Gambling in Macau or in Las Vegas – A Money Launderer’s Paradise

Considerable set back in earnings is hanging over the heads of Las Vegas casinos if money laundering operations are discovered.

With several Macau-based casinos undergoing huge revenue losses, Las Vegas casinos better watch out too or they may get caught for harboring money launderers. Although the regulatory expense of conforming to an AML 101 is heavy, the fines condoning money launder could leave an even bigger hole in the pockets od casino operators. Just 2 years ago Las Vegas Sands was fined a grand some of $47 million for not adhering to anti-money laundering operations.

Under the AML 101 or Anti-money laundering federal 1970 Bank Secrecy Act, or BSA, companies dealing with money must report any suspicious activity of illegal money floating around in their business transactions. They must also comply to requests from government authorities to furnish details of suspected monetary activities involving the company’s clients. The establishment may be asked to keep detailed records of their transactions with clients for years.

The stance against illicit financial activity in China affects casino earnings in Macau.

According to Macanese gambling news, some government authorities believe the casino industry is particularly keen on ignoring the BSA requirements so much so that these authorities in turn are set on uncovering money laundering in the gaming industry. Although the casino may have to invest in AML security they may have to shell out a lot more for failing to comply with AML regulations.

The Chinese President Xi Jinping’s government has been waging a brave war against corruption and illegal monetary activities. Along with Chinese special administrative region there is a battle on to curb money laundering. The result is that the total gaming earnings in Macau fell by almost half of what it was a year ago, in March. Wynn Resorts who serve the high rollers who provide as much as 75% of Wynn Macau’s revenues have had a major blow to incoming revenues.

The fight against corruption escalated when it was reported that the government had uncovered the activities of rich gamblers from mainland China who collaborated in schemes with junket operators that secured money, which as moved back and forth, between the mainland and Macau.

Money laundering could lame Las Vegas’ future growth

The problem was, loads of government officials were using illicit funds to gamble, which made Macau an easy target to declare the fight against money laundering and corruption. Because of the strict Macanese gambling laws, high rollers are deserting Macau. But what about Las Vegas, are they safe from VIP players who are looking to take their dirty money elsewhere?

While money laundering hasn’t been a huge issue for the casino industry yet, Las Vegas and its investors are running several risks. Firstly, the probability that Las Vegas is attracting money laundering and related activities is high since Chinese travelers make up about 10% of Las Vegas guests and main investors.

President Xi could be attempting to block Chinese citizens moving away from Macau poker rooms to gambling in Las Vegas, by restricting the 85% of EB-5 visas granted to Chinese citizens. This means Chinese government restrictions could cause Sin City revenues to decline but it could also have Las Vegas casinos vulnerable to paying hefty fines, if they are found to be lacking in fulfilling AML obligations.

In order to protect their assets Caesars hired industry AML leader, Benjamin Floyd, to join their executive team when it was being investigated by the Treasury Department for potential AML deficiencies. So did Wynn Resorts, at the end of last year. So far, neither of these casinos being investigated have been fined, but the risk is there.

So some companies such as MGM and Wynn have stopped the use of cash at their poker tables in their attempt to curb money laundering risks. For any massive fines incurred will come at a time when Las Vegas casino earnings have already seen a big drop with MGM losing $150 million in 2014. So a fine in 2015 could mean investors who are betting on a turnaround would have to envisage other ways of making a profit.