Financial Crime World

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Macao Falls Short in Risk-Based Approach to Financial Crime

A recent evaluation has revealed that Macao still has some way to go in implementing effective measures to combat financial crime. The country scored poorly in several key areas, with significant gaps identified in its risk-based approach.

Deficiencies in Assessment and Management of Risks

According to the assessment carried out by a team of international experts, Macao needs to improve its implementation of the Financial Action Task Force (FATF) Recommendations. The country was criticized for lacking a comprehensive risk-based approach to financial crime, with many areas identified as requiring urgent attention.

Key Areas for Improvement

Money Laundering Offence

  • Macao’s laws and regulations were deemed insufficient to prevent and detect money laundering activities.
  • The country needs to strengthen its anti-money laundering framework to mitigate risks associated with illicit financial flows.

Confiscation and Provisional Measures

  • Macao’s mechanisms for confiscating assets and imposing provisional measures on individuals suspected of financial crime were found to be inadequate.
  • The country should improve its ability to confiscate proceeds from crime and impose effective provisional measures.
  • Macao’s systems for implementing targeted financial sanctions were criticized as being insufficiently robust.
  • The country needs to enhance its capacity to identify, freeze, and block assets linked to terrorism and terrorist financing.

Commendations

Despite the areas for improvement, Macao was commended for its efforts in some areas, including:

Customer Due Diligence

  • The country’s financial institutions were praised for their compliance with customer due diligence requirements.
  • This suggests that Macao has made progress in ensuring that financial institutions verify and record information about customers.

Record Keeping

  • Macao’s financial sector was found to maintain adequate records and documentation.
  • Effective record-keeping is essential for detecting suspicious transactions and identifying money laundering activities.
  • The country made progress in increasing transparency around the beneficial ownership of companies.
  • This step helps prevent illicit actors from hiding behind complex corporate structures.

Recommendations

The evaluation team made several recommendations for Macao to strengthen its risk-based approach to financial crime, including:

Develop a Comprehensive National Risk Assessment

  • Macao should conduct a thorough national risk assessment to identify and prioritize areas of high risk.
  • This will help the country allocate resources effectively and develop targeted strategies to mitigate risks.

Establish a National Coordination Mechanism for Combating Financial Crime

  • A national coordination mechanism is essential for ensuring that relevant agencies and institutions work together effectively to combat financial crime.
  • This includes sharing information, coordinating investigations, and implementing policies and procedures.
  • Macao should review and strengthen its laws and regulations related to money laundering and terrorist financing.
  • This will help ensure that the country’s legal framework is effective in preventing and detecting financial crime.

Improve the Confiscation of Assets and Imposition of Provisional Measures

  • The country needs to improve its ability to confiscate proceeds from crime and impose effective provisional measures on individuals suspected of financial crime.
  • This includes developing procedures for freezing and seizing assets, as well as imposing travel bans and other restrictions.