The Chinese Way – the impact of China’s anti-corruption campaign on trade-based money laundering and Macau casinos

By Christine Duhaime | November 29th, 2014

Money Laundering Bulletin in the UK has a good article out today on the anti-corruption drive in China and its impact on the casinos in Macau, which explores the anti-money laundering lapses and lack of legislation in the gambling industry in Macau, and the corresponding increase of trade-based money laundering in China.

Trade-based money laundering

According to the article, as a result of the diminishing gambling revenues in Macau, Chinese foreign nationals are increasingly turning to trade-based money laundering in China to remove funds from the country.

The article notes that last month, the government of China discovered that companies in China have “faked, forged and illegally re-used” documents for imports and exports on a wide scale and there is an investigation ongoing with a view to prosecuting the companies and their executives involved.

Because of the prospect of lucrative bribes, the article notes that one of the most sought-after positions in China is as a border guard at the Hong Kong-Shenzhen border. Border guards at that location will, for a fee, adjust the price of iPhones in a container upwards or downwards depending upon the request, notes the article, to either half price or double the price.

The article quotes an analyst describing the revival of the ancient practice of “mayo banjia” (meaning ants moving a house) where many people move funds across the border instead of one person as the new, old way of money laundering across the Hong Kong and Macau borders. The analyst says that rather than giving one person a bag of gold to smuggle, 1,000 people each smuggle a bag of gold bracelets.

Less money moving to Macau from China

According to an organized crime specialist in China quoted in the article, money supply is tightening in China and officials are having difficulty exporting funds from China to gamble in Macau. In order to internationalize the Yuan, President Xi is apparently controlling the laundering of funds out of China.

We are quoted in the article as saying that supervision and oversight of casinos in Macau in terms of anti-money laundering (“AML”) law compliance is not as stringent as in mature gambling markets and that Macau’s standards for AML fall short compared to global standards with respect to junket operators who manage the VIP Rooms, which account for 75% of the gambling revenues in Macau.

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