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Macao, China’s AML/CFT Regime Undergoes Major Reforms

Macao, China has completed a series of thematic assessments and implemented various reforms in the past decade to strengthen its anti-money laundering and counter-terrorist financing (AML/CFT) regime.

Compliance with FATF Recommendations

According to an assessment by the Asia-Pacific Group on Money Laundering (APG), Macao, China is largely compliant with 37 out of 40 FATF Recommendations. The jurisdiction has made substantial progress in:

  • International cooperation
  • Supervision
  • Use of financial intelligence
  • Targeted financial sanctions for terrorism and proliferation financing
  • Transparency of legal persons and arrangements

Areas for Improvement

The APG assessment noted that while Macao, China’s understanding of money laundering risks is improving, there are still major deficiencies in the implementation of AML/CFT requirements in:

  • Designated non-financial businesses and professions (DNFBPs), aside from concessionaires, sub-concessionaires, financial sector, and notaries
  • Understanding major risks related to regional organized crime, cross-border movements, and corruption

Efforts to Address ML/TF Risks

Macao, China has implemented a yearly AML/CFT strategic plan to address ML/TF risks. In 2016, the jurisdiction amended all sectoral AML/CFT enforceable instruments for:

  • Financial institutions (FIs)
  • DNFBPs
  • Other designated sectors
  • Risk assessment and additional requirements

Progress in Targeted Financial Sanctions and Cross-Border Cooperation

The APG assessment praised Macao, China’s progress in implementing targeted financial sanctions for terrorism and proliferation financing, as well as its efforts to strengthen cross-border cooperation.

Challenges and Areas for Improvement

However, the jurisdiction still faces challenges in:

  • Prosecutorial resources in the Public Prosecutions Office (MP)
  • Heavy evidentiary requirements for third-party money laundering cases
  • Shortage of staff at the Financial Intelligence Unit (FIU)

Conclusion

Overall, the APG assessment concluded that while Macao, China has made significant progress in strengthening its AML/CFT regime, there are still areas that require improvement to ensure the jurisdiction’s compliance with international standards.