HONG KONG (Reuters) - Macau has introduced new anti-money laundering rules for its $29 billion casino industry, the world’s biggest, adding to costs for operators at a time when revenues have slumped to five-year lows.
The new regulations, published on the Gaming Bureau’s website this month, have been effective since May 13. They are far broader in scope than the last version issued in 2006.
Located on China’s southern coast, Macau is the only place in the country where nationals are legally allowed to gamble in casinos. Over the past two years revenues have tumbled due to a nationwide anti-corruption campaign and slowing economic growth, which have compounded industry woes.
Increased scrutiny and tighter regulatory policies in Macau have also hit sentiment and slammed junkets, middlemen who are employed by the casinos to bring in wealthy gamblers.
The tighter regulations in Macau contrast with the lax money laundering laws of Manila where a lack of robust controls made it an easy target for a brazen cyber-heist from Bangladesh’s central bank.
Macau’s new measures, which include keeping daily records and hiring compliance officers, are expected to compound pressure on the high-roller VIP sector and increase operating costs for casinos, said analysts.
“Casino and junket operators now have to assume more due diligence and operational obligations, and to adopt more pre-emptive measures,” said Karen Tang, analyst at Deutsche Bank in Hong Kong.
Casino operators in the former Portuguese colony now have to verify and sign any large or suspicious reports submitted by junkets. And both casinos and junkets can no longer do business with anyone using an alias. Operators also need to know the identities of ultimate beneficiaries for transactions over 500,000 patacas ($60,000).
Jamie Soo, analyst at Daiwa Capital Markets in Hong Kong, downgraded the sector on June 3, stating expected weakness, and cut his forecast for annual revenue to a 10 percent fall versus a 5 percent drop previously.
Despite headwinds, Macau is set to open three large-scale resorts this year, with features including a 50 percent scale version of the Eiffel Tower, a large lake with a gondola ride and ultra-luxury shopping and dining, as operators try to appeal to a broader type of customer than the traditional hardcore gambler.
Reporting by Farah Master; Editing by Muralikumar Anantharaman
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