Financial Crime World

Macao’s Anti-Money Laundering Framework Under Scrutiny

Macao, a special administrative region of China, has been evaluated by the Financial Action Task Force (FATF) on its implementation of international anti-money laundering (AML) and combating terrorist financing (CFT) standards. The evaluation reveals a mixed picture of Macao’s AML/CFT framework.

Key Findings

The FATF report highlights several key findings, including:

  • Assessing Risk and Applying a Risk-Based Approach: Macao has largely complied with the FATF recommendations on assessing risk and applying a risk-based approach.
  • National Cooperation and Coordination: The region has been partially compliant in implementing measures to combat terrorist financing offense (R.5) and targeted financial sanctions related to terrorism and terrorist financing (R.6).
  • Financial Institution Secrecy Laws: Macao’s financial institution secrecy laws have been largely compliant with international standards, but the country still needs to improve its record keeping (R.11), politically exposed persons (R.12), and correspondent banking (R.13).

Areas for Improvement

The FATF report identifies several areas where Macao needs to improve its AML/CFT framework, including:

  • Confiscation and Provisional Measures: Macao’s laws and regulations do not provide sufficient powers for freezing and confiscating assets.
  • Customer Due Diligence: The region needs to strengthen its customer due diligence requirements, particularly in the area of identifying beneficial owners.
  • Higher-Risk Countries: Macao should maintain a list of higher-risk countries and require enhanced due diligence from financial institutions when dealing with these countries.

Conclusion

The FATF evaluation provides a comprehensive assessment of Macao’s AML/CFT framework. While the region has made progress in implementing certain technical requirements, there are still areas where improvement is needed. By addressing these weaknesses, Macao can strengthen its ability to detect and prevent money laundering and terrorist financing.