In the money-laundering space, the casino industry is considered one of the non-financial sectors that poses significant risk. This is to be expected, in view of the high volumes of cash transactions that casinos undertake, whether in payments out to patrons or receiving cash in exchange for chips or other goods and services. Among the 40 recommendations of the Financial Action Task Force (FATF) on anti-money laundering measures, casinos are singled out for special mention. At recommendation 28, FATF advises that casinos should be subject to a comprehensive regulatory and supervisory regime that ensures that they have effectively implemented the necessary anti-money laundering and terrorist-financing measures. To that end, I see the Bill as another step towards this recommendation.
On the provisions of the Bill, I wish to raise three points – on ownership of casino businesses, anti-money laundering (AML) measures, and the drastic increase in punishments for certain offences. Later in this debate, my party colleague Sengkang MP Louis Chua will raise questions regarding gambling duties and casino tax rates, the challenge of technology and the retrospective amendment regarding casino entry levies.
Approval of Ownership Changes
FATF’s Recommendation 28 on casinos advises that competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner of a significant or controlling interest, holding a management function in, or being an operator of a casino. Put simply, we need to prevent organised criminal syndicates from profiting from casino businesses and laundering illegal funds through them.
Under the existing Act, approval of changes in the main shareholders of casinos needed approval from the Gambling Regulatory Authority (GRA). Under the Bill, it is proposed that approval of changes in the main shareholder be transferred from the GRA to the Minister for Home Affairs. On the other hand, the opposite is being done for changes in ownership that do not involve the main shareholder. For those who are controllers and substantial shareholders, the Bill removes certain powers from the Minister and transfers them to the GRA.
The Ministry has sought to explain the rationale for these changes. As regards the main shareholders, the Ministry has argued that considerations about the main shareholder should rightly be with the Minister who can take into account whole of government considerations; as for controllers and substantial shareholders, it is said that the decisions involved are regulatory decisions with operational implications, which are more appropriately undertaken by the GRA rather than the Minister.
Even accepting the Ministry’s reasoning, one needs to ask why in the original Act, the approving authorities were structured the other way round. Could the Ministry please elaborate on this and what has changed?
Enhanced AML Measures
Next, I move to specific changes to enhance AML measures in casinos. These are seen in Clauses 46 and 47 of the Bill.
Under Clause 46, the threshold amounts of money which would trigger customer due diligence (CDD) obligations have been lowered. For both payments out and receipts of monies in, the threshold amount will be lowered to $4,000, which is down from the current $10,000 for payments out and $5,000 for payments in. In addition, there will be a new requirement for the casino operator to expressly consider making a suspicious transaction report (STR). This requirement will be triggered when casino operators do not proceed with the transaction with the patron, whether it is because they are unable to complete the CDD measures satisfactorily, or because the patron refuses to provide the necessary information.
Under Clause 47, there will be a new electronic information-sharing scheme for casino operators. This scheme will provide for information sharing of the contents of an STR to prescribed persons, once the filer is notified by the GRA to do so. In the media release on the Bill, MHA explained that this scheme will enable casino operators to share information directly with each other, so that those in the industry can act more quickly to prevent money laundering, terrorism financing and proliferation financing.
I see these measures as particularly prudent. Already under the current obligations, our casino operators have occasionally fallen short. For instance, it was reported in December last year that one of the casino operators was fined a total of $2.25 million for failing to perform due diligence checks on deposits into patrons’ accounts in prior years. Another operator was investigated in Singapore and the United States four years ago into whether it had fully complied with anti-money laundering measures when allowing patrons to transfer monies amongst themselves, known as “third party transfers”.
The risks are further amplified in Singapore due to the high percentage of casino patrons from overseas. According to Singapore’s Money Laundering Risk Assessment Report released in June this year, the majority of casino patrons are foreigners, which would mean that in most cases, our agencies may have little or no background information about these individuals.
Of course, the effectiveness of these enhanced AML measures lies not just in the design but in the implementation. Much work will be needed by casino operators to review SOPs and systems and to train staff to understand their roles. The GRA’s role as regulator is critical as it works with the casino operators to raise their game.
Why Harsher Punishments?
Finally, I would like to ask about Clause 91 on the increase in punishments for certain offences. The increases in punishments are very significant and it is necessary to understand the rationale behind these changes. For instance, some offences that are currently fine-only offences are being converted to offences which are punishable by significant jail time. These offences include violating business stakeholding requirements, ignoring directions of the GRA or failing to give information to the GRA, or failing to provide certain information to the police within a specified time frame.
The existing law already provides for heavy fines for these offences, ranging from $50,000 to over $100,000 in many cases. The Bill introduces jail as an option, with a maximum jail term of either 3 years or 7 years.
What is the mischief the government wishes to address with these enhanced punishments? Has there been evidence that hefty fines alone are insufficient to deter these offences, and that imprisonment needs to be included? Have casino operators or other persons not been co-operative with the Ministry or the GRA, such as to warrant these changes?
Conclusion I support the efforts to enhance our AML regime and in particular relating to casinos. It is no mean task and I hope we will succeed. That said, I look forward to the government’s clarifications on my queries regarding the swap in the approving authority for ownership changes and the introduction of harsher punishments.