-
IP addresses are NOT logged in this forum so there's no point asking. Please note that this forum is full of homophobes, racists, lunatics, schizophrenics & absolute nut jobs with a smattering of geniuses, Chinese chauvinists, Moderate Muslims and last but not least a couple of "know-it-alls" constantly sprouting their dubious wisdom. If you believe that content generated by unsavory characters might cause you offense PLEASE LEAVE NOW! Sammyboy Admin and Staff are not responsible for your hurt feelings should you choose to read any of the content here. The OTHER forum is HERE so please stop asking.
Aegean Paradise -- Cruise / Casino Ship @ New Century Tours Corporation Pte Ltd
- Thread starter HorLee
- Start date
Heard from Angry Punters Aegean Paradise ,AP ,will be next.
Albert 's Health is getting worse . No successor in sight. His companies and investments Losing huge amount of funds.
Junkets are getting fed up with Ap 's management.
Stay tuned , more stories Unfolding...
$$$
Money Laundry
$$$
The Vulnerability of Casinos to Money Laundering
This is a two-part article.
Part one examines how and why casinos are vulnerable to money laundering from a Singapore perspective. Part two will examine the laws and regulations governing casinos in Singapore.
Introduction The Financial Action Task Force in its recent world-wide study “Vulnerabilities of Casinos and Gaming Sector” (March 2009) (“FATF Casino Report”) states: Casinos undertake high volume/speed financial activities that are similar to financial institutions, but in an entertainment context. Casinos are generally large cash based businesses. Foreign exchange facilities and reduced transparency of ‘high rollers’ in VIP rooms present substantial challenges. The use of foreign holding accounts where funds in one jurisdiction are available for use in a casino in another jurisdiction without the need for a cross-border remittance presents further issues.1 There are three reasons why casinos are vulnerable to money laundering. First, casinos operate like financial institutions. Casinos provide financial services similar to banks, such as foreign currency exchange, granting credit, conducting wire/fund transfers, cheque encashment, accepting deposits and providing safe deposit boxes. However, casinos, unlike banks, do not have the same levels of anti-money laundering (“AML”) controls that banks have. Hence, if possible, a money launderer would prefer to use a casino to “wash” his “dirty” money than to use a bank. Second, casinos are cash-intensive businesses. Money launderers are attracted to casinos because they prefer to use cash – which is anonymous. Much of the casino transactions are cash based. At the “cash-in” (or “buy-in”) stage, a patron may deposit cash with a casino to buy the casino chips to commence gaming. At the end of the play, the patron cashes out or redeems the amount of chips he has with the casino for either cash or typically, a casino cheque. This is the “cash-out” (or “buy-out”) stage. Hence, there is a lot of cash moving in and out of a casino everyday, 24 hours a day. Typically, a money launderer commences laundering his “dirty” money at the “cash-in” stage (“dirty” money in exchange for casino chips) and completes the laundering process in the casino at the “cash-out” stage (ie, “dirty” money in exchange for a casino cheque). This is the “placement”2 stage of money laundering. When he converts his “dirty” money into a casino cheque, he has successfully placed his “dirty” money into the financial economy. The casino cheque also helps to hide his original source of funds. What a money launderer is mainly interested in visiting a casino for is the casino cheque. Third, is the role a junket promoter plays in a casino. A junket is an organised gaming tour for “high-roller” foreign patrons to gamble in a casino, typically on an “all expenses paid” basis (including accommodation, transport, food and other privileges). Casinos need junket promoters to bring in these “high-roller” foreign patrons. In consideration of their services, the casino pays them commissions based on the amount the junket players gamble. The casino’s vulnerability to money laundering lies in the role that junket promoters perform in moving vast amounts of funds on behalf of these “high roller” clients. The junket’s intermediary role adds another layer which obscures the source and ownership of these funds. This will pose challenges to a bank dealing with junket customers because it will have difficulty in identifying and verifying the identity of the beneficial owners of these funds which may be pooled together in a junket’s bank account. How Money Laundering Takes Place in a Casino The FATF Casino Report has identified several key money laundering methods and techniques in casinos which include: use of casino value instruments, structuring/refining, use of casino account/facilities, currency exchanges, credit/debit cards, junkets etc. This article will examine the key methods and techniques identified in the FATF Casino Report. Buying and redeeming casino value instruments with minimal gambling The casino value instruments (“CVIs”) are in the form of casino chips, TITO (Ticket-in, Ticket-out) tickets, gaming machine credits, cashiers orders, casino cheques, gift certificates/vouchers, chip purchase vouchers (“CPVs”) and casino reward cards/complimentaries. In exchange for the payment by the patron, the casino issues these value instruments to facilitate the patron’s gaming in the casino. They have no financial value outside the casino. Typically, a money launderer launders his “dirty” money in a casino by purchasing CVIs. After minimal gambling (or no gambling at all), he redeems his CVIs for a casino cheque. For larger sums, the patron may request the casino to wire transfer the amounts to another account in another country (eg, another branch of the same casino). Once this is done, the money launderer would have succeeded in “layering” the proceeds of his illegal activities. This cross-border transaction will make it harder for the illegal proceeds to be traced. The main motive of a money launderer in frequenting a casino is not to gamble but to “wash” his “dirty” money with minimum or no gambling at all. This is one of the red flags to look out for in detecting money laundering in a casino. In Belgium, a money launderer paid two Asian students €250,000 to purchase casino chips (over two visits). These students did not play at the casino. At the end, they “cashed-out” their casino chips with casino cheques. This money launderer was suspected to be a human