1. MALAWI GAMING BOARD
Anti-Money Laundering Compliance in the gaming industry
Presented by: Master Maliro

2. Money Laundering Definitions
The process by which large amounts of illegally obtained money is given the appearance of having originated from a legitimate source.
The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime.

3. Stages of Money Laundering
Placement
The money is placed into the financial system or retail economy or smuggled out of the country. The aims of the launderer are to remove the cash from the location of crime so as to avoid detection from the authorities and then transform it into other asset forms.
Layering
Concealment or disguise of the source of the ownership of the funds by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity.
Integration
The money is integrated into the legitimate economic and financial system and is assimilated with all other assets in the system.

4. How money may be laundered in casinos
Criminal interest in casino: Organised crime groups seek to own casinos or aspects of casino operations.
Structuring (Distribution of large amount of cash into smaller transactions to evade threshold reporting)
Refining (Exchanging low denomination notes for higher denomination currencies)
Punters buying chips or tokens with large quantities of cash and cashing out after little play or no play at all. Or playing machines with low pay-out ratio and receiving casino cheque for total amount of credit remaining in the machine.
Purchase of chips from “clean” players at a premium
Currency exchange: Converting criminal proceeds from one currency to another.
Use of chips as currency in illegal transactions

5. How money may be laundered in casinos
Casino employees arranging for someone to make a big winning.
Employee complicity: staff conspiring with customers to overlook money laundering transactions.
Using false documents: Money launderers using false documents to disguise origin of criminal proceeds.

6. Indications of suspicious behaviour in casinos
A punter buying large quantities of chips/value cards and cashing out after few turns at the table or machine.
Frequent purchases/top up of the value cards.
Buying large quantities of chips and sharing with other punters (systematic or organised money lending between customers).
Supposed winnings not corresponding with recorded winnings.
Attempting to befriend casino employees.

7. Indications of suspicious behaviour in casinos (contd..)
Multiple chip cash outs on the same day.
Customer requests to add cash to casino winnings and then exchanging the combined cash and winning for a single cheque.
Chip cash out is same/similar to chip purchase.
Structuring of chip/cheque transactions.
Requests for credit transfers to other casinos.
Use of third parties to purchase casino chips.
Customer due diligence challenges e.g. refusal and false documents.
Unexplained income inconsistent with financial situation/customer profile.

8. Casinos’ AML/CTF Reporting Requirements (S16)
Casinos should undertake customer due diligence measures including identifying and verifying the identity of customers, when:
Establishing business relationship.
Carrying out occasional transactions above the applicable designated threshold.
There is a suspicion of money laundering or terrorist financing.
The financial institution has doubts about the veracity or adequacy of previously obtained customer identification data.
Casinos should conduct ongoing due diligence on the business relationship and scrutiny of transactions to ensure that the transactions are consistent with the institution’s knowledge of the customer, their business and risk profile including the source of funds.

9. Customer Due Diligence for Casinos
What is required: [S16(2)]
Name, address and occupation of the customer
Type of identification (National identity card, passport etc)
Source of wealth and property of the customer
When is it required?
When entering the casino/gaming area
Membership approach (Identifying, and verifying the identity of customers on application for membership
When punters gamble over a given threshold (Threshold approach)
Combination of the above options.
Gaming licensees may also use self exclusion procedures in identifying the customers.

10. Other AML Requirements for Casinos
Appointment of a Compliance Officer (S27)
Development of compliance management programme
Development of policies, procedures and systems
Risk based approach
Internal systems
Transaction monitoring
Internal and external reporting (STRs)
Record keeping and retention
Training
Audit

11. Records to be kept by casinos
Names, addresses, occupation and source of wealth of customers.
Identification documents of the customers.
Large quantity purchases of chips and value cards.
Register of large cash pay outs (to protect them against the money launderer falsely claiming that they won dirty money at a casino).

12. Responsibilities of Regulatory Authorities
Licensing of casinos (Identifying beneficial owners of the business [S16(3)]
Taking appropriate legal or regulatory measures to prevent criminals or their associates from holding or being beneficial owner of a significant controlling interest, holding a management function in or being an operator of a casino.
Ensuring that casinos are effectively supervised for compliance with requirements to combat money laundering.

13. Conclusion
Casinos are an attractive target for money launderers because of the variety, frequency and volume of transactions that they conduct. It is the responsibility of regulatory authorities to ensure that the gaming sector is crime free by enforcing compliance with AML/CFT legislation. There is need for regulators to share best practice models for AML/CFT regulation and supervision of the gaming sector. Domestic and international cooperation among law enforcement agencies and supervisory authorities are necessary for combating money laundering in casinos and other sectors of the economy.

14. Thank You
Questions?