Financial Crime World

Terrorist Financing Risks and Mitigation in Macao: A Critical Assessment

Macao’s anti-money laundering (AML) and combating the financing of terrorism (CFT) framework has been evaluated by the Financial Action Task Force (FATF), revealing significant risks and vulnerabilities. This assessment highlights the need for Macao to strengthen its measures to prevent terrorist financing.

Ratings Show Room for Improvement

Macao’s ratings reflect the extent to which it has implemented the technical requirements of the FATF Recommendations. While the territory has made some progress in certain areas, significant gaps remain.

Compliance Ratings

  • Assessing risk and applying a risk-based approach: Macao is largely compliant (LC) in this area.
  • National cooperation and coordination: Macao is also largely compliant (LC).
  • Money laundering offence: Macao’s laws on money laundering are largely compliant (LC).

However, there are areas where Macao requires improvement:

  • Confiscation and provisional measures: Macao is only partially compliant (C) in this area.
  • Targeted financial sanctions related to terrorism and terrorist financing: Macao is also partially compliant (C).
  • Financial institution secrecy laws: Macao’s laws on financial institution secrecy are non-compliant (NC).

Key Areas for Improvement

To strengthen its AML/CFT framework, Macao should focus on the following areas:

Enhancement Measures

  1. Confiscation and provisional measures: Ensure that laws and regulations allow for effective confiscation of proceeds from terrorist financing.
  2. Targeted financial sanctions related to terrorism and terrorist financing: Implement targeted financial sanctions in line with international standards.
  3. Financial institution secrecy laws: Reform laws on financial institution secrecy to ensure transparency and accountability.
  4. Customer due diligence: Enhance customer due diligence procedures to prevent terrorist financing.

International Cooperation

Macao should also strengthen its international cooperation, including:

International Collaboration

  1. Mutual legal assistance: Improve mutual legal assistance arrangements with other countries.
  2. Extradition: Ensure that extradition agreements are in place and effective.
  3. Other forms of international cooperation: Engage in other forms of international cooperation to prevent terrorist financing.

By addressing these areas, Macao can strengthen its AML/CFT framework and reduce the risks associated with terrorist financing.