Triads And The Art Of Macau Money Washing

China’s ruling Communist party has long had an ambivalent–if not schizophrenic–obsession with gambling. Across this vast Asian superpower gambling is technically legal in only two places: Hong Kong and Macau, both former colonial enclaves.

Hong Kong is noted for its elite Hong Kong Jockey Club, founded by the colonial British, and hundreds of nefarious back-shop Mahjong parlours, where fortunes, illicitly, are won and lost on the ancient game of luck and skill. Macau, an otherwise grubby former Portuguese entrepôt, is the site of the world’s richest and mostly U.S.-owned casino hub.

It’s yet another astonishing, go-figure, paradox in the new “Great Game” being played out for world domination between the Sino-American rivals.

Meantime, on the China mainland proper millions of regular gamblers defy their government and access Internet gaming through semi-clandestine off-shore sites — many of them POGOs, the contentious Philippine Offshore Gaming Operators, or similar hack sites in surrounding South East Asia locations.

The stratospheric rise of Chinese wealth, an undimmed national appetite to gamble and the expertise of U.S.-dominated casino heavy-hitters–among them Galaxy Casino (above), Las Vegas Sands, Melco Resorts Macau, MGM Grand Paradise, SJM Resorts, Venetian Macau and Wynn Resorts Macau–has made Macau the world’s biggest gambling market, and one now climbing back to pre-Covid-19 levels of income, generating some Macau Pataca (MOP) 292 billion in annual GGR — the equivalent of US$36.2 billion (£28.25bn) from 39 million visitors.

Gangsters

Peering into this opaque casino pleasure land, most keen observers agree that the future and the fortune of Macau is determined not just by gambling industry trans-national corporations but also by deeply embedded Triad gangsters who flourish in Hong Kong, Macau, Taiwan and throughout overseas ethnic-Chinese communities.

By law, mainland Chinese residents going abroad or travelling to the gaming tables of Macau are limited to exchanging (only) the equivalent of US$50,000 currency a year (£39,300).

It’s certainly not enough of a bankroll for high-rollers looking to beat the baize — or for money launderers needing to wash their ill-gotten gains.

Hitherto, into this void have stepped the Triads. In Macau–among much else–they also control the lucrative money laundering and currency exchange industry, for industry it is.

But now–following the 2021 China national crackdown on the so-called Triad-controlled “Junkets”, that brought gambling whales to the territory to bet vast sums in illegal back rooms at the major casinos–Macau authorities have also decided to outlaw and criminalise local currency exchange operators.

Survival

Prompted by their mainland masters, who are trying to stop capital outflows amid a constricting economy, Macau arrested some 10,000 individuals for offering currency exchange services last year. Underground banking, they argue, is also linked to fraud, kidnapping, human trafficking and organised crime. Now they plan to imprison currency conversion violators for up to five-years and ban the guilty from casinos for between two to 10-years.

While positing that “big gamblers are unlikely to use these small money touts as their main fund facilitator”, Macau gambling analysts at Citigroup argue:

“This negative news could add uncertainties and hurt the already fragile investment sentiment against the Macau gaming sector.”

Certainly, share prices of most Macau casino operators dipped on news of the intended crackdown last week. But the entrepôt is well versed in survival.

It has recovered from the debilitating impact of travel restrictions imposed during the Covid-19 pandemic. It has overcome the massive financial hit of losing the Junkets, which once contributed an estimated 50 percent of casino revenue. And–along with the Triad snakehead–it will certainly survive this latest swipe at money-laundering.

Source: igamingfuture.com

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