Double or Nothing
Singapore has been touted to be a notable financial centre worldwide. Given its global image as a trade hub, it has been especially susceptible to money laundering due to huge cross-border flows. According to Boston Consulting Group, Singapore’s tight bank secrecy laws have aid in attracting close to USD 1.1 trillion in foreign funds into the city-state, claiming that it is now “growing faster than Switzerland and is set to become the largest cross-border financial centre in the world by 2028.” The combination of large inflows of transactions and high levels of secrecy has also made Singapore an attractive haven for those who want to keep their money under the radar, increasing regulatory scrutiny on the country.
In June 2020, news broke out that one of Singapore’s two casinos, Marina Bay Sands, was being probed by the United States Department of Justice over the handling of their top gamblers’ accounts and whether anti-money laundering directives had been breached. According to a Bloomberg article, the casino’s internal investigation noted that there had been violations in the manner in which its employees had “accepted transfer procedures by filling in payment details on pre-signed or photo-copied authorization forms” and “uncovered cases in which original documents were destroyed.”
Interestingly, the probe had been sparked by a separate incident — when the casino had “agreed to pay a settlement of USD 6.5 million to a Chinese gambler who claimed that the sum had been withdrawn from his account and transferred to other guests without his approval.” This had prompted a chain of further investigations by the Singaporean authorities into the casino’s role in facilitating money laundering in the country. Marina Bay Sands is owned by billionaire Sheldon Adelson’s Las Vegas Sands Corp. and is said to be one of the most lucrative casinos worldwide, making up 20% of the United States parent company’s revenue.
Casinos worldwide have long been seen as vulnerable in the money laundering process. Given the cash intensive nature of casinos, they are often seen as a preferred vehicle by criminals to launder illicit funds. Money laundering via casinos typically take place in the placement and layering stage of the money laundering process. One common way in which these funds are laundered through casinos is by converting illegal cash into casino chips, gambling, and then cashing the funds out. In 2009, the Financial Action Task Force (FATF) recognized the susceptibility of casinos to the money laundering process, updating their 40 recommendations, “with obligations on casinos being significantly enhanced”.
These incidents have also brought to light some of the issues surrounding casinos worldwide. For one, there are no clear AML/CFT obligations in place for subsidiary casinos — are they obligated by the laws of the country where the parent company is registered, the country where the subsidiary is registered or both? While this was highlighted in the 2009 FATF report on the Vulnerabilities of Casinos and Gaming Sector, there is still a need for a global enforcement body to ensure recommendations put forth by the FATF are followed through in the casino industry.
History of casinos in Singapore
Singapore’s relationship with casinos has been fairly recent but the history of gambling in the country dates back to British colonization. It had been legalized in 1923 under the British government but given the rise of misdemeanours and addiction, it was repealed when Singapore gained independence in 1965. After Singapore’s independence, gambling was limited to state-controlled activities such as lotteries and horse racing.
In a bid to increase tourism in the country and remain competitive compared to its South East Asian neighbours, Prime Minister Lee Hsien Loong introduced the government’s decision to allow the operation of two new casinos in 2005. Lifting a 40-year-old ban on gambling, the Prime Minister announced the operation of two new casinos, reversing stringent anti-gambling rules that had been put forth by his father, Lee Kuan Yew, touted to be the founder of modern Singapore. The first casino, located within the Resorts World Sentosa integrated resort, opened on February 14, 2010. The second casino, housed in the Marina Bay Sands integrated resort, opened two months later on April 27, 2010. According to the Singaporean National Public Library archives, “by 2013, the combined gross gaming revenue of the two casinos in Singapore had reached S$7.66 billion,” or around USD 5.55 billion.
Since the casinos had been introduced primarily to attract foreign tourism, strict limitations were imposed on Singaporeans to curb the peripheral social impacts gambling may have on society:
- Singaporeans and Permanent Citizens are required to pay a daily entry levy of SGD 150 (approx. USD 110) to enter the casino
- Singaporeans and permanent residents who visit casinos more than five times a month may need to show proof they are not in financial distress
- Immediate family members may call the National Council on Problem Gambling helpline to limit a relative’s visits, proving the individual has neglected their family due to gambling habits
The FATF’s 2009 report on Vulnerabilities of Casinos and Gaming Sector discusses why adopting a “foreigners-only” or “foreigners-mainly” approach to casinos like the Singaporean government may be problematic in curbing money laundering through casinos. While this view is often seen to one mitigate risk arising from these establishments, it can lead “to weakened oversight by authorities as there is a perception that risks from money laundering are less under this model.” While the Singaporean government has been proactive in engaging a Casino Regulatory Authority, creating this dichotomy between Singaporeans and foreigners may contribute to more lenient regulations against money laundering since it is seen as an “other” problem.
Anti-Money Laundering Regulations in Singapore
According to the FATF’s November 2019 report on Anti-Money Laundering and Counter-Terrorist Financing Measures in Singapore, the country was noted to have unsatisfactory customer due diligence requirements for industries and professions such as casinos, real estate, accounting and precious stones and metals.
The Singaporean Ministry of Home Affairs, along with its casino regulator, have indicated that they are currently reviewing some of the provisions in Singapore’s Casino Control Act to ensure that reporting standards are in line with recommendations made by the FATF. One immediate change made in June 2020 was the lowering of the threshold for cash transactions by that are subject to due diligence to “half the current legislated level” or SGD 5,000 (approx. USD 3,600). It was noted that Singapore’s previous official threshold, SGD 10,000 (approx. USD 7,300), was much higher than the FATF-set global standard of USD 3,000.
It was also announced in April 2020 that a new centralized authority, reconstituted from the current Casino Regulatory Authority, to oversee the Singaporean gambling authority would be established by the Singaporean Ministry of Home Affairs by 2021 to allow “authorities to stay abreast of gambling trends and take a more holistic approach to policies and issues.” It was commented in the November 2019 FATF report that Singapore has made significant effort in establishing measures to tackle money laundering and terrorism financing, taking into account that the majority of issues brought up in an earlier 2016 had now been addressed. Establishing a consolidated team and authority is a sign of a step in the right direction to streamline communication between authorities and casinos to efficiently manage and investigate any suspicious activity.
While Singapore’s history of casinos may be unique, it is not the only establishment that has been investigated on money laundering suspicions. Tackling money laundering through casinos cannot be done alone, especially given how transnational the sector is today. There is an increasing need to stay one step ahead of the money laundering game by educating employees on risk management, working together with relevant regulatory bodies and encouraging conversations between different casino groups globally. Finally, given the trend towards online gambling and casinos, there is an increasing need to take advantage of tech-enabled risk management tools to assess and mitigate risks of money laundering in real time. How do you think we can combat financial crime in casinos?
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