Casino City Times – A federal commission studying U.S. relations with China recommended closer examination of gaming in Macau, saying weak financial controls in the district pose “significant risk” of money laundering and terrorist financing.
The report issued Wednesday by the U.S.-China Economic Security Review Commission stopped short of saying U.S. security interests might be at stake. But commission Chairman William Reinsch said what it found “was disturbing and raises the question that possibility is out there.”
The 12-member panel, composed of experts in trade, intelligence, defense and international affairs, said it “did not seek nor did it find evidence of wrongdoing by any U.S.-based casino company, either in Macau or in Las Vegas.”
But several commissioners suggested that federal oversight or regulation of U.S. gaming companies doing business in Macau might be merited.
The commission recommended the United States press Macau, a special administrative region of China, to fix shortcomings in its financial regulations.
Potential reforms could include a more effective process of freezing assets of suspected criminals, and reducing the high $62,500 threshold for reporting suspicious casino transactions.
The commission was formed in 2000 to make recommendations to Congress on national security and trade issues between the United States and China.
This was the first year in which it examined Macau, and the undertaking appeared to raise red flags with the gaming industry. Macau in 2006 surpassed Las Vegas as the world’s largest gambling market. Its annual, officially reported gross gaming revenue in 2012 of $38 billion was six times that of the Nevada resort city. Experts have guessed the true gaming market could be six times larger than the official estimates.
But rapid inflows of money coupled with Macau’s relatively loose regulations and strict privacy laws present large risks of money laundering, authorities have said. Also the casino industry relies heavily on loosely regulated junket operations that have a history of association with Asian organized crime.
Three Nevada companies, MGM Resorts International, Wynn Resorts Ltd. and Las Vegas Sands Corp., operate some of the three dozen casinos in the booming district. Wynn and MGM made private presentations to the commission about controls and safeguards they have in place to mitigate risks.
At a commission hearing in Washington, D.C., in June, Nevada Gaming Control Board Chairman A.G. Burnett testified that the state believes that Nevada-affiliated casinos in Macau “offer robust compliance with anti-money laundering protocols,” but only to a point where junket operators assume responsibility.
“From our perspective of regulation in this matter, we have limitations,” Burnett said.
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