trafficker. The casino cheques were used to justify the origin of his funds.3 In Australia, a drug trafficker who was a regular customer of a casino conducted 50 betting transactions. He subsequently “cashed-out” a total sum of A$890,000 in cash transfer and casino cheques. Very little casino gaming play was recorded. The drug trafficker justified that his source of funds was from casino winnings.4 In the United States (“US”), a lawyer embezzled more than US$500,000 and managed to launder US$250,000 in an Atlantic City casino. He wire transferred US$250,000 to the casino and arrived in the casino the same day. He purchased casino chips and gambled for an hour on a roulette table, losing US$10,000. He “cashed-out” the remaining US$240,000 and left the casino.5 To prevent such misuse of the casinos by money launderers in Singapore, the Casino Regulatory Authority of Singapore (“CRA”) has made it illegal to convert money from one form to another without gaming. This includes wire transfer of funds and cheque encashment for the casino patrons without gaming.6 Structuring Since cash is the preferred medium for a money launderer, most jurisdictions impose “cash transaction reporting” (“CTR”) on casinos to report any cash transaction exceeding a certain threshold (typically, US$10,000, A$10,000 etc). In Singapore, under reg 3 of the Casino Control (Prevention of Money Laundering And Terrorism Financing) Regulations, 2009 (“Casino AML Regulations”), a casino is required to lodge a CTR when a patron “cashes-in” or “cashes-out” a cash transaction7 of S$10,000 or more. A money launderer will attempt to reduce a large sum of cash into smaller amounts below the CTR threshold to avoid a CTR (hence to avoid arousing the suspicion of the casino). This process is called “structuring” (or “smurfing”). Thus, when a money launderer brings in S$100,000 “dirty” cash to wash in a casino in Singapore, he will have to “cash-in” at least 11 times (each below S$10,000) to avoid a CTR. However, he can still be caught under the multiple transactions rule under reg 3, Casino AML Regulations, (where a casino is required to aggregate all the cash transactions conducted by a patron within each gambling day ie, 24 hours). To avoid getting caught under this regulation, a money launderer will either employ 11 associates to conduct the S$100,000 cash transactions or visit the casino himself over a period of 11 days or more to avoid the 24-hour rule. This is not practical if the amount to be laundered is large. For “professional” money launderers who need to launder large amounts on a more regular basis in a casino, the need to avoid CTRs using multiple parties becomes more compelling. In Australia, money launderers engaged a significant number of welfare recipients, pensioners and unemployed people to assist them to avoid the CTRs to launder their “dirty” money in Australian casinos.8 Another method of “structuring” used to avoid CTR is adopted by patrons who constantly switch tables and gaming rooms by gaming below the CTR threshold amount. Since the amounts of gaming are always below the CTR threshold, no CTRs are generated. These transactions cannot be tracked. Hence these patrons operate outside the casino’s CTR radar. To further ensure that they successfully avoid a CTR, they will “cash-in” and “cash-out” their chips or winnings at different shifts in the casino. Reverse-structuring Money launderers will go through great lengths to “structure” their cash transactions to avoid CTRs. On the other hand, there are money launderers who will also go through equally great lengths to deliberately trigger a CTR to provide an alibi to hide the true source of their illegal funds. This is “reverse- structuring”. In the US, a number of persons purchased casino chips with “dirty” cash (provided by a money launderer) below the CTR amount of US$10,000. All the casino chips were passed on to the money launderer who eventually “cashed-out” all the chips, thus triggering a CTR. This was to give the appearance that he had gambled in the casino and won the amount he “cashed-out”. This was done over a period of one year and the amount “washed” through this reverse-structuring came to US$1 million.9 Refining Closely related to the “structuring” method of laundering money in a casino is the “refining” method. In “structuring”, a money launderer attempts to break down a high value of cash into smaller denominations to avoid a CTR. In “refining”, a money launderer attempts to combine large quantities of small denominations to reduce the quantities of cash, ending up with higher value denominations. For instance, a drug trafficker having sold his drugs on the streets, typically ends up with a large quantity of cash in small denomination notes. If he were to go to the casino cashier with a sack full of such small denominations, this will not only trigger a CTR but also a STR (Suspicious Transaction Report). To avoid this, a money launderer can go to gaming machines or slot machines that accept currency notes and feed large amounts of small denomination bills into these machines to accumulate credits. He then redeems them in the “cash-out” stage. He presses the “cash- out” button to obtain the cash. If the amount is large, a ticket is provided by the slot machine attendants to exchange for a casino cheque. This is equivalent to going to a bank to exchange cash for a cashier’s order. Casino accounts and facilities A patron in a Singapore casino can open three types of patron accounts: Credit Account, Cheque-cashing Account and Deposit Account. In a Credit Account, a casino can give credit to a patron to buy chips. In a Cheque-cashing Account, cheques deposited by the patron can be “cashed-out” to buy chips. In a Deposit Account, the patron’s cash, cashier’s orders, cheques, wire transfers etc are deposited into this account. Besides a patron account, a casino also provides safe deposit box facilities especially for the VIP/high roller patrons. Each of the casino accounts and facilities is vulnerable to money laundering. In a Credit Account, a casino may unknowingly grant credit to a patron to gamble. The latter later settles his payment with “dirty” money by wire transfer from a high risk country. In a Cheque-cashing Account, a casino may accept third party or bearer cheques which may represent proceeds from a third party’s illegal activities in payment for the chips. In a Deposit Account, a money launderer can deposit cash (“placement”) or cheques, cashier’s orders or wire transfer (“layering”), which represent proceeds from illegal activities. This becomes