos, the gambling business remains high risk. Raising staff and company awareness, generating a culture of compliance business and implementing a minimum level of training for casino staff can help to eradicate – or at least reduce – the impact of some of the tried and tested money laundering methods.

In 2009 the Asia-Pacific Group on Money Laundering published a report on money laundering via casinos. The common methods used below can be identified easily if the casino staff are encouraged and trained to identify suspicious transactions.

The cheque method – A casino client exchanges cash for chips gambles away a small amount and returns the chips to the cashier. The cashier provides him with a cheque from the casino for the value of the chips. The client then presents the cheque to a bank.

Enhanced due diligence processes in place at both casinos and banks should mean both large sums of money and cheques for large amounts from casinos should be the subject of enhanced scrutiny. However, the gambling business is geared towards attracting ‘high-rollers’ who play with vast sums in casinos. Spending levels that may constitute unusual or suspicious in most businesses is ‘normal’ behaviour in casinos.

Value tampering – the purchase of chips from ‘clean’ players at a higher price – Money launderers may purchase chips from other money launderers or un-associated casino patrons with ‘clean’ backgrounds. This is done at a price greater than the chips’ face value.

Combining winnings and cash into casino cheques – although few jurisdictions allow this, money launderers seek to add cash to casino winnings and then exchange the combined cash and winnings for a single cheque.

As any anti-money laundering veteran will attest, the criminally minded are always one step ahead of the law enforcers and standard setters. Financial Crime Asia would like to hear from AML officers in casinos who have identified suspected money laundering. All stories and reports will be treated confidentially.

 

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