Financial Institution Fraud Risks in Macao: A Growing Concern

Macao’s financial sector has been facing growing concerns about fraud risks, with the country’s Mutual Evaluation Report 2017 revealing several areas of non-compliance.

Assessing Risk and Applying a Risk-Based Approach

Macao’s financial institutions were found to be lacking in their ability to assess risk effectively, with many failing to apply a risk-based approach to their operations. This lack of oversight has led to concerns about the potential for fraud and money laundering to go undetected.

Key Findings:

Macao’s financial institutions failed to conduct adequate customer due diligence.
There was a lack of transparency in the country’s financial transactions.
The authorities were found to be lacking in their ability to share information and coordinate efforts to combat financial crime.

National Cooperation and Coordination

The report also highlighted the need for improved national cooperation and coordination between financial institutions, law enforcement agencies, and regulatory bodies. Macao’s authorities were found to be lacking in their ability to share information and coordinate efforts to combat financial crime.

Key Findings:

There was a lack of effective communication and coordination between different government agencies.
The authorities failed to provide adequate training for law enforcement officials and regulators.
There was inadequate sharing of information and intelligence between different agencies.

Money Laundering Offence

Macao was found to have inadequate laws and regulations in place to prevent money laundering, with many of its financial institutions failing to implement effective anti-money laundering measures.

Key Findings:

The country’s anti-money laundering laws were found to be overly broad and vague.
Financial institutions failed to conduct adequate customer due diligence.
There was a lack of transparency in the country’s financial transactions.

Recommendations

To address these concerns, we recommend that Macao:

Strengthen anti-money laundering laws and regulations.
Implement adequate customer due diligence procedures for all financial institutions and DNFBPs.
Ensure transparency and disclosure of beneficial ownership information about legal persons and legal arrangements.
Regulate and supervise financial institutions and DNFBPs effectively.
Increase cooperation and coordination between financial institutions, law enforcement agencies, and regulatory bodies.

By implementing these recommendations, Macao can significantly reduce the risk of fraud and money laundering in its financial sector and maintain a reputation as a stable and reliable financial center.