more challenging in a cross-border situation in relation to a foreign holding account where a patron has an account with a casino in one jurisdiction and uses the funds to gamble in another jurisdiction where the casino has a branch. For instance, a money launderer has an account in Macau with Casino A. He can use his funds in his Macau account to gamble in the Singapore branch in Casino A. Since the money never leaves Macau, it does not generate any CTR under the Casino AML Regulation, and no CTR under s 48E (Cross Border Movement of Physical Currency) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”). So, a money launderer can park his “dirty” money overseas in a safe jurisdiction (where his funds are unlikely to be confiscated) and gamble to launder in another jurisdiction. In the United Kingdon (“UK”), a criminal syndicate transferred £millions, which represented proceeds from criminal activities in UK, including drug trafficking, VAT fraud, counterfeiting, credit card fraud etc, to a bank in Dubai. To further “wash” (or “layer”) their “dirty” funds, they used part of the proceeds to gamble in a casino by accessing the funds in the Dubai bank account. £Thousands were laundered through the gambling tables to disguise the original source.9 Safe deposit box facilities can also be abused by money launderers because they can be used by third parties who are money launderers. A Japanese loan shark converted his loan-sharking proceeds from Japanese Yen to US Dollars and deposited part of these proceeds in a safe deposit facility of a major Japanese bank in Tokyo. This amount was used for security to gamble at a Las Vegas casino as a VIP player.10 Use of winnings A money launderer gambles in a casino with the hope of generating sufficient winnings to camouflage the amount of illegal proceeds he has. Alternatively, he can buy a winning from a genuine player and pay him a premium to justify that sum as his winning. In Australia, a group of overseas nationals were found buying winning jackpots from patrons at various gambling clubs in Sydney. The funds used to purchase the jackpot winnings were suspected to be from illegal activities.11 Another way to generate winnings is to play table games – such as Baccarat – with low returns but higher chances of winning. This objective can also be achieved by playing gaming machines with low payout but high winnings/losses. Use of currency exchanges for layering Casinos offer foreign currency exchange services because a large number of their patrons are foreigners and casinos can only accept local currencies to play. A money launderer may take advantage of this facility to further “layer” his illegal proceeds by converting his “dirty” money in one currency (eg, Indonesian Rupiahs) into another currency (eg, Singapore dollars). This money laundering activity is completed when the money launderer redeems the chips in Singapore dollars. In Spain, a group of foreigners entered a Spanish casino to purchase chips using Swiss Francs. Their intention was not to gamble but merely to convert their “dirty” money (in Swiss Francs) to Euros. They attempted to redeem all the chips in Euros. However, the casino suspected their intention, stopped the transaction and lodged a STR.12 Use of credit cards to purchase chips Instead of using cash, which is easier to detect, a money launderer may prefer to use credit cards to further launder his money in a casino. Some jurisdictions allowed casino patrons to purchase chips with credit cards. In Singapore, under reg 5 of the Casino Control (Credit) Regulations 2010, a non-Singapore resident patron is allowed to purchase chips using a credit or debit card to qualify as a Premium Player (patron with $100,000 credit balance in deposit account). A money launderer can use credit cards to launder his money in several ways. One way is through credit card fraud where a money launderer uses a stolen credit card to purchase chips to gamble in a casino. Alternatively, he may use a legitimate credit card to further launder his money in a casino. Since the money launderer now holds a valid credit card, he would have succeeded in the “placement” stage; in using his credit card, he now moves to the next stage of money laundering (“layering”) to hide the true source of his funds. In Belgium, a resident went to a casino and bought a total of €400,000 worth of chips (over two occasions). It was paid in cash and credit card. The casino was suspicious of these two transactions and it lodged a STR. It was found that this man’s wife had underworld links with organised crimes in Eastern Europe.13 Junket promoters Junket promoters provide a valuable service to casinos, by bringing the “high-rollers” or VIP patrons to gamble. These VIP patrons are highly valued by casinos because of the high revenue they bring. According to a Canadian study in 2007, the VIP patrons accounted for 80 per cent of the casinos’ turn-over in Canada.14 Another report indicated that the VIP customers accounted for 50 per cent to 70 per cent of all the casinos’ revenues in Macau, China.15 In bringing these VIP patrons to a casino to gamble (with all expenses paid for), a casino rewards a junket promoter by paying a commission (based on the amount his VIP patrons gamble). Junket promoters are legally recognised and are licensed in Singapore under the Casino Control (Junket) Regulations, 2009 (“Junket Regulations”). Besides organising all aspects of the tour of a casino, a junket promoter also provides fund-transfer services to its clients. It is this feature of a junket’s services (among others) that increases a casino’s vulnerability to money laundering. This concern is expressed in the FATF Casino Report: A vulnerability of junket programmes is that they involve the movement of large amounts of money across borders and through multiple casinos by third parties. Junket participants generally rely on the junket operator to move their funds to and from the casino. This creates layers of obscurity around the source and ownership of money and the identities of the players. This is made more difficult if the junket operator is complicit in any money laundering activity by the players, or is solicited by criminals to blend illicit funds with the pool of legitimate funds.”16 A casino is required under the Casino AML Regulations to conduct customer due diligence (“CDD”) before it opens a patron account for a patron.17 This means a casino must be able to: (i) identify and verify the identity of the patron; and (ii) identify and verify the identity of the beneficial owner of the patron account (if any).18 It will be difficult for a casino (or a bank) to perform the CDD above if the funds belonging to junket participants are wire-transferred under the junket promoter’s name. The “intermediary” role performed by the junket promoter obscures the casino’s (or a bank’s) ability to identify the beneficial owners of the underlying funds ie, junket participants and the source of these funds. This poses an even greater challenge to a casino when a junket promoter pools its clients’ funds together, making it impossible to distinguish the “dirty” money from the “legitimate” money in this mixed pool of funds. A junket promoter may go through great lengths to assist its clients to move funds to and from a casino to gamble, including the use of illegal means. In China, a junket promoter assisted its client in China to smuggle a large quantity of cash into Macau (through professional cash movers) to gamble. The cash, together with the cheque and wire transfers, were deposited into his deposit account and converted into cashier’s orders by the VIP room of the casino to purchase chips to gamble. At the end of his gambling, his gain in cash was given to the junket promoter who remitted it back to China via underground banks. In Singapore, all licensed junket promoters undergo vigorous probity tests before they are issued the licence under the Junket Regulations.20 Casinos in Singapore are prohibited from dealing with an unlicensed junket promoter. However, there is always the possibility that an unlicensed junket promoter may use a licensed junket promoter to “front” for him in Singapore. This is an area the Casino Regulatory Authority (“CRA”) will no doubt be keeping a close watch over. In some jurisdictions, a junket promoter may enter into a contractual arrangement with a casino where certain VIP rooms in a casino are rented exclusively to the junket promoter, giving up full control over these rooms. This will eventually end up as a “casino within a casino”. In Singapore, a casino is not allowed to sub-let any part of the casino or to cede control over any VIP rooms (called High Limit Gaming Area) to a junket promoter or any third party.21 Using false identity documents Casinos are expected to perform CDD on certain patrons under certain circumstances. For instance, a casino in Singapore is required to perform CDD on a patron when he opens a patron account or when he carries out a cash transaction of $10,000 or more or when he deposits $5,000 or more in a single transaction into his Deposit Account. A patron can defeat the purpose of this CDD exercise by providing false identity cards or passports. He can also defeat the CTRs and STRs by using these false identification documents. How Money Laundering Can Be Controlled in a Casino From the above discussion, it is clear that casinos are vulnerable to money laundering. Hence, all regulators and banks characterise casinos as “high risk”. How then can a casino control the risk of money laundering? First, all casinos must have clear and robust AML policies, procedures and controls in place. This should include customer due diligence, record-keeping, detection and reporting of suspicious transactions, auditing of internal policies, procedures and controls, compliance management arrangement and the hiring and training of employees. This is clearly required in reg 17, Casino AML Regulations. Having well-drafted AML policies, procedures and control guide books will not, by themselves, combat money laundering in a casino. The real test lies in the implementation of these polices, procedures and control. This calls for a serious, genuine commitment on the part of the casino’s Board of Directors and Senior Management to ensure its employees are implementing these polices, procedures and controls on a daily basis. Second, the employees must be adequately trained to implement these policies, procedures and controls. Hence, it is a mandatory requirement under reg 18, Casino AML Regulations that a casino must ensure that its employees are regularly trained on the AML laws in Singapore, the prevailing techniques, methods and trends in money laundering and its internal policies, procedures and controls. These are the two key areas the CRA will be looking at in regulating the AML controls in the casinos in Singapore. Similarly, this is what the banks will be looking at before establishing and in maintaining the relationship with a casino. Tan Sin Liang* SL Tan & Co E-mail: [email protected] The author’s area of practice is in compliance regulatory laws relating to financial institutions. Notes 1 See “Executive Summary”, FATF Casino Report. 2 There are three stages of money laundering. The first stage is “placement” which is the physical disposal of cash proceeds derived from illegal activities. The objective here is to place illicit cash into a non-cash economy. The second stage is “layering”, which is the separation of illegal monies from their illegal source by creating layers of financial transactions. The objective here is to break the linkage between the criminal and the proceeds of crime thus making detection difficult. The third stage is “integration” which is to provide legitimacy to illegal funds. The objective here is to place the laundered funds within the economy as legitimate business funds. 3 FATF Casino Report, p 28. 4 Ibid. 5 Ibid. 6 Regulation 4, Casino Control (Prevention of Money Laundering And Terrorist Financing) Regulations. 7 “Cash transactions” includes currency notes and coins (s 2, Casino AML Regs). 8 In a recent conference held in Singapore, a speaker, Mr Christopher Douglas, from the Australian Federal Police, gave a number of interesting cases of Australian money laundering in casinos. He spoke of a Victorian unemployed man who laundered A$ 13 million through a casino in Melbourne. He also cited the case of 2,600 welfare recipients who bought chips worth at least A$ 50,000 each (some had cash buy-ins of more A$ 1million each). Yet in another case, he pointed out how 160 pensioners (earning A$ 300 per week) were used to launder A$ 25 million in Australian Casinos. 9 FATF Casino Report, p 31. 10 Ibid, p 35. 11 Ibid, p 36. 12 Ibid, p 38. 13 Ibid, p 39. 14 Ibid, p 42. 15 Ibid, p 51. 16 Ibid. 17 Ibid, p 46. 18 Casino AML Regs, reg 6(1). 19 Ibid, reg. 10. 20 Section 110(3), CCA. 21 Regulation 13(1), Junket Regulations. To discuss in second article. 22 This is typically stated as one of the conditions in the casino licence. This was confirmed by the Chief Executive of CRA at a recent conference in Singapore. 23 Casino AML Regs, regs 11 and 12.
