APG report on illicit money curbs gives Macau high praise

Macau becomes the first member to pass all 40 Technical Compliance Recommendations from the global AML regulatory body.

Macau has been accused of lax anti-money-laundering standards in the past, but in recent years, the SAR has been making giant strides to improve both its legal framework and its enforcement regulations. The result is that it has gained a high approval rating from the global organization devoted to combating the spread of money-laundering and terrorist financing.

Known as the Asia-Pacific Group (APG), the regional body is part of a bigger global organization known as the Financial Action Task Force (FATF), which has 39 members representing most of the world’s major financial centers.

Recently, Macau became the first member to pass all 40 FATF legal and technical compliance standards with a fully qualified rating by APG. The news came soon after APG officially released a mutual assessment follow-up report on Macau, which had been approved by all APG members in August and subsequently reviewed by members of the Financial Action Task Force (FATF) to ensure the quality and consistency of the evaluation criteria. Macau was found to done a rigorous job.

It has been a long and dedicated effort for Macau to get to this point. In 2010, the Inter-departmental Anti-Money Laundering and Anti-Terrorism Financing Working Group, comprising 15 government departments, conducted a review of the legal framework for AML and ATF in Macau. It submitted a proposal for tightening the SAR’s regulations to the government, together with a feasibility study for its implementation.

The first thing the government did was focus on amending its legal framework. This resulted in the bill that was submitted to the Legislative Assembly in 2016, known as the Law on the Implementation of the System of Frozen Assets. The Legislative Council passed this, together with related laws on cross-border cash reporting systems.

This was all done after the APG had conducted its field review in 2015. In other words, it was too late to show up in the APG’s report from that visit. Nevertheless, these actions showed the determination of the Macau government to combat money laundering and terrorist financing. And with time, the APG came back again with a task force, reviewed the progress Macau had made, and published its latest report for review, which recognized the progress Macau had made.

It is no easy task to prevent money laundering and terrorist financing in a jurisdiction with a large casino industry. This is for the obvious reason that large amounts of cash are being handled by the casinos, and it is often difficult to thoroughly check the sources of the cash.

Nevertheless, the government has been working with the six gaming concessionaires in recent years to adopt more advanced AML and ATF prevention measures. These have been particularly focused on getting the gaming promoters – otherwise known as junkets – and their partners directly under the industry’s regulatory and licensing system.

Today, the government has a “double check” process on junkets, aiming to both raise the capital threshold for participants, i.e., ensure only the strongest can participate, and to ensure they are held accountable for the players that come through their VIP rooms.

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