MONEY LAUNDERING: MACAU'S YOUNG FIU GAIS

UNCLAS HONG KONG 000944

SIPDIS

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

E.O. 12958: N/A
TAGS: EFIN ECON SOCI KCRM QA MC
SUBJECT: MONEY LAUNDERING: MACAU'S YOUNG FIU GAIS
MILESTONE EGMONT GROUP MEMBERSHIP


1. (SBU) Smmary: Macau's Financial Intelligence Unit (GIF
for its Portuguese name) ill gain memberhip to the Egmont
Group of Financal Intelligence Units at the Group's May
24-28 Penary in Doha, GIF Director Deborah Ng told us May

14. Egmont Group membership gives GIF a formal latform to
exchange information, training, and expertise with other
developed FIUs (e.g., FinCEN, the U.S. Financial Crime
Enforcement Network). GIF chairs Macau's Anti-Money
Laundering (AML) Working Group, which is addressing
recommendations resulting from a 2006 mutual evaluation of
Macau's AML programs by the Asia Pacific Group on Money
Laundering (APG) and the Offshore Group of Banking
Supervisors (OGBS). We continue to encourage and provide
substantive assistance to the GIF in addressing the APG
recommendations issued in July 2007. We note good progress
in four key areas (Egmont Group membership, GIF permanence,
increased investigative capacity, and maintenance of
financial crimes/prosecution statistics),while the Macau
Special Administrative Region Government (MSARG) still lags
in two of the recommended areas (cross-border currency
reporting requirements and customer due diligence). The
MSARG must respond to the APG/OGBS mutual evaluation report
by July 2009 (two-year mark). End Summary.

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Egmont Group Membership to Boost Cooperation
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2. (SBU) The Egmont Group will extend membership status to
Macau,s Financial Intelligence Unit (GIF) at its upcoming
May 24-28 Plenary and Working Groups meetings in Doha, Qatar,
GIF Director Deborah Ng told us May 14. The Egmont Group,
established in 1995, provides its operationally-defined FIU
members a platform for cooperation in information exchange,
training opportunities, and expertise sharing. Macau's
joining the group publicly demonstrates its capability and
willingness to share information with other FIUs, such as the
U.S. Financial Crime Enforcement Network (FinCEN). GIF
recently signed Memorandums of Understanding (MOUs) to
mutually share information with FIUs from Portugal, Korea,
mainland China, and Hong Kong, jurisdictions that comprise
Macau's major sources of fund inflows. Ng told us GIF is
also considering MOUs with Indonesia, the Philippines, and
Japan.

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Investigative Capacity: Training/International Cooperation
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3. (SBU) GIF members continue to build investigative capacity
through training and participation in AML international
mutual evaluation teams. The Department of State's Bureau of
International Narcotics and Law Enforcement (INL) funded a
financial investigations training course for the MSARG from
May 18-22, 2009. This course, arranged by the U.S. Consulate
General Hong Kong and instructed by personnel from the
Criminal Investigation Division of the U.S. Internal Revenue
Service (IRS-CID),attracted members of Macau's GIF,
Judiciary Police, Public Prosecutions Office, and the Macau
Monetary Authority. GIF Director Ng is also building her own
professional competence while reviewing Korea's AML programs
during a joint APG/Financial Action Task Force on Money
Laundering (FATF) mutual evaluation. She is collaborating
with AML experts from Hong Kong, Japan, Spain, the United
States, and representatives from the APG and FATF
Secretariats.

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GIF Entrenching While Expanding; Tracking Progress
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4. (SBU) The MSARG established the GIF in 2006, following the
U.S. Treasury Department's proposed designation of Macau's
Banco Delta Asia (BDA) as an institution of primary money
laundering concern. In order to rapidly field an FIU, the
MSARG established the GIF as a "temporary" project/entity.
Director Ng told us that Macau's Legislative Assembly would
consider proposals for a permanent GIF after the new Chief
Executive takes office later this year. Meanwhile, GIF
continues to expand operations and staffing, with additional
recently acquired office space, and increased staffing from
five to thirty full-time employees, ten of whom are technical
financial analysts. GIF is also considering procurement of a
web-based system to automate Suspicious Transaction Reports'
(STRs) collection (current paper-based collection system
requires labor-intensive manual data input by GIF staff).
GIF continues to raise AML awareness within the financial,

gaming, and other cash-collecting sectors (e.g., precious
metals dealers, money exchangers, etc.) and has instituted
operational procedures to track the status of investigative
and prosecutorial leads it forwards to relevant authorities.
GIF now maintains statistical records and in 2008, it
received 838 STRs, 104 of which were submitted to Macau's
Public Prosecutions Office.

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Cross-Border Currency Movement Remains a Concern
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5. (SBU) GIF Director Ng told us Macau's GIF-chaired AML
Working Group is discussing the strength of cross-border
currency movement regulations. She stated that GIF submitted
to Macau's Secretary for Economy and Finance a proposal to
address this weakness. Ng cited, however, that the MSARG
would first have to evaluate any proposed measure on its
local economic impact, given that Macau's revenue generating
sectors (i.e., casinos, tourism) rely heavily on overseas
visitors' spending. In spite of this, Ng did acknowledge
that Macau needs stronger regulations in this area.

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No Change in Recommended Customer Due Diligence
-------------- --


6. (SBU) Macau's APG/OGBS mutual evaluation report recommends
that non-financial businesses and professions (e.g., casinos)
obtain customer identification (ID) for cash transactions
larger than $3,000 U.S. dollars. Current Macau regulations
require casinos to obtain customer ID only for transactions
above $62,500 U.S. dollars (500,000 Macau Patacas, MOP).
Macau officials have told us in the past that these
recommendations are too "onerous," and they are reluctant to
lower the current level since virtually all casino players
would qualify.

DONOVAN