There are “various visible gaps or shortcomings in the current regulatory system” for Macau gaming, says a leading scholar of Macau gaming law and regulation.
Jorge Godinho is a legal consultant and a visiting professor at the University of Macau, where he teaches gaming law and anti-money laundering law.
Mr Godinho states – writing in the University of Nevada, Las Vegas, Law Journal – that among the concerns are the lack of public information about any enforcement actions taken by the Gaming Inspection and Coordination Bureau (DICJ), the Macau government department tasked with overseeing Macau’s casino industry.
Mr Godinho says of the bureau: “While DICJ is known to take appropriate actions it does not make its findings and enforcement measures available to the public. Namely, there is no public data on penalties applied or licences cancelled. This information would be helpful to assess the overall compliance of the industry with anti-money laundering regulations and the level of impact of the enforcement of the suitability requirements.”
The scholar also points out however that some of those criticising Macau’s system of regulation – particularly in relation to allegations of organised crime infiltration of VIP gambling operations – might not be disinterested parties.
He states: “The worse the reputation, the higher will be the perception of the need for expensive checks and investigations.”
He suggests improvements could also be made in the way data is released to the public by the city’s Financial Intelligence Office, known by its Portuguese initials GIF. The government office was created in 2006 with the responsibility to combat money laundering and the financing of terrorism.
Under Instruction 2/2006, issued by DICJ in November 2006, identification of casino patrons is required in the case of suspicious transactions and also in relation to all transactions above a specified amount, which currently stands at MOP500,000 (US$62,500). Such reports must be sent first to DICJ, which then forwards cases meriting further investigation to GIF.
Suspicious transaction reports by Macau casinos fell by 14.3 percent last year, to 1,138 from 1,328 in 2012, according to the office’s latest newsletter in May.
Mr Godinho says although Macau is “perceived internationally as being seriously committed to anti-money laundering efforts,” the limited information released on suspicious transaction reports means “it is impossible to determine which [casino] market segments are generating reports and which ones are not…”
He adds: “Having detailed information would be helpful to assess how the various local operators are implementing and complying with the obligation to report suspicious transactions.”
“Currently, it is not possible to determine how many reports were filed by gaming promoters,” he adds. The latter refers to the technical name for the DICJ-licensed entities responsible under Macau law for coordinating the recruitment and credit funding of high stakes gamblers not directly managed by the casino.
The academic says another gap in the regulatory system relates to the absence of a legal regime to deal with cases where a gaming concessionaire breaches or fails to comply with relevant provisions of applicable rules.
He states: “While some offences and penalties are mentioned directly in the concession contracts and in some laws, and major breaches may cause the rescission of the concession, for all other issues further regulation is needed and expected. This is long overdue. The current situation is one where the government does not have the means to punish minor offences.”
Singapore, which uses a Common Law system and not Macau’s Continental Law system, lists a number of sanctions in Chapter 33A of its Casino Control Act for offences that don’t mandate rescindment of a casino licence.
Mr Godinho’s analysis of the Macau regulatory system also draws attention to the development of the so-called “satellite casino” sector, where people never licensed or scrutinised by the government for suitability as gaming operators have become direct investors in gaming operations.
“Other problems needing attention are profit-sharing agreements by which parties that have not been subject to suitability investigations may be able to gain access to the market,” he states.
“It is clear that there are a number of casinos that are being operated as a joint venture between one of the sub-concession/concession holders and one other party, such as the owner of a hotel. It is also clear that the government has in the past authorised these types of agreements, although this practice was stopped in 2008,” says Mr Godinho.
He adds: “The main problem with these agreements is that the party who owns the hotel is not subject to a suitability investigation nor is the party selected by a public tender. This is a major regulatory problem that still needs to be addressed.”
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