MONEY LAUNDERING: MACAU STRENGTHENS ITS BANK

UNCLAS SECTION 01 OF 02 HONG KONG 001824

SIPDIS

STATE FOR EAP/CM, EEB/IFD AND EEB/ESC
TREASURY FOR OASIA
BEIJING FOR TREAS ATTACHE

E.O. 12958: N/A
TAGS: EFIN ECON SOCI KCRM MC
SUBJECT: MONEY LAUNDERING: MACAU STRENGTHENS ITS BANK
GUIDELINES

REF: HONG KONG 1493


1. (SBU) SUMMARY: The Macau Monetary Authority (Portuguese
acronym AMCM) revised its Anti-Money Laundering (AML) and
Combating the Financing of Terrorism (CFT) guidelines for
financial institutions, effective September 1. The
strengthened guidelines now apply to money changers,
remitters, and lenders and mandate Macau-based institutions
ensure compliance by their overseas subsidiaries. The
revisions enhance due diligence requirements, in particular
over politically exposed persons (PEP) and foreign customers
from jurisdictions lacking a robust AML/CFT regime. Audit
teams and AMCM-approved compliance officers are now
compulsory for all financial institutions. Macau's Financial
Intelligence Unit (Portuguese acronym GIF) will play an
essential role in implementing the revised guidelines. END
SUMMARY


2. (SBU) COMMENT: Macau authorities' commitment to developing
AML/CFT capabilities has come a long way since the U.S.
Treasury Department announced it was considering designation
of Macau's Banco Delta Asia (BDA) as an institution of
primary money laundering concern in 2006. Despite relatively
limited human resources, Macau has joined international
AML/CFT organizations, improved training and education on
AML/CFT compliance, tightened regulations and expanded
oversight. Serious concerns remain, however, particularly in
oversight in the gaming sector and Macau's weak border
controls. Post continues to support Macau's AML/CFT capacity
efforts through information sharing and training, most
recently with a September 7-11 Bulk Cash Smuggling workshop
for Macau officials conducted by personnel from U.S.
Immigration and Customs Enforcement (ICE) and U.S. Customs
and Border Protection (CBP). END COMMENT


3. (SBU) The Macau Monetary Authority recently strengthened
its 2006 AML/CFT guidelines for financial institutions
operating in Macau, their overseas subsidiaries, and Macau
branches of foreign-based institutions. For the first time,
AMCM has included guidance for money changers, remitters,
lenders, venture capitalists, and asset managers operating in
Macau. Macau's first AML/CFT laws were passed in the wake of
the U.S. Treasury Department's proposed designation of
Macau's BDA as an institution of primary money laundering
concern. This revision strengthens the 2006 guidelines by
incorporating recommendations made by the Asia Pacific Group
on Money Laundering (APG) and the Offshore Group of Banking
Supervisors (OGBS) in late 2006.

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(Really) Know Your Customers
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4. (SBU) The new AMCM guidelines require financial
institutions to exercise increased due diligence in
identifying and handling customers according to perceived
AML/CFT risk. High-profile customers, PEPs, and foreign
customers from jurisdictions with substandard AML/CFT
requirements or from countries with unstable political
systems are subject to special scrutiny under the new rules.
In addition, senior management at Macau's financial
institutions must regularly review the effectiveness of their
AML/CFT policies and maintain independent internal audit
units to test their established procedures. Institutions
must also appoint AMCM-approved compliance officers,
implement proper hiring screening procedures, and develop an
employee AML/CFT training program that incorporates ML/FT
laws, regulations, techniques, methods, and trends.

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Financial Intelligence Unit's Role
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5. (SBU) Staffed by AMCM banking regulators as an
independent, but temporary, government entity in 2006,
Macau's GIF analyzes Suspicious Transaction Reports (STRs)
from the financial, insurance, and gaming sectors and chairs
Macau's AML/CFT Working Group. In 2006, the APG recommended
the GIF be made a permanent body, but Macau officials, citing
legal and bureaucratic obstacles, decided to only extend the
GIF mandate for an additional three years (reftel). Despite
its temporary status, Macau officials say they are committed
to maintaining and building the GIF's capacity, and its
AML/CFT role is fundamentally emphasized throughout AMCM's
revised guidelines. GIF officials have informed us
legislation institutionalizing the GIF may be proposed by

HONG KONG 00001824 002 OF 002


Macau's Legislative Assembly after Chief Executive-elect
Fernando Chui Sai On takes office in December.

MARUT