Gambling with dirty money in Macao

Casinos in Macau

Casinos in Macau (Photo credit: Wikipedia)

China and Macau are stepping up efforts to clean up Macau’s multi-billion dollar gambling industry, according to a the US Congressional-Executive Commission on China‘s 2013 report.

Macau’s gambling industry has proved hugely profitable for the Chinese enclave, with revenues reportedly outstripping those of Las Vegas by five times. Earnings hit the USD32.5bn mark in 2011.

With much of the money spent in Macau’s casinos coming across the sea from China, this is a cause for concern for the governments of both countries who have reportedly stepped up efforts to regulate gambling in Macau.

The vast numbers of Chinese gamblers spend the most money at the tables and as Macau law makes few demands on casinos to be vigilant for financial crime, all bets are on. There is no cash declaration threshold at the border for anyone entering Macau, the high transaction reporting threshold provides little information and there are very few poor customer due diligence requirements.

Enter the PEPs

The casinos are widely thought to be where Chinese Communist Party officials – politically exposed persons – and others launder the proceeds of corruption and other crimes, sometimes even dipping into public coffers to fund gambling trips, according to a report from ChinaForbiddenNews in May 2013. The former vice-president of the Agricultural Bank of China was reportedly CNY3bn (USD492,245) in debt to casinos in Macau.

Help is at hand

The congressional report details the US plan of action. Macau can expect a raft of visits from the US authorities who have plans to help the Chinese enclave to bolster its anti-money laundering (AML) legal and regulatory regime. As of July 2013, the AML regime had no ‘freeze’ mechanism, which allows banks to block access to accounts upon the request of law enforcement.  Macau is considering introducing a cross border cash declaration requirement, which may discourage certain gamblers from hitting the tables, depending on whether the law is enforced or not.

If getting off the boat becomes a problem, as the risk of arrest outweighs the prospect of a good night of spending your own – or somebody else’s – cash at the tables, then some gamblers may opt to stay on. Anyone familiar with Hong Kong will recognise the windowless, former cargo boats that cruise the harbour picking up gamblers before heading into international waters where they open up the tables, deftly side-stepping Hong Kong’s strict gambling laws. The floating casinos are patronised by those gamblers who either do not want to make the journey over to Macau, or for reasons of discretion, prefer gambling in a more controlled environment.

In May this year, one rather nervous Chinese player jumped ship from a casino boat in Hong Kong harbour. After a reportedly disastrous night at the tables, the man decided to swim ashore rather then face the loan sharks whose money he had just lost. Another boat picked the man out of the water, and he recovered from his leap in hospital. Although the Hong Kong police suspected no foul play at the time, there may be some if the loan sharks get hold of the gambler. Read the story here.



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