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of voracious gambling across borders,” the report continued, citing the “clas- sic cases” of three senior of cials from Shenyang city in Liaoning province and a deputy mayor of Hangzhou in Zhe- jiang province. “A portion of these corrupt elements


and managers of state-owned enter- prises have moved cash across borders through gambling in preparation for  eeing the country, for example by ex- changing funds for chips, then cashing in the chips for cash, then transferring the cash to individual overseas bank ac- counts,” the report said. “In so doing these ill-gotten pro-


ceeds take on the appearance overseas of lawful income,” it said. Working with individuals who act


as runners between the mainland and other locations, corrupt individuals can, “with the intimate support of gambling conglomerates,” launder money outside the mainland, the report added. With the exception of a state-ap-


proved lottery duopoly, gambling is il- legal in the mainland, though Beijing has allowed Macau to develop into the world’s premier casino market following the handover in 1999.


 ve recommendations. Nor is it clear


what effect, if any, the report had on visa or other policies relating to Macau and Hong Kong.


Cashing in On the in uence of gambling, the re- port says the rapid development of the gaming industry around the world has produced a “gambling network” around China that extends from the “territory of Macau and the Philippines, Malaysia, Thailand and Myanmar to Korea and Russia and all the way to Australia, Eu- rope and the Americas.” “In recent years many casinos have


locked onto Chinese government of-  cials and persons in charge of state- owned enterprises as important sources of custom,” the report said. “These of - cials and senior managers frequently use public funds to engage in gambling be- haviour and hence the tendency to gam- ble large sums is even stronger.” “Several dozen of cials and senior managers have come unstuck because


Written in the cards The report also identi es use of the Chi- na UnionPay interbank transaction card as a facilitator of the problem. The card was “established under the approval of the State Council and the People’s Bank of China,” according to the UnionPay website. “In September 2004, Macau formal-


ly commenced the use of UnionPay card services, with more than 200 Macau- based companies allowing tourists in the territory to use the cards to make cash payments. Cardholders could also with- draw cash from 125 ATMs,” the report said.


“Presently, the card occupies a large


part of the Macau market. By the end of March 2007, it could be used with 2,170 participating companies, at 2,999 points of sale and at 207 ATMs. In one quar- ter of 2007 the number of transactions reached 440,000 and involved MOP4.4 billion,” it said. “While the card offered ... conven-


ience in regard to sightseeing and travel- ling expenses in Macau, it also provided suitable conditions for corrupt personnel to realise cross-border capital move- ment,” it said.


The report says a former mayor of


Haimen township in Jiangsu province misappropriated RMB18 million using a UnionPay card during 48 gambling trips to Macau between July 2003 and August 2005. An unnamed woman from a company in Zhongshan, Guangdong province, is also described as having lost more than RMB950,000 in company funds using the card. Macau and Hong Kong are also


listed as the two important “transfer points” for remittance of illegally ob- tained funds overseas.


Oops, sorry for the mistake Three years on, at the annual confer- ence of the Association for Certi ed Anti-Money


Laundering Specialists


last month in Beijing, a senior People’s Bank of China anti-money laundering of cial said the bank is improving its high-volume suspicious activity report system for suspect transactions, re ning anti-money laundering monitoring proc- esses and targeting higher-risk  nancial institutions. Shi Yongyan, director of research


for the central bank’s Anti-Money Laun- dering Bureau, said 13 percent of cases of misappropriation of public funds in- volved gambling offences. However, Hong Kong was more than three times as likely as Macau to act as a conduit for illegal transfers, he said. The sensitivity of the People’s Bank


of China report was re ected not just in its removal from of cial websites but also in a vague clari cation on the China Society for Finance and Banking web- site on June 16, following the media cov- erage, which said “some readers” had pointed out “errors” in data relating to  eeing corrupt of cials and the quoted amounts of money. “Upon investigation, the source of


the data was found to be false informa- tion online that had not been veri ed,” the clari cation said, adding that media reporting on the “erroneous data” had “created a serious negative in uence,” though it did not identify the data or sources in question. The authors of the report, it said,


“extend to the public their sincere apolo- gies and solemnly hope that the media and the public do not take seriously the grave untruths in the report relating to  eeing corrupt of cials and amounts of money.”


* EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS JULY 2011


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