Macao has obtained an outstanding result in the recent Asia/Pacific Group on Money Laundering (APG) Mutual Evaluation. It must be emphasized that the outcome of the evaluation does not come in a sudden, but is the result of the continuous work of all the government agencies and private sectors who have continuously placed tremendous participation in the process.
Beginning from 2010, the Anti-Money Laundering Working Group (the Working Group) which currently consists of 15 government agencies already looks into the Anti-Money Laundering/Counter Financing of Terrorist (AML/CFT) regime of Macao with thorough review on the recommendations given in the APG Mutual Evaluation Report (MER) of 2007. The Working Group also closely keeps track with the development of international standards and best practices on AML/CFT. Since 2010, a feasibility study on revision of the AML/CFT legislation and regulations has been proposed to the government in order to address the main gap with international standards. The project was kept ongoing with incorporation of the FATF revised Recommendations of 2012 and the latest revision of Recommendation 5 on Terrorist Financing.
Macao also acknowledges the importance of the fight against Terrorist Financing and Proliferation Financing, and in order to further enhance the legal regime in this regard, the Law on Asset Freezing Regime was introduced in 2016. The Legislative Assembly of the Macao SAR Government also passed the law to implement the cross border cash declaration and disclosure systems. Although the law was passed after the on-site visit of the APG, this still indicates the full commitment of the Macao SAR Government in the fight against money laundering and terrorist financing.
GIF would like to highlight some of the most important work which have been carried out through the effective coordination mechanism of the AML/CFT Working Group:-
1. The Working Group has continuously carried out different thematic risk assessments including the periodic review on Non-Profit Organizations, risk assessment on use of alternative remittance system for money laundering, risk assessment on gaming sector based on the Large Transaction Reports (ROVE) and trends of Suspicious Transactions, risk assessment report on cross border cash declaration system, etc. Such reports are the shared work among government agencies with contribution of useful qualitative and quantitative information. All the thematic risk assessments have been followed up with constructive proposals to update AML/CFT policies and procedures and the risk-based approach supervision of supervisory agencies. Law enforcement agencies also got alert to identified money laundering threats from crimes and progressively enhanced their financial investigation capacities with the setting up of a special parallel financial investigation working group composed of members from the main Investigation Divisions and Intelligence Units.
2. The Risk Assessment of Macao SAR (NRA) is one of the most important project and a special sub-working group is set up within the AML/CFT Working Group in order to follow up with the continuous process of risk assessment. The first overall risk assessment of Macao was initiated in 2013 with the feasibility study and plan to initiate the project. The risk assessment project was formally initiated in 2014 with the participation of 17 government agencies and thousands of private entities which cover all the financial entities, gaming concessionaries, sub-concessionaries, gaming intermediaries and other non-gaming designated non-financial business and professionals (DNFBPs). Before the design of the assessment model, survey questionnaires and coverage of assessment, a full scope consultation has been conducted to collect valuable comments from government agencies and private entities. During this stage, hundreds of meetings, seminars and workshops have been carried out in order to obtain adequate information to identify the ML/TF risk areas which will be put into study.
The Threat analysis of the NRA is considered one of the most important components of the risk assessment process. MP and all the law enforcement agencies (LEAs) including SPU, Customs, CCAC, PJ and PSP have fully committed to the project. The NRA project team has performed detail study of fund movements through the possible high risky channels identified in the vulnerabilities study. The Sector Questionnaires sent out were not only purported to collect data on the high risks areas identified but also with the intention to raise awareness to the private entities that they need to carry out their own risk assessments.
3. The NRA report of 2015 was taken just as a starting point as the report has come up with the 5-year AML/CFT Strategic Plan and the AML/CFT Working Group has immediately put into action plans to implement the recommendations. The revision of AML/CFT supervisory guidelines were among the most important follow-up measures to incorporate the risk mitigation measures against the cross sector risks identified. The LEAs, long before the completion of the NRA, have already put into their strategic and operational plans action items to strengthen international cooperation, enhancement of financial investigation capacities and the setting up of parallel financial investigation working group.
4. Regarding supervision of the gaming sector, for many years Macao has applied AML/CFT preventive measures, including licensing and fit-and-proper test requirements covering junket promoters and their formal collaborators. This is a necessary response to the inherent risks of the sector. Under the current regime, the Macao SAR Government has set up a double-scrutiny system for the market entry of junket promoters, in which the DICJ undertakes stringent market entry/licensing fit-and-proper tests for junket promoters, in addition to the due diligence undertaken by concessionaires/sub-concessionaires before entering into a business relationship with junket promoters.
5. Concessionaries/ sub-concessionaries and junket promoters have been put under stringent supervision by the DICJ since 2006 when the AML Law (Law no. 2/2006) came into force in the same year. Risk-based supervision has been conducted on both concessionaires/sub-concessionaires and junket promoters since 2007, requiring the implementations of customer due diligence (CDD) measures and a mandatory reporting system applicable to all large-sum transactions. Before the passage of the revised AML/CFT Law (Law no. 2/2006 and 3/2006) in 2017, the DICJ has already adopted new measures by revising its AML/CFT guideline in 2016 to require all gaming operators to perform risk assessments and subject all financial transactions to CDD measures.
In addition, DICJ provides industry training once every year to the gaming sector with a thematic topic/objective. Training provided by DICJ has addressed AML/CFT requirements and ML typologies in the casino sector, large transactions reporting requirements, an overview of the risk assessment, and an explanatory session on the 2016 updated AML/CFT Guideline. The training provided has been directed at the concessionaries, sub-concessionaries and junket promoters. AML/CFT obligations contained in the updated DICJ AML/CFT Guideline and understanding of ML/TF risks are well understood by the concessionaries and sub-concessionaries.
6. In the supervision of the financial and insurance sector, the AMCM has been implementing a risk-based approach in its supervision. The AML/CFT guidelines for both the financial and insurance sectors have incorporated the requirements stipulated by the FATF Recommendations and Methodology and are continuously updated, which have been a routine practice long before the APG Mutual Evaluation in 2016. Through the onsite and offsite supervisions, thematic assessments and cross-border supervisions, AMCM is effective in ensuring the compliance of the financial and insurance institutions with the international standards. The robust licensing requirements of new entrants into the financial markets are also key to effective supervision.
7. Apart from the supervisory efforts on the financial and gaming sectors, Macao has been conducting close supervision on the DNFBPs. In fact, Macao is one of the few jurisdictions that have the widest coverage of AML/CFT supervision on DNFBPs, including real estate intermediaries and agents, dealers of precious metals and stones, pawn shops, car dealers, notaries and professionals including accountants, auditors and lawyers. The Housing Bureau, the Economic Services Bureau, the Legal Affairs Bureau, the Financial Services Bureau, the Macao Trade Investment Promotion Institute and Macao Lawyers Association have also put in lots of efforts to ensure the compliance of the sectors under their supervision.
8. The effectiveness of the 6 immediate outcomes supports the long lasting vision of Macao’s AML/CFT Strategy, that is, to protect financial stability with adequate preventive measures to mitigate the risks with use of the financial systems for movement of criminal proceeds. The Macao SAR Government always takes it as a top priority to prevent crimes and the flow of funds rather than letting them happen and prosecuting them afterwards. Therefore, the government has placed top priority resources allocation to strengthen the supervision framework while progressively enhancing the capacity of the LEAs in financial investigation.
9. Last but not least, the Macao SAR Government will take into consideration of the recommendations in the Mutual Evaluation Report and give full commitment to carry out follow up actions to address the deficiencies pointed out in the report.