Macau is a major gambling center that falls under the classification of a Special Administrative Region of China. The casino industry contributes almost three quarters of Macau’s government revenue and attracts a huge number of tourists and high-rollers from mainland China. It is also a place where loose regulations allow large scale money laundering to take place through its glamorous casinos.
Gambling junket operators are a large part of the casino culture in Macau. They promote the gaming industry in Macau and encourage high rollers to visit. However, their operations allow money laundering to take place, using casinos to disguise money as legitimate winnings. In addition, their client base allows them to gain footholds in Chinese politics as well as the financial sector.
Strict limits are placed on the amount of money that is allowed to leave the mainland, but the use of junkets is a way of getting around these restrictions. Gamblers coming from China arrive in Macau and are extended an advance by the junket operators. Using this money, clients can gamble in the casinos. If the money is churned, it allows clients the chance to disguise the funds as legitimate casino winnings, which can then go to various offshore bank accounts.
Upon returning to China, agents working for the junkets then collect the debt from the client. All of this means that, technically, no money ever left China, and no laws had been broken. The money was loaned to the client in Macau, then paid back upon the client’s return. Junket agents have also been alleged to be aligned with organized crime triads, who are also involved in the narcotics and prostitution businesses. This raises concerns that the triads are also laundering money through junkets, possibly using their clients as a potentially unwitting agent.
Macau’s casinos managed to make a stunning roughly $4.5 billion dollars in October, 2013 alone, and it is estimated that $202 billion in dirty money moves through the region every year. Wikileaks released some diplomatic cables that indicated that Macau’s regulations were seriously lacking and were a weak spot when it comes to anti-money laundering efforts.
The Macau government has indicated that it will be strengthening its licensing requirements for junkets, but some analysts have doubted that much, if anything, will change about the way junkets are monitored. Casinos are also making efforts to reduce illicit business, with Sands China asking junkets for more details on their VIP clients, as well as looking to meet the more strict standards imposed by American regulators.
Even junket organizations themselves seem eager to shed the stigma of the past. Several have branched out to become major international players. One of the largest, Suncity, has interests in things as diverse as the ore industry, financial services, food and beverage and film and television. Others have followed suit and diversified as a way to combat the decline of VIP visitors coming to Macau due to increased scrutiny.
Whether or not these changes make a difference in the money laundering racket that exists in Macau remains to be seen. One thing is certain, however: with the billions of dollars that flow through the region every year, Macau remains an attractive location to the politicians and criminals who want to hide their dirty laundry.