Money Laundry
$$$
The Vulnerability of Casinos to Money Laundering
This is a two-part article.
Part one examines how and why casinos are vulnerable to money laundering from a Singapore perspective. Part two will examine the laws and regulations governing casinos in Singapore.
Introduction The Financial Action Task Force in its recent world-wide study “Vulnerabilities of Casinos and Gaming Sector” (March 2009) (“FATF Casino Report”) states: Casinos undertake high volume/speed financial activities that are similar to financial institutions, but in an entertainment context. Casinos are generally large cash based businesses. Foreign exchange facilities and reduced transparency of ‘high rollers’ in VIP rooms present substantial challenges. The use of foreign holding accounts where funds in one jurisdiction are available for use in a casino in another jurisdiction without the need for a cross-border remittance presents further issues.1 There are three reasons why casinos are vulnerable to money laundering. First, casinos operate like financial institutions. Casinos provide financial services similar to banks, such as foreign currency exchange, granting credit, conducting wire/fund transfers, cheque encashment, accepting deposits and providing safe deposit boxes. However, casinos, unlike banks, do not have the same levels of anti-money laundering (“AML”) controls that banks have. Hence, if possible, a money launderer would prefer to use a casino to “wash” his “dirty” money than to use a bank. Second, casinos are cash-intensive businesses. Money launderers are attracted to casinos because they prefer to use cash – which is anonymous. Much of the casino transactions are cash based. At the “cash-in” (or “buy-in”) stage, a patron may deposit cash with a casino to buy the casino chips to commence gaming. At the end of the play, the patron cashes out or redeems the amount of chips he has with the casino for either cash or typically, a casino cheque. This is the “cash-out” (or “buy-out”) stage. Hence, there is a lot of cash moving in and out of a casino everyday, 24 hours a day. Typically, a money launderer commences laundering his “dirty” money at the “cash-in” stage (“dirty” money in exchange for casino chips) and completes the laundering process in the casino at the “cash-out” stage (ie, “dirty” money in exchange for a casino cheque). This is the “placement”2 stage of money laundering. When he converts his “dirty” money into a casino cheque, he has successfully placed his “dirty” money into the financial economy. The casino cheque also helps to hide his original source of funds. What a money launderer is mainly interested in visiting a casino for is the casino cheque. Third, is the role a junket promoter plays in a casino. A junket is an organised gaming tour for “high-roller” foreign patrons to gamble in a casino, typically on an “all expenses paid” basis (including accommodation, transport, food and other privileges). Casinos need junket promoters to bring in these “high-roller” foreign patrons. In consideration of their services, the casino pays them commissions based on the amount the junket players gamble. The casino’s vulnerability to money laundering lies in the role that junket promoters perform in moving vast amounts of funds on behalf of these “high roller” clients. The junket’s intermediary role adds another layer which obscures the source and ownership of these funds. This will pose challenges to a bank dealing with junket customers because it will have difficulty in identifying and verifying the identity of the beneficial owners of these funds which may be pooled together in a junket’s bank account. How Money Laundering Takes Place in a Casino The FATF Casino Report has identified several key money laundering methods and techniques in casinos which include: use of casino value instruments, structuring/refining, use of casino account/facilities, currency exchanges, credit/debit cards, junkets etc. This article will examine the key methods and techniques identified in the FATF Casino Report. Buying and redeeming casino value instruments with minimal gambling The casino value instruments (“CVIs”) are in the form of casino chips, TITO (Ticket-in, Ticket-out) tickets, gaming machine credits, cashiers orders, casino cheques, gift certificates/vouchers, chip purchase vouchers (“CPVs”) and casino reward cards/complimentaries. In exchange for the payment by the patron, the casino issues these value instruments to facilitate the patron’s gaming in the casino. They have no financial value outside the casino. Typically, a money launderer launders his “dirty” money in a casino by purchasing CVIs. After minimal gambling (or no gambling at all), he redeems his CVIs for a casino cheque. For larger sums, the patron may request the casino to wire transfer the amounts to another account in another country (eg, another branch of the same casino). Once this is done, the money launderer would have succeeded in “layering” the proceeds of his illegal activities. This cross-border transaction will make it harder for the illegal proceeds to be traced. The main motive of a money launderer in frequenting a casino is not to gamble but to “wash” his “dirty” money with minimum or no gambling at all. This is one of the red flags to look out for in detecting money laundering in a casino. In Belgium, a money launderer paid two Asian students €250,000 to purchase casino chips (over two visits). These students did not play at the casino. At the end, they “cashed-out” their casino chips with casino cheques. This money launderer was suspected to be a human trafficker. The casino cheques were used to justify the origin of his funds.3 In Australia, a drug trafficker who was a regular customer of a casino conducted 50 betting transactions. He subsequently “cashed-out” a total sum of A$890,000 in cash transfer and casino cheques. Very little casino gaming play was recorded. The drug trafficker justified that his source of funds was from casino winnings.4 In the United States (“US”), a lawyer embezzled more than US$500,000 and managed to launder US$250,000 in an Atlantic City casino. He wire transferred US$250,000 to the casino and arrived in the casino the same day. He purchased casino chips and gambled for an hour on a roulette table, losing US$10,000. He “cashed-out” the remaining US$240,000 and left the casino.5 To prevent such misuse of the casinos by money launderers in Singapore, the Casino Regulatory Authority of Singapore (“CRA”) has made it illegal to convert money from one form to another without gaming. This includes wire transfer of funds and cheque encashment for the casino patrons without gaming.6 Structuring Since cash is the preferred medium for a money launderer, most jurisdictions impose “cash transaction reporting” (“CTR”) on casinos to report any cash transaction exceeding a certain threshold (typically, US$10,000, A$10,000 etc). In Singapore, under reg 3 of the Casino Control (Prevention of Money Laundering And Terrorism Financing) Regulations, 2009 (“Casino AML Regulations”), a casino is required to lodge a CTR when a patron “cashes-in” or “cashes-out” a cash transaction7 of S$10,000 or more. A money launderer will attempt to reduce a large sum of cash into smaller amounts below the CTR threshold to avoid a CTR (hence to avoid arousing the suspicion of the casino). This process is called “structuring” (or “smurfing”). Thus, when a money launderer brings in S$100,000 “dirty” cash to wash in a casino in Singapore, he will have to “cash-in” at least 11 times (each below S$10,000) to avoid a CTR. However, he can still be caught under the multiple transactions rule under reg 3, Casino AML Regulations, (where a casino is required to aggregate all the cash transactions conducted by a patron within each gambling day ie, 24 hours). To avoid getting caught under this regulation, a money launderer will either employ 11 associates to conduct the S$100,000 cash transactions or visit the casino himself over a period of 11 days or more to avoid the 24-hour rule. This is not practical if the amount to be laundered is large. For “professional” money launderers who need to launder large amounts on a more regular basis in a casino, the need to avoid CTRs using multiple parties becomes more compelling. In Australia, money launderers engaged a significant number of welfare recipients, pensioners and unemployed people to assist them to avoid the CTRs to launder their “dirty” money in Australian casinos.8 Another method of “structuring” used to avoid CTR is adopted by patrons who constantly switch tables and gaming rooms by gaming below the CTR threshold amount. Since the amounts of gaming are always below the CTR threshold, no CTRs are generated. These transactions cannot be tracked. Hence these patrons operate outside the casino’s CTR radar. To further ensure that they successfully avoid a CTR, they will “cash-in” and “cash-out” their chips or winnings at different shifts in the casino. Reverse-structuring Money launderers will go through great lengths to “structure” their cash transactions to avoid CTRs. On the other hand, there are money launderers who will also go through equally great lengths to deliberately trigger a CTR to provide an alibi to hide the true source of their illegal funds. This is “reverse- structuring”. In the US, a number of persons purchased casino chips with “dirty” cash (provided by a money launderer) below the CTR amount of US$10,000. All the casino chips were passed on to the money launderer who eventually “cashed-out” all the chips, thus triggering a CTR. This was to give the appearance that he had gambled in the casino and won the amount he “cashed-out”. This was done over a period of one year and the amount “washed” through this reverse-structuring came to US$1 million.9 Refining Closely related to the “structuring” method of laundering money in a casino is the “refining” method. In “structuring”, a money launderer attempts to break down a high value of cash into smaller denominations to avoid a CTR. In “refining”, a money launderer attempts to combine large quantities of small denominations to reduce the quantities of cash, ending up with higher value denominations. For instance, a drug trafficker having sold his drugs on the streets, typically ends up with a large quantity of cash in small denomination notes. If he were to go to the casino cashier with a sack full of such small denominations, this will not only trigger a CTR but also a STR (Suspicious Transaction Report). To avoid this, a money launderer can go to gaming machines or slot machines that accept currency notes and feed large amounts of small denomination bills into these machines to accumulate credits. He then redeems them in the “cash-out” stage. He presses the “cash- out” button to obtain the cash. If the amount is large, a ticket is provided by the slot machine attendants to exchange for a casino cheque. This is equivalent to going to a bank to exchange cash for a cashier’s order. Casino accounts and facilities A patron in a Singapore casino can open three types of patron accounts: Credit Account, Cheque-cashing Account and Deposit Account. In a Credit Account, a casino can give credit to a patron to buy chips. In a Cheque-cashing Account, cheques deposited by the patron can be “cashed-out” to buy chips. In a Deposit Account, the patron’s cash, cashier’s orders, cheques, wire transfers etc are deposited into this account. Besides a patron account, a casino also provides safe deposit box facilities especially for the VIP/high roller patrons. Each of the casino accounts and facilities is vulnerable to money laundering. In a Credit Account, a casino may unknowingly grant credit to a patron to gamble. The latter later settles his payment with “dirty” money by wire transfer from a high risk country. In a Cheque-cashing Account, a casino may accept third party or bearer cheques which may represent proceeds from a third party’s illegal activities in payment for the chips. In a Deposit Account, a money launderer can deposit cash (“placement”) or cheques, cashier’s orders or wire transfer (“layering”), which represent proceeds from illegal activities. This becomes more challenging in a cross-border situation in relation to a foreign holding account where a patron has an account with a casino in one jurisdiction and uses the funds to gamble in another jurisdiction where the casino has a branch. For instance, a money launderer has an account in Macau with Casino A. He can use his funds in his Macau account to gamble in the Singapore branch in Casino A. Since the money never leaves Macau, it does not generate any CTR under the Casino AML Regulation, and no CTR under s 48E (Cross Border Movement of Physical Currency) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (“CDSA”). So, a money launderer can park his “dirty” money overseas in a safe jurisdiction (where his funds are unlikely to be confiscated) and gamble to launder in another jurisdiction. In the United Kingdon (“UK”), a criminal syndicate transferred £millions, which represented proceeds from criminal activities in UK, including drug trafficking, VAT fraud, counterfeiting, credit card fraud etc, to a bank in Dubai. To further “wash” (or “layer”) their “dirty” funds, they used part of the proceeds to gamble in a casino by accessing the funds in the Dubai bank account. £Thousands were laundered through the gambling tables to disguise the original source.9 Safe deposit box facilities can also be abused by money launderers because they can be used by third parties who are money launderers. A Japanese loan shark converted his loan-sharking proceeds from Japanese Yen to US Dollars and deposited part of these proceeds in a safe deposit facility of a major Japanese bank in Tokyo. This amount was used for security to gamble at a Las Vegas casino as a VIP player.10 Use of winnings A money launderer gambles in a casino with the hope of generating sufficient winnings to camouflage the amount of illegal proceeds he has. Alternatively, he can buy a winning from a genuine player and pay him a premium to justify that sum as his winning. In Australia, a group of overseas nationals were found buying winning jackpots from patrons at various gambling clubs in Sydney. The funds used to purchase the jackpot winnings were suspected to be from illegal activities.11 Another way to generate winnings is to play table games – such as Baccarat – with low returns but higher chances of winning. This objective can also be achieved by playing gaming machines with low payout but high winnings/losses. Use of currency exchanges for layering Casinos offer foreign currency exchange services because a large number of their patrons are foreigners and casinos can only accept local currencies to play. A money launderer may take advantage of this facility to further “layer” his illegal proceeds by converting his “dirty” money in one currency (eg, Indonesian Rupiahs) into another currency (eg, Singapore dollars). This money laundering activity is completed when the money launderer redeems the chips in Singapore dollars. In Spain, a group of foreigners entered a Spanish casino to purchase chips using Swiss Francs. Their intention was not to gamble but merely to convert their “dirty” money (in Swiss Francs) to Euros. They attempted to redeem all the chips in Euros. However, the casino suspected their intention, stopped the transaction and lodged a STR.12 Use of credit cards to purchase chips Instead of using cash, which is easier to detect, a money launderer may prefer to use credit cards to further launder his money in a casino. Some jurisdictions allowed casino patrons to purchase chips with credit cards. In Singapore, under reg 5 of the Casino Control (Credit) Regulations 2010, a non-Singapore resident patron is allowed to purchase chips using a credit or debit card to qualify as a Premium Player (patron with $100,000 credit balance in deposit account). A money launderer can use credit cards to launder his money in several ways. One way is through credit card fraud where a money launderer uses a stolen credit card to purchase chips to gamble in a casino. Alternatively, he may use a legitimate credit card to further launder his money in a casino. Since the money launderer now holds a valid credit card, he would have succeeded in the “placement” stage; in using his credit card, he now moves to the next stage of money laundering (“layering”) to hide the true source of his funds. In Belgium, a resident went to a casino and bought a total of €400,000 worth of chips (over two occasions). It was paid in cash and credit card. The casino was suspicious of these two transactions and it lodged a STR. It was found that this man’s wife had underworld links with organised crimes in Eastern Europe.13 Junket promoters Junket promoters provide a valuable service to casinos, by bringing the “high-rollers” or VIP patrons to gamble. These VIP patrons are highly valued by casinos because of the high revenue they bring. According to a Canadian study in 2007, the VIP patrons accounted for 80 per cent of the casinos’ turn-over in Canada.14 Another report indicated that the VIP customers accounted for 50 per cent to 70 per cent of all the casinos’ revenues in Macau, China.15 In bringing these VIP patrons to a casino to gamble (with all expenses paid for), a casino rewards a junket promoter by paying a commission (based on the amount his VIP patrons gamble). Junket promoters are legally recognised and are licensed in Singapore under the Casino Control (Junket) Regulations, 2009 (“Junket Regulations”). Besides organising all aspects of the tour of a casino, a junket promoter also provides fund-transfer services to its clients. It is this feature of a junket’s services (among others) that increases a casino’s vulnerability to money laundering. This concern is expressed in the FATF Casino Report: A vulnerability of junket programmes is that they involve the movement of large amounts of money across borders and through multiple casinos by third parties. Junket participants generally rely on the junket operator to move their funds to and from the casino. This creates layers of obscurity around the source and ownership of money and the identities of the players. This is made more difficult if the junket operator is complicit in any money laundering activity by the players, or is solicited by criminals to blend illicit funds with the pool of legitimate funds.”16 A casino is required under the Casino AML Regulations to conduct customer due diligence (“CDD”) before it opens a patron account for a patron.17 This means a casino must be able to: (i) identify and verify the identity of the patron; and (ii) identify and verify the identity of the beneficial owner of the patron account (if any).18 It will be difficult for a casino (or a bank) to perform the CDD above if the funds belonging to junket participants are wire-transferred under the junket promoter’s name. The “intermediary” role performed by the junket promoter obscures the casino’s (or a bank’s) ability to identify the beneficial owners of the underlying funds ie, junket participants and the source of these funds. This poses an even greater challenge to a casino when a junket promoter pools its clients’ funds together, making it impossible to distinguish the “dirty” money from the “legitimate” money in this mixed pool of funds. A junket promoter may go through great lengths to assist its clients to move funds to and from a casino to gamble, including the use of illegal means. In China, a junket promoter assisted its client in China to smuggle a large quantity of cash into Macau (through professional cash movers) to gamble. The cash, together with the cheque and wire transfers, were deposited into his deposit account and converted into cashier’s orders by the VIP room of the casino to purchase chips to gamble. At the end of his gambling, his gain in cash was given to the junket promoter who remitted it back to China via underground banks. In Singapore, all licensed junket promoters undergo vigorous probity tests before they are issued the licence under the Junket Regulations.20 Casinos in Singapore are prohibited from dealing with an unlicensed junket promoter. However, there is always the possibility that an unlicensed junket promoter may use a licensed junket promoter to “front” for him in Singapore. This is an area the Casino Regulatory Authority (“CRA”) will no doubt be keeping a close watch over. In some jurisdictions, a junket promoter may enter into a contractual arrangement with a casino where certain VIP rooms in a casino are rented exclusively to the junket promoter, giving up full control over these rooms. This will eventually end up as a “casino within a casino”. In Singapore, a casino is not allowed to sub-let any part of the casino or to cede control over any VIP rooms (called High Limit Gaming Area) to a junket promoter or any third party.21 Using false identity documents Casinos are expected to perform CDD on certain patrons under certain circumstances. For instance, a casino in Singapore is required to perform CDD on a patron when he opens a patron account or when he carries out a cash transaction of $10,000 or more or when he deposits $5,000 or more in a single transaction into his Deposit Account. A patron can defeat the purpose of this CDD exercise by providing false identity cards or passports. He can also defeat the CTRs and STRs by using these false identification documents. How Money Laundering Can Be Controlled in a Casino From the above discussion, it is clear that casinos are vulnerable to money laundering. Hence, all regulators and banks characterise casinos as “high risk”. How then can a casino control the risk of money laundering? First, all casinos must have clear and robust AML policies, procedures and controls in place. This should include customer due diligence, record-keeping, detection and reporting of suspicious transactions, auditing of internal policies, procedures and controls, compliance management arrangement and the hiring and training of employees. This is clearly required in reg 17, Casino AML Regulations. Having well-drafted AML policies, procedures and control guide books will not, by themselves, combat money laundering in a casino. The real test lies in the implementation of these polices, procedures and control. This calls for a serious, genuine commitment on the part of the casino’s Board of Directors and Senior Management to ensure its employees are implementing these polices, procedures and controls on a daily basis. Second, the employees must be adequately trained to implement these policies, procedures and controls. Hence, it is a mandatory requirement under reg 18, Casino AML Regulations that a casino must ensure that its employees are regularly trained on the AML laws in Singapore, the prevailing techniques, methods and trends in money laundering and its internal policies, procedures and controls. These are the two key areas the CRA will be looking at in regulating the AML controls in the casinos in Singapore. Similarly, this is what the banks will be looking at before establishing and in maintaining the relationship with a casino. Tan Sin Liang* SL Tan & Co E-mail: [email protected] The author’s area of practice is in compliance regulatory laws relating to financial institutions. Notes 1 See “Executive Summary”, FATF Casino Report. 2 There are three stages of money laundering. The first stage is “placement” which is the physical disposal of cash proceeds derived from illegal activities. The objective here is to place illicit cash into a non-cash economy. The second stage is “layering”, which is the separation of illegal monies from their illegal source by creating layers of financial transactions. The objective here is to break the linkage between the criminal and the proceeds of crime thus making detection difficult. The third stage is “integration” which is to provide legitimacy to illegal funds. The objective here is to place the laundered funds within the economy as legitimate business funds. 3 FATF Casino Report, p 28. 4 Ibid. 5 Ibid. 6 Regulation 4, Casino Control (Prevention of Money Laundering And Terrorist Financing) Regulations. 7 “Cash transactions” includes currency notes and coins (s 2, Casino AML Regs). 8 In a recent conference held in Singapore, a speaker, Mr Christopher Douglas, from the Australian Federal Police, gave a number of interesting cases of Australian money laundering in casinos. He spoke of a Victorian unemployed man who laundered A$ 13 million through a casino in Melbourne. He also cited the case of 2,600 welfare recipients who bought chips worth at least A$ 50,000 each (some had cash buy-ins of more A$ 1million each). Yet in another case, he pointed out how 160 pensioners (earning A$ 300 per week) were used to launder A$ 25 million in Australian Casinos. 9 FATF Casino Report, p 31. 10 Ibid, p 35. 11 Ibid, p 36. 12 Ibid, p 38. 13 Ibid, p 39. 14 Ibid, p 42. 15 Ibid, p 51. 16 Ibid. 17 Ibid, p 46. 18 Casino AML Regs, reg 6(1). 19 Ibid, reg. 10. 20 Section 110(3), CCA. 21 Regulation 13(1), Junket Regulations. To discuss in second article. 22 This is typically stated as one of the conditions in the casino licence. This was confirmed by the Chief Executive of CRA at a recent conference in Singapore. 23 Casino AML Regs, regs 11 and 12.
Ah soon got open new cruise?
Ah soon should consider take in more pretty young staff to promote biz.
heard Mdm Tan money left behind to son Ah Soon can buy a Gambling Ship Cruise serving Batam and Bintan.
btw why this Ah Soon Male Staffs All so Handsome one. ???
Ah Soon like Handsome Staffs iszzit ???
tmr ferries service all fully booked.
Ap and Aw All Cabins fully booked.
they are watching Padang FireWorks from Cruise Ships.
Wow, so tmr cruise super good loh.
Similar threads
