The U.S. Department of State has issued its annual report on money laundering, financial crimes and drug and chemical control activities entitled, 2016 International Narcotics Control Strategy Report. In the report, the department concludes that the prevalence and nature of junket operators in Macau continues to pose a potential “vulnerability for money laundering.”
As in earlier years the report includes a segment on Macau, listed under a heading that reads “Countries/Jurisdictions of Primary Concern.” While describing the MSAR as “not a significant regional financial center,” it warns that the anonymity of junkets facilitating the circumvention of China’s currency movement restriction represents a “vulnerability for money laundering, encourages Chinese capital flight and fosters underground financial systems.”
The Department of State’s annual report welcomed the work of Macau’s Financial Intelligence Unit (FIU), saying that it regards the unit as “an essential component in coordinating efforts to develop long term […] infrastructure and in developing close collaboration with other FIUs, including the signing of memoranda of understanding and collaboration agreements with foreign counterparts.”
However, the report noted that “important deficiencies remain.” The failure of lawmakers to pass legislation aiming to strengthen Macau’s customer due diligence requirements and to seek to improve the cross-border currency controls have been pending for over three years, the report claims. Unsurprisingly it adds that Macau is yet to implement an effective cross-border cash declaration system.
The 2016 edition of the report reads, “The primary sources of laundered funds, derived from local and overseas criminal activity, are gaming-related crimes, property offenses and fraud.”
“Organized crime, including triads, are active in the gaming services and are engaged in loan-sharking [and] prostitution services,” the report said, complementing a report recently released in the British Journal of Criminology which claimed that Macau VIP rooms “remain to this day dominated by triads.”
Gaming-related crimes continue to account for a significant portion of reported crime in Macau. The Times reported last month that gaming-related cases surged by 38 percent to 1,553 cases last year, which law enforcement agencies attribute to heightened police attentiveness to gaming operators as the industry undergoes an “adjustment period.”
According to the report, while Macau’s law does not require currency transaction reporting, gaming entities are obliged to report transactions over MOP500,000 to the Gaming Inspection and Coordination Bureau. The report recommends that Macau lowers this threshold to USD3,000 thereby bringing the amount in line with international standards.
It further recommends that the government “take[s] action on its long-pending legislation regarding customer due diligence and cross-border currency controls. Macau should also enhance its ability to support international […] investigations.”
In the first half of last year, there was just one criminal prosecution for money laundering, while there were no convictions.
In international cooperation terms, Macau is a member of the Asia-Pacific Group of Money Laundering (APG), a FATF-style regional body.
As Macau is not a sovereign state it is unable to sign certain conventions independent of China. Nevertheless, the conventions extended from China to Macau include the United Nations (UN) Convention against Transnational Organized Crime (2003), the UN Convention against Corruption (2006), and the International Convention for the Suppression of the Financing of Terrorism (2006). DB
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