GGRAsia – Casino AML well policed in Singapore: FATF

Casino AML well policed in Singapore: FATF

Sep 28, 2016 Newsdesk Latest News, Singapore, Top of the deck

Singapore’s casinos are “well supervised” but more could be done in general by the city-state to combat the global threats of money laundering and the financing of terrorism, says a new report by the Paris-based Financial Action Task Force (FATF).

The intergovernmental body was originally set up in 1989 by the Group of 7 – also known as the G7 – to combat a perceived growing global risk posed by money laundering. The G7 is a club of developed nations consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

The FATF said in its “Mutual Evaluation Report” on Singapore, published on Tuesday: “Singapore maintains one of the lowest domestic crime rates in the world and therefore the bulk of Singapore’s exposure to money laundering risks arises from offences committed overseas.”

The on-site visit on which the review is based was conducted from November 17 to December 3, 2015. Since that time, Singapore has launched inquiries into alleged money laundering offences linked to Malaysian state investment fund 1Malaysia Development Bhd, a body also known as 1MDB.

The FATF’s report said: “Sectors such as the casino and trust service providers are well supervised, but the majority of precious stones and metals dealers are not subject to anti-money laundering and combatting the financing of terrorism supervision and only those [dealers] with a pawnbroker’s licence are regulated for AML/CFT purposes,” said the FATF.

The 218-page document discussed efforts made by the city-state’s authorities – and Singapore’s two gaming resorts: Marina Bay Sands, operated by a unit of U.S.-based gaming group Las Vegas Sands Corp; and Resorts World Sentosa, run by Genting Singapore Plc, a unit of Malaysian conglomerate Genting Bhd – to combat the risk of financial crime.

Systematic measures

It said the casino sector had been taking “comprehensive systematic measures”, such as: screening of every employee; a restriction on taking chips valued at more than SGD10,000 (US$7,354) out of either resort; a quarterly review of clients’ accounts and termination of dormant accounts; and internal and external audits.

“Against this, measures taken by other [Singapore] designated non-financial business professions are rather focused on simply preventing customers identified as high risk from being accepted and high-risk transactions being executed than exercising enhanced due diligence and managing the risk,” said the FATF.

Examples of designated non-financial business professions include real estate developers; dealers in precious metals; law firms and accountancy companies, according to some financial regulatory authorities.

The FATF noted in its report that Singapore was ranked by the International Monetary Fund as one of 29 “systemically important” financial centres in the world. The paper added that as of December 31, 2014, there were more than 1,000 financial institutions in Singapore.

The FATF report additionally shed light on the relationship between Singapore’s Casino Regulatory Authority (CRA) and the local industry.

“The CRA is strengthening on-site inspections in casinos,” noted the document. The FATF also stated the CRA had seven memorandums of understanding with “foreign casino regulators”. The task force noted: “Most of the sharing has been in relation to the screening of employees.”

At the 4th Singapore Symposium on Casino Regulation and Crime in late July, Lee Tzu Yang, chairman of the CRA, said casino regulators around the world needed to work together to address the challenges of a fast-changing casino sector and the wide-ranging threats to the integrity of the industry via transnational crime.

The FATF said that in 2014 – the most recent data utilised by the report authors – Singapore’s casinos filed 4,359 suspicious transaction reports (STRs). That was a 31 percent rise on the 3,331 such reports in 2013. In 2010, the year the two casino resorts launched, there was a total of 530 STRs.

“The casino operators share information with one another in Singapore and as part of their risk assessment, they will also review any money laundering/terrorism financing cases and trends that occurred in other jurisdictions to further strengthen their framework,” noted the FATF.

According to the report, at least one of the city-state’s casinos had banned a “substantial number of individuals due to suspected money laundering activity”.

Due diligence

The body said Singapore casinos conducted customer due diligence “several times” throughout a “gaming process”. Examples were: at a membership counter for registration of a member account with the casino operator; when there was a purchase of chips worth more than SGD5,000; and when winnings above SGD5,000 were paid out in the form of either cash, cheque or telegraphic transfer.

Singapore’s casino operators initated screening of the customer “at the various customer due diligence trigger points,” as defined in the city-state’s Casino Control Act, said the body. “Screening is made against UN sanction lists, [lists of] politically-exposed persons and the jurisdictions [where] the FATF has called for counter-measures. All these results are recorded and kept for five years,” added the task force.

It noted that directors and senior management of casino operators, who were “performing licensable functions”, were required to be licensed as special employees. “Sanctions are imposed on casino operators and their special employees if found in breach of regulatory requirements. However, as far as corporate service providers are concerned, there do not appear to be direct sanctions for directors/senior managers (except refusal of registration),” noted the FATF.

According to Singapore’s Accounting and Corporate Regulatory Authority, corporate service providers are defined as filing agents and registered qualified individuals providing services including the registration of companies.

The FATF report reiterated that any breaches of Singapore’s Casino Control Act could result in the city’s gaming resorts being fined respectively a sum not exceeding 10 percent of their annual gross gaming revenue, or SGD1 million per breach.

The city’s casino operators have in the past each received individual fines of fewer than SGD1 million for breaches of the Act, typically for allowing unauthorised people to gain access to the gaming floor.

Several investment analysts covering the gaming sector have mentioned in recent notes to clients that the FATF is due to conduct in the fourth quarter of 2016 an audit of Macau’s anti-money laundering safeguards.