Macao, China’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Measures: A Review
Key Findings
The report on AML/CFT measures in Macao, China highlights several key findings that demonstrate the strengths and weaknesses of the current system.
Risk Assessment
- The authorities have a good understanding of the risks related to Money Laundering (ML), but there are gaps in understanding the main foreign ML risks.
- This lack of understanding can lead to difficulties in developing effective strategies to combat money laundering.
Regulatory Framework
- The new freezing law and proposed amendments to the AML/CFT laws demonstrate the strengths of the 2016 plan, but it lacks adequate direction for Law Enforcement Agencies (LEA) to adopt a risk-based approach for ML investigations.
- This gap can hinder the effectiveness of ML investigations and prosecutions.
Supervisory Authorities
- Supervisors have enhanced procedures and guidance in line with the strategic plan, but there are limitations in their ability to monitor cross-border regional crime trends due to restrictions on using police intelligence.
- These limitations can make it difficult for supervisors to identify and address potential money laundering risks.
Financial Intelligence Unit (FIU)
- The FIU operates effectively as an autonomous independent unit, producing operational intelligence and enhancing its procedures to address practical problems identified by LEAs.
- However, the current resources of the FIU may struggle to meet its combined FIU, policy development, and expanded coordination roles effectively without additional staff.
Weaknesses and Challenges
The report highlights several weaknesses and challenges that need to be addressed in order to improve Macao’s AML/CFT measures.
Limited Focus on Cross-Border Regional Crime Trends
- The lack of a cross-border disclosure or declaration system is a major intelligence gap for a jurisdiction exposed to high-risk from vast numbers of visitors and cash-intensive businesses.
- This can make it difficult to identify and track money laundering activities that involve multiple jurisdictions.
Gaps in ML Investigations and Prosecutions
- LEA investigations generally do not match the risk profile, and there are limited convictions due to a shortage of prosecutorial resources, heavy evidentiary requirements, difficulty in obtaining evidence on predicate offences, and lack of an adequate policy directive.
- This can undermine confidence in the effectiveness of Macao’s AML/CFT measures.
Limited Resources for FIU
- The current resources of the FIU may struggle to meet its combined FIU, policy development, and expanded coordination roles effectively without additional staff.
- This can hinder the FIU’s ability to produce operational intelligence and address practical problems identified by LEAs.
Recommendations
To improve Macao’s AML/CFT measures, the report recommends:
- Enhance the understanding of main foreign ML risks
- Develop a risk-based approach for ML investigations
- Improve information sharing among GIF, supervisors, and LEA
- Address resource gaps in FIU and prosecutorial resources
- Strengthen policy directives for ML investigations and prosecutions