PRACTICAL SOLUTIONS
It is , thus , unsurprising that bad actors see casinos as an enticing way to launder illicit funds , a reality noted by authorities and regulators , including the Financial Action Task Force ( FATF ). Casinos are cash-intensive businesses categorized by FATF as designated nonfinancial businesses and professions ( DNFBPs ). Casinos offer , in addition to their normal gaming operations , various financial functions , such as accepting funds , conducting money exchanges and transfers , offering credit lines and renting deposit boxes .
Casino-based laundering
Common ways of laundering funds through casinos include but are not limited to the following : Buying gaming chips with cash , thereby limiting the ability of casinos to confirm the source of the funds ; placing high amount , low-risk bets ( e . g ., betting on red versus black in roulette , or with and against the bank in baccarat , and cashing out at the end of play with minimal losses ); splitting larger amounts into smaller transactions , often with multiple individuals , to minimize suspicion and evade threshold reporting requirements , a practice commonly referred to as “ smurfing ” and “ structuring ;” refining large quantities of low-denomination notes into high-denomination notes , or “ refining ;” depositing funds and cashing out with minimal-to-no gaming activity or “ minimal play ” and forging documents to open casino accounts .
One of the most common illegal activities on casino floors is loan-sharking or usury , whereby individuals outside the purview of the casino loan money to , often , desperate gamblers at higher exchange rates than legally allowed , with the ever-present threat of collection via blackmail or violence .
Currency exchange
Another common method of enabling potential money laundering in casinos includes illegal currency exchanges . This practice is becoming increasingly common in the Macau Special Administrative Region , where non-resident workers ( NRWs ), mostly from mainland China , are lured by illegal exchangers offering better exchange rates than those practiced by legal exchange venues . The NRWs , who are paid in Macanese patacas ( MOP ), use ATMs to withdraw their wages in Hong Kong dollars ( HKD ), which is the only accepted currency to wager bets in Macau ’ s casinos ( the exchange rate from MOP to HKD is nearly one-to-one ). The illegal exchanger then orders a transfer of the corresponding amount in Chinese yuan ( RMB ) to either the workers ’ mainland China bank accounts or their mobile-based WeChat Pay or Alipay accounts . This practice thwarts cross-border policies and enables potentially illicit funds to be used in casinos .
This method imitates another system of non-bordercrossing money transfers known as the hawala system . Originating in India and dating back to at least 1327 , this system requires a minimum of two operators to ensure “ money transfer without money movement .” A recent major court case in Macau involving former gaming promoter Suncity Group , since renamed to LET Group , its CEO Alvin Chau and other senior management , highlighted the use of a similar system , among other charges . The gaming promoter was accused of laundering money by aiding and abetting the transfer of its VIP patrons ’ funds from mainland China to Macau and commingling Suncity ’ s illegally earned profits with proceeds from its lawful gaming activities . Although ultimately acquitted of the money laundering charges due to legal technicalities , Chau was convicted on multiple charges of illicit gaming ( e . g ., side-betting and telephone betting and defrauding the Macau Special Administrative Region Government and gaming concessionaires ).
Another recent case concerns Australian-based casino operators Crown Resorts , The Star and SkyCity . Royal Commissions and Commissions of Inquiry have found them to be guilty , to a more or lesser extent , of aiding organized crime in the illegal use of China UnionPay ( CUP ) to fund gaming , thereby evading anti-money laundering ( AML ) rules , the People ’ s Republic of China currency controls and the National Australian Bank and CUP ’ s internal rules . They were generally found unsuitable to operate casinos in their jurisdictions , resulting in board resignations , substantial fines and collapsing share prices .
Digital currency , casinos and risk
Digital currency acceptance in casinos represents an evolving new compliance challenge . Digital currency presents several risks with its use , including price volatility , risk of hacking and fraud of users ’ digital wallets and crypto exchanges , regulatory risks , limited acceptance as a medium of exchange , and lack of consumer protection regarding disputes and fraudulent transactions .
Cryptocurrencies have become a concern for regulators and law enforcement ( LE ) agencies due to their potential use in money laundering and other criminal activities . The anonymity and decentralized nature of cryptocurrencies can make them attractive to criminals looking to conceal their activities and move money across borders without scrutiny . Transactions are generally identified by a unique address rather than their name or other identifying information . This makes it difficult for LE to trace the flow of funds and identify the parties involved .
Accepting cryptocurrencies as a form of payment could expose casinos to several potential risks , as casinos must comply with various regulations related to AML / counter-terrorist financing ( CTF ) and know your customer requirements . The regulatory framework for cryptocurrencies is still evolving , and there is no uniform approach or guidance that applies to all jurisdictions .
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