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Macao, China’s Anti-Money Laundering and Counter-Terrorist Financing Measures

The Financial Action Task Force (FATF) has released a report assessing Macao, China’s Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures against the FATF Recommendations.

Key Findings

Effectiveness

Macao, China has made substantial progress in international cooperation, supervision, use of financial intelligence, targeted financial sanctions for terrorism financing and proliferation financing, and transparency of legal persons and arrangements. However, there are areas that require improvement to ensure effective implementation of the FATF Recommendations.

  • Substantial progress: Macao, China has demonstrated significant advancements in:
    • International cooperation
    • Supervision
    • Use of financial intelligence
    • Targeted financial sanctions for terrorism financing and proliferation financing
    • Transparency of legal persons and arrangements

Major Improvements Needed

There are areas that require improvement to ensure effective implementation of the FATF Recommendations:

  • Understanding of money laundering risks: Macao, China’s understanding of money laundering risks needs to be improved.
  • Investigations and prosecutions: Investigations and prosecutions need to be enhanced.
  • Implementation of AML/CFT requirements in DNFBPs: Implementation of AML/CFT requirements in designated non-financial businesses and professions (DNFBPs) aside from concessionaires/sub-concessionaires, financial sector, and notaries needs improvement.

Risk Assessment

The authorities have a sound understanding of risks involving the gaming and financial sectors, particularly high-risk junkets, but an uneven understanding of major risks related to regional organized crime, cross-border movements, and corruption.

  • Sound understanding: Macao, China has demonstrated a good understanding of:
    • Risks involving the gaming sector
    • Risks involving the financial sector
    • High-risk junkets

Financial Intelligence and ML Investigations

The use of multi-source information and sound analysis results in a very high number of financial intelligence disseminations opened for investigation, but there are gaps in the ability of officers to interpret the intelligence value and use of GIF information in predicate investigations.

  • Use of financial intelligence: Macao, China has demonstrated effective use of:
    • Multi-source information
    • Sound analysis

Recommendations

To address the areas identified for improvement, the following recommendations are made:

  • Strengthen understanding of money laundering risks and implementation of AML/CFT requirements in DNFBPs: Macao, China should improve its understanding of money laundering risks and implement AML/CFT requirements in designated non-financial businesses and professions (DNFBPs).
  • Enhance coordination between GIF, LEA, and supervisors: Macao, China should enhance coordination between the Gaming Inspection and Coordination Bureau (GIF), law enforcement agencies (LEA), and supervisors.
  • Improve use of financial intelligence for ML investigations and prosecutions: Macao, China should improve its use of financial intelligence for money laundering investigations and prosecutions.
  • Increase transparency of legal persons and arrangements: Macao, China should increase the transparency of legal persons and arrangements.
  • Develop a risk-based approach for ML investigations: Macao, China should develop a risk-based approach for money laundering investigations.

Overall, the report highlights areas where Macao, China has made progress in AML/CFT measures but also identifies areas that require improvement to ensure effective implementation of the FATF Recommendations.