Macau Casinos Report Surge in Suspicious Transactions, Reflecting Tightening Regulatory Controls

Macau casinos saw an 89.1% increase in suspicious transaction reports (STRs) in the first quarter of 2024 compared to the same period last year, according to new data from the special administrative region’s (SAR) Financial Intelligence Office. This surge in STRs is attributed to both the general growth in transactions as Macau’s post-pandemic recovery continues and the tightening of regulatory controls within the casino hub.

STRs are triggered by customer behaviour that may suggest money laundering, such as the conversion of chips with little or no gaming activity or the conversion of chips on behalf of third parties. Large currency exchanges also prompt STRs. Additionally, casinos must file a large-amount transaction report (LTR) for transactions exceeding MOP500,000 (approximately US$62,000).

Casino operators filed 1,125 STRs between January and March 2024, up from 595 in the first quarter of 2023. For context, the 3,431 STRs filed throughout 2023 marked an 80% increase over 2019, the last year unaffected by the pandemic. This rise in reports reflects Beijing’s ongoing efforts to clean up Macau’s casino industry.

Gambling is illegal in mainland China, and Beijing has long criticized Macau’s casinos, particularly their junket operators, for facilitating capital flight and money laundering. A 2013 report by the Chinese Communist Party’s Congressional-Executive Commission estimated that $202 billion in “ill-gotten funds” were funnelled through Macau annually.

President Xi Jinping signalled the need for tighter regulation during a 2014 visit to Macau, expressing his hope that the SAR could “better regulate the gaming industry” with “courage and wisdom.” The casino relicensing process of 2022, the first since Macau opened to international operators two decades earlier, provided an opportunity to impose new financial standards and curtail the influence of junkets, aligning with Beijing’s goals.

Beijing also aims for Macau to diversify its economy beyond casino-driven capitalism and has encouraged the SAR to develop into a financial hub, although it remains far from rivalling Hong Kong in this regard. A recent British government report on overseas business risk noted improvements in anti-money laundering (AML) compliance in Macau over the past decade but concluded that “the risk of money laundering within the gaming industry remains of significant concern.”

By fLEXI tEAM