Will Japan's Casino Resorts Be Able to Combat Money Laundering?

newsonjapan.com -- May 19
Japan is planning to open its first casino on 'Dream Island.'

The development will signal the end of the country's troubled relationship with gambling. However, the rise of slot machines and poker tables in Japan is raising concerns among many. Fears of casinos facilitating money laundering and other financial crime have long pushed the industry to the margins of the country's unwelcome businesses.

It is difficult to ignore the industry's history of working with/for cartels and money launderers. Those who would use casinos to clean their ill-gotten gains. There are already traces of related activities affecting the emerging industry. Recent news has revealed compliance issues and bribery, which may portend an unusually bleak future for Japan's casino industry.

Money Laundering in Casinos in Other Countries

The concern for the upcoming industry is not unfounded. It is a genuine campaign against Japan's casino industry. These factions are concerned with the treacherous path that other countries' casinos have taken over the years. There have been numerous reports of money laundering at various casinos around the world. Not just in the Asian region, but also across Europe, North America and Australia. Even in major gambling landscapes, the casino industry is far from being free of the money laundering vice.

Casinos in the United States report approximately 50,000 cases of money laundering and related activities each year. Many casinos are already accustomed to losing money due to money laundering investigations and legal settlements. The payments are now included in the regular gambling business costs; indicating the extent of the adversities caused by money laundering.

Unsurprisingly, casinos in the United States suffer such losses, given the industry's inextricable link to money laundering. The illegal activity dates back to the construction of the Las Vegas Strip. Because a mobster was a major contributor to the region's growth, money laundering remains at the heart of Nevada's casino industry. Casinos, along with other forms of gambling, are among the most vulnerable businesses in terms of money laundering.

As evidenced by the recent case of Crown Resorts, Australia also has a malignant problem. Australia's Crown resorts and its Perth subsidiary have been suspended for two years due to their inability to avoid money laundering issues. The casinos were accused of failing to operate legally and putting customers' funds at risk. The suspension was imposed following the completion of a 994-page report by the Perth Royal Gambling Commission commissioner. It appeared that Crown Perth had continually tainted itself with money laundering and related criminal activities.

Such cases exemplify the rot that has spread throughout casinos around the world. Casinos run the risk of aiding money laundering activities by providing a practical and easy maneuver environment for people to clean their money expeditiously. Money launderers deposit large sums of money in casinos, play with a portion of it as proof of winning, and withdraw lump sums disguised as legitimately gained money. Therefore, legitimate casinos must always be vigilant and constantly improve their security protocols to reduce the possibility of abetting such criminal activities.

Japan's Government Anti-Money Laundering Measures

The Japanese government's actions are informed by learning the up-to-the-minute trades and tricks of money laundering from events in other countries. The government is considering enforcing the rule that casino operators report all cases of customers exchanging chips for cash totaling Y1 million (US $9,500) and above.

The regulation aims to reduce the possibility of casino visitors laundering money or criminals funding terrorist activities. Addressing the two concerns is part of the government's efforts to develop the rules and regulations that will govern the casinos that are being built to attract more foreign tourists. Casino operators will be required to record visitors' names, addresses, birth dates, and transaction dates. The data will then be sent to a casino management committee, which will look for any suspicious activity.

This requirement is a carbon copy of the effective steps being taken in other countries to combat money laundering in casinos. The United States and Singapore were among the first to implement the strategy. Casino operators in Nevada are required to report transactions totaling $1 million or more. Similarly, in Singapore, exchanges worth $800,000 or more should be reported to the government for proper scrutiny.

Recap

Japan can successfully combat money laundering by enforcing stringent rules and regulations. As seen in other countries that have implemented similar measures, the strictness of the regulatory measures increases their effectiveness to combat illegal activities. To be successful in combating money laundering, legalizing and enhancing casino tourism in Japan has to be complemented by a top-notch gaming regulatory framework. It will not only increase revenue in the integrated resorts but also create a safe gaming environment for local and international gamblers.