UN: China’s Gambling Crackdown Has Increased Money Laundering Elsewhere

Posted on: October 30, 2023, 10:38h. 

Last updated on: October 30, 2023, 02:03h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

A United Nations official says China’s crackdown on cross-border money transfers related to gambling in Macau has resulted in illicit gangs laundering their dirty money through casinos and online gambling platforms in other parts of Asia.

United Nations UN money laundering casinos
The Kings Roman Casino in Laos is seen in 2022. Casinos in Laos and other parts of the Lower Mekong River are being increasingly used to launder money, an official with the United Nations says. (Image: South China Morning Post)

Benedikt Hofmann is the deputy representative for the UN Office of Drugs and Crime for the Southeast Asia and Pacific regions. Speaking recently with Voice of America, a US government-owned news network, Hofmann says China’s scrutiny of money movement from the mainland to Macau has allowed casinos and internet casinos to flourish in Southeast Asia.

Macau casinos in 2013 won a record $45 billion off of gamblers. But China President Xi Jinping wasn’t impressed, as the People’s Republic leader expressed his opinion that a considerable portion of the gaming income was tied to criminal gangs laundering dirty money. Xi also said the massive outflow of money through the tax haven that is Macau threatened national security.

Along with criminals allegedly using Macau casinos to wash money, Xi believed the mainland’s wealthiest people also used the gaming hub to reduce their hefty tax responsibilities in the communist country. China’s highest earners share about half of their income with Beijing.

Southeast Asia Lacks ML Safeguards

With China more closely tracking money movement, Hofmann says many criminal entities have taken their illicit business elsewhere. The UN official says the Lower Mekong River countries of Cambodia, Laos, Myanmar, Thailand, and Vietnam have become preferred places to launder money.

Casinos in those countries have been reporting increases in annual gaming revenue since China began cracking down on junket groups that had organized travel for mainlanders to Macau. The COVID-19 pandemic, Hoffman says, led to illicit groups also taking their money laundering operations to offshore gaming sites that have few money laundering safeguards.

High volumes of large, anonymous transactions, very limited regulation and compliance standards, and the transboundary nature of services make the online gambling sector really attractive for people wanting to hide transactions,” Hofmann told VOA.

“Casinos have long played a role in money laundering in Southeast Asia, but the surge of online gambling has accelerated this in ways that weren’t expected,” he added.

Money Laundering Poses Global Threats

The UN says preventing money laundering worldwide is critical to global peace and economic stability.

“Money laundering is the processing of criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardizing their source,” the UN Office on Drugs and Crime website explains.

The United Nations is working to improve worldwide money laundering securities through its Global Program Against Money Laundering (GPML). The GPML is mandated to help member states develop effective anti-money laundering and countering financing of terrorism (AML/CFT) capacities.

Each of the aforementioned Lower Mekong nations is a UN member state.

The Philippines has also recently been determined to lack adequate safeguards to limit money laundering. The Financial Action Task Force, an international agency backed by the Group of Seven, has placed the Philippines on its “Increased Monitoring” list. Philippines President Ferdinand Marcos Jr. has pledged to implement better money laundering protections.