In a new report, the U.S. State Department has warned that opening Vietnam casinos to locals could increase the country’s money-laundering risks “if authorities do not ensure these establishments effectively implement and enforce anti-money laundering standards.” The warning was in the latest edition of the State Department’s International Narcotics Control Strategy Report, released in March.
“Newly-legalized local casinos” means “Vietnam’s exposure to illicit finance will increase in coming years,” the report continued.
The Vietnamese government first lifted the ban on locals gaming in March 2017, with certain conditions. Customers must be 21 or older, have a monthly income of at least VND10 million (US$445), and pay an entry fee to access the gaming floor.
Only casino resorts with a total capital investment of at least US$2 billion may serve Vietnamese gamblers. At least two properties will be open to local gamblers as part of a three-year trial: one on Phu Quoc Island and another in the Van Don Special Economic Zone near the Chinese border, about 100 miles from Hanoi. There are currently fewer than 10 casinos in Vietnam, mostly border casinos located outside major metropolitan areas; none are currently open to locals.
The State Department report also pointed to other “major money laundering jurisdictions,” including Macau, the Philippines and Malaysia.
“Money launderers continue to use offshore centers, free-trade zones, and gaming enterprises to launder illicit funds,” stated the report. “These sectors can offer convenience and, often, anonymity to those wishing to hide or launder the proceeds of narcotics trafficking and other serious crimes.”
The report acknowledged that many jurisdictions “are taking measures to reduce vulnerabilities,” including Macau, which “is taking a more stringent approach toward the licensing and supervision of gaming junket promoters” who cater to high rollers.
The report urged the Macau government to continue strengthening “inter-agency coordination to prevent money laundering in the gaming industry, especially by continuing to encourage smaller junket operators, who have weaker AML controls, to exit the market while encouraging the professional junket operators to further develop their compliance programs.”
The number of junket operators has certainly shrunk in Macau; according to GGRAsia, data published in January by Macau’s gaming regulator showed there are now 100 licensed junkets in the market, an 8.3 percent drop since 2018, and the sixth consecutive year of decline in the sector. In January 2013, for example, Macau had 235 licensed junkets.
The junket business is considered to be rife with risk, the report stated. “In addition to attracting those seeking anonymity or alternatives to China’s currency movement restrictions, junket operators are also popular among casinos unable to collect gaming debts on the mainland where gaming is illegal.”
“Asian organized crime groups, including triads, are active in the gaming services and involved in illegal activities such as drug trafficking. This mingling of licit and illicit activities, together with the anonymity gained through the use of a junket operator in the transfer and commingling of funds, as well as the absence of currency and exchange controls, present vulnerabilities for money laundering.”
Also worrisome to the State Department are high single-transaction cash thresholds in Macau and the Philippines. In Macau, the threshold is more than US$62,640 (MOP500,000). “Macau should lower the large transaction report threshold for casinos to US$3,000 to bring it in line with international standards,” the report advised.
In the Philippines, the reportable threshold is $100,000, “and the exclusion of non-cash transactions from reporting requirements and junket operators as covered entities are also deficiencies in the current AML regime,” the report noted. It wasn’t until 2017 that casinos were added to the list of entities subject to anti-money laundering regulations in the Philippines. That followed the 2016 theft of $81 million that originated with the Bangladesh central bank and was laundered through Philippine casinos.
“Under the well-regarded leadership at the Anti-Money Laundering Council, the government continues work to minimize risks in key areas, including the gaming sector,” the State Department of State. “The banking sector remains the primary avenue for money laundering followed by the gaming industry.”
The report also made reference to ongoing risks at casinos in Myanmar and Laos.
