Las Vegas Sands

Sands steps up scrutiny of Macau casino junkets

Operators questioned as casino seeks to bolster safeguards against money laundering in Macau

PUBLISHED : Saturday, 05 April, 2014, 1:07am
UPDATED : Saturday, 05 April, 2014, 1:55am

Las Vegas Sands is increasing its scrutiny of Macau junket operators in a move that may lead to a shake-out among the middlemen who account for two-thirds of the betting in the world's largest gambling market, a person familiar with the matter said.

Junket operators, who bring wealthy gamblers from the mainland, are being asked to provide more information about their businesses to Sands as the company seeks to bolster its safeguards against money laundering and other wrongdoing, said the source. The changes are likely to reduce the number of junket operators working with Sands, the person said.

Sands, founded by billionaire Sheldon Adelson, is seeking to meet demands by US regulators and prosecutors to prevent money-laundering. Doing so risks alienating high rollers or offending local authorities who oversee the industry in Macau.

At the same time, Sands and other casinos in Macau have stepped up efforts to attract mass-market players on their own, reducing their dependence on the lower-margin junket business.

"It is political, it is also financial," said I. Nelson Rose, a professor at Whittier Law School in California who studies the casino industry.

Over the past two years, Las Vegas-based Sands has beefed up the teams that monitor players, employing former Federal Bureau of Investigation agents, regulators and lawyers experienced in anti-money laundering.

"Our chairman and board expect the company to set the standard for ethical performance in our industry," said Ron Reese, a Sands spokesman. "Across every spectrum of our business, we look for partners who share and abide by that goal."

In August, Sands reached an agreement with the US Department of Justice to forfeit US$47 million in proceeds from a gambler in Las Vegas who was later linked to international drug trafficking, according to a statement.

The Nevada Gaming Control Board is also boosting oversight of US casinos' Macau operations, sending teams more often to monitor Sands, MGM Resorts International and Wynn Resorts. Each of the three US companies has publicly traded subsidiaries listed in Hong Kong. Those include Sands China, the biggest operator in the market with a 23 per cent share in the first quarter, according to Barclays Capital.

Rules in Nevada and other local jurisdictions require regulators to monitor licensees' activities elsewhere to guard against cross-border violations.

"Controls are getting more robust," Nevada Gaming Control Board chairman AG Burnett said. "Things are getting much better."

Sands no longer allows international transfers of funds by customers and limits the use of cheques or money transfers from business accounts, according to another person familiar with the matter. Sands also restricts the amount of cash customers can withdraw from their casino accounts in a given day.

MGM Resorts said in a statement it limits the use of junket operators to a small number of the total licensed.

Macau's casinos have relied on junket operators for years to locate gamblers on the mainland and bring them to the former Portuguese colony. The middlemen serve a critical role by lending to Chinese players who face curbs on how much money they can bring from home. They also collect gambling debts.

Lax rules allow criminals to transform ill-gotten cash into legitimate-looking gambling proceeds from casinos. A report in October said US$202 billion is laundered each year through Macau.