Authorities in Hong Kong have disrupted a money laundering operation that moved bulk cash via the Hong Kong-Zhuhai-Macau Bridge (HZMB) to be washed at Macau casinos.
It’s the first known instance of the bridge, which opened in 2018, of being used as a conduit for money laundering.
According to a statement released Wednesday by the Hong Kong government, customs officials detected the gang’s movements in May and launched an investigation dubbed “Operation Interceptor.” This culminated in the arrest of five men suspected of transporting around HK$170 million (US22 million) into Macau.
Two of the five were “cross-boundary drivers,” arrested last Thursday when agents intercepted their vehicles on the Hong Kong side of the bridge. Officers seized HK$20 million (US$257,000) in cash from the men. Other members of the gang were described as “money changers” in the government statement.
All have been charged with conspiring to “deal with property known or reasonably believed to represent proceeds of an indictable offence” and for violating the Cross-boundary Movement of Physical Currency.
A Bridge Too Far?
The 34-mile-long HZMB took nine years to build at a cost of $15.1 billion and is the world’s longest sea bridge. The aim of this marvel of modern engineering is to link the economies of Hong Kong, Macau, and the Pear River Delta region more closely, although not necessarily their black economies.
As highly competitive cash-intensive businesses that deal with large numbers of transient visitors, casinos are vulnerable to money laundering. But Macau’s reliance on VIP gaming and junket operators places it at particular risk, as does its status as the only Chinese region where casino gaming is permitted.
Despite strict controls on the movement of capital out of mainland China, a 2013 report by the US Congressional Executive Commission on China estimated that US $202 billion in “ill-gotten funds” was being channeled through Macau every year.
Around this time that Beijing and the Macau governments stepped up efforts to regulate the gambling industry as part of a wider campaign against corruption. From 2012, casinos were required to report suspicious transactions and player lists each month, making it harder for patrons to remain anonymous.
Beijing Crackdown
By 2014, this had escalated into a full-scale crackdown, as Beijing enforced visