Inside Asian Gaming

inside asian gaming August 2016 28 by the DICJ and will be eventually dismissed by the regulator if found unqualified or unsuitable. The compliance officer – a key element of the new framework – has been assigned extended responsibilities and operators are obliged to grant them ample powers and sufficient means to address them. Amongst such responsibilities one of the duties of a gaming concessionaire’s compliance officer may be to monitor the overall observance of junkets with their own anti-money laundering obligations. Specifically, the unfortunate chosen one will have to review and sign off on all high value cash transaction reports (locally known as ROVEs) produced by gaming promoters. That is no small task. The new rules – which for the first time introduce the concept of domestic (i.e. Macau) politically exposed persons – have also expanded the previous definition of PEPs to include the close relatives and known business associates of people entrusted with prominent public functions. These include members of government, holders of high level public offices in the civilian, military and judicial spheres, top executives of state owned enterprises and key members of political parties. PEPs are now subject to enhanced identification obligations and their play must be continuously monitored by gaming operators. Most importantly, the acceptance of play from PEPs by gaming operators must be approved at a board or executive level. The implementation and observance of these new obligations will represent a significant challenge to operators, particularly if one considers the absolute number of PEPs in greater China. However, practicalities aside, these efforts are in line with the higher level of risk associated with PEP gaming and the potential for involvement in corruption that their position and status unfortunately represents. Soon after the Instructions were enacted, industry sources voiced their concerns over the excessive costs that the implementation of these measures would entail, particularly at a time when operators are already under the pressure of declining gaming revenues. I have to disagree with such views. Firstly, the Instructions themselves are not insensitive to the price of the obligations they impose. In fact, they are the first to promote that the entities they apply to take on a risk-based approach to the prevention of money laundering. This has long been recommended by the Financial Action Task Force – the independent inter-governmental body that promotes AML and CTF policies worldwide – as being central to the effectiveness of all money laundering prevention policies. A risk-based approach is founded on the common sense understanding that the resources of both public enforcers and private operators are limited and should be applied in the most effective possible manner. As such, instead of being forced to comply with regulatory requirements despite their particular profile, operators are incentivized to identify the risks to which they aremost exposed and to takemeasures that are proportional to those risks. Secondly, the new standards brought in to the industry by the new rules are targeted straight at the heart of Macau’s gaming revenue decline. That is the lack of trust of its largest client, the PRC, in Macau’s ability to prevent its gaming industry from becoming the preferred way of cleaning the dirty proceeds of corruption and other criminal activities taking place on the mainland. Rules of the game “The directives impose generally more stringent obligations than their predecessors but also promote the introduction of a risk-based approach to internal controls by the entities to which they apply.”