Home Credit inquiry Casino AML Risks and Reforms in the Spotlight in Global Gaming Centers | Thomson Reuters Regulatory watch and compliance learning

Casino AML Risks and Reforms in the Spotlight in Global Gaming Centers | Thomson Reuters Regulatory watch and compliance learning


Casinos are under renewed scrutiny from global regulators looking to tackle money laundering and misconduct in the gambling industry worldwide

Money Laundering and Misconduct in Casinos has renewed global scrutiny of Anti-Money Laundering and Anti-Terrorist Financing (AML/CTF) compliance in the gaming industry. Recent regulatory reforms target the culture of conduct and compliance in government agencies and the private sector.

Meanwhile, law enforcement activities are also taking a more aggressive turn, with regulators in one jurisdiction going so far as to classify casino money laundering misconduct as a threat to stability and security. financial.

Canada: Public Inquiry Sparks Calls for Reform

The findings of a regulatory investigation into money laundering in the Canadian province of British Columbia (BC) are increasing scrutiny of the gambling industry in this country and beyond. Earlier this month, the Cullen Commission, a public inquiry headed by B.C. Supreme Court Justice Austin Cullen, submitted a report to the federal government that examines whether the acts or omissions of regulators and individuals have contributed to money laundering in the province. The report covered 133 hearings, including testimony from gambling officials, police and financial crime experts, that took place as part of the investigation.

The commission found serious cultural shortcomings in the gambling industry. The findings of the investigation support the possibility that compensation incentives from the British Columbia Lottery Corp., a government agency responsible for overseeing gambling in province, have pressured gaming officials to prioritize gambling revenue over compliance with federal provincial anti-money laundering laws.

The Commission noted that “staggering amounts” of illicit funds are being laundered provincially. Although the survey did not quantify the exact numbers, the report provided evidence to support the hypothesis that the amounts are in the billions of Canadian dollars per year, in British Columbia alone, and increasing with time.

The 1,800-page report was recently made public and sparked calls for stricter enforcement and regulatory reform of anti-money laundering requirements for the Canadian gambling industry. The appointment of a dedicated commissioner to anti-money laundering and lowering the threshold for requiring proof of funds for casino cash transactions are among the recommendations made by the Cullen Commission to combat money laundering risks in the gaming industry.

Australia: Ongoing reforms and enhanced supervision

Misconduct and money laundering scandals at two major casino operators, Star Entertainment Group and Crown Resorts, have spurred wholesale regulatory reform of gambling regulations in Australia. A series of investigations into Australian gambling operators have revealed serious compliance failures at casinos operated by the two groups as well as loopholes at state-level casino regulators that have enabled money laundering. money to continue unabated for years.

An investigation in the Australian state of New South Whales found that The Star and its management had facilitated over A$900 million in money laundering for junket operators. Regulators in another state of Victoria have found Crown processed A$164 million in China UnionPay card payments in breach of anti-money laundering laws that prohibit the withdrawal of gambling funds using cards credit or debit. Crown’s casino license was recently reinstated with conditions after being suspended in 2020 for anti-money laundering non-compliance.

Regulatory reforms currently underway include proposals to broaden cooperation and enforcement between the Australian Center for Transaction Analysis and Reporting (AUSTRAC) and state level regulators. In addition, AUSTRAC has taken legal action against Crown Resorts, citing “serious and systemic non-compliance” with Australia’s anti-money laundering laws which has left the country’s financial system “vulnerable to criminal exploitation”.

The states of Victoria and Queensland have introduced legislation to provide increased oversight and enforcement powers to their respective state casino regulators. Queensland casino operators will be subject to stricter compliance requirements and stiffer penalties for breaching regulations; meanwhile, casino operators in Victoria will have to comply with expanded regulatory reporting requirements. Overall, the reforms suggest that the gambling industry in Australia will be subject to a much greater degree of oversight and accountability in the future.

Macau: Rising risks for operators

Macau recently gave the go-ahead to a new gaming bill that gives its chief executive the power to revoke gambling concessions given to casinos on national security grounds or for failure to pay taxes on time. Operators could be forced to give up concessions such as gaming tables or be asked to pay additional taxes if they fail to generate sufficient revenue to meet new minimum gaming tax requirements. a development that could have unintended consequences on driving risk.

Higher tax requirements have raised concerns as the industry continues to suffer financial losses due to limited visitor numbers in the city. Macau’s borders have been mostly closed since the start of the pandemic in 2020; and, beginning June 20, the gaming center closed most schools and businesses following the discovery of dozens of locally transmitted coronavirus cases. Although casinos have been allowed to stay open, residents have been told to stay home and analysts believe casino revenue in the coming weeks will be close to zero.

Pressure to generate revenue under difficult operational conditions could increase conduct and regulatory risk for casino operators in the gambling hub. Although Macau has not reviewed money laundering risks in the gambling industry with as much rigor as casino regulators in other jurisdictions, law enforcement has acted in cases where cross-border activity and enforcement actions in other jurisdictions are involved.

Long flagged as a high risk for money laundering and organized crime, these operators bring in high rollers to gamble in casinos, extend credit and collect debts.

In 2021, local law enforcement arrested 21 people, including the general manager of Macau Suncity’s Casino Junket, Alvin Chau, for organized crime and money laundering. Suncity has also been involved in a separate investigation by Australian regulators into allegations that Star Entertainment Group authorized money laundering in secret junket-operated rooms inside Star casinos.

Take away food

Casino operators in global gaming centers are coming under increased scrutiny as part of a broader crackdown on organized crime and money laundering. The culture of conduct and compliance emerged as two main areas where regulatory reforms are aimed. As seen in recent enforcement actions in Canada and Australia, culture and conduct within regulatory bodies are as problematic as in the private sector.

Financial institutions dealing with casino operators and the gaming industry should take note of the current heightened surveillance environment and apply enhanced due diligence measures where necessary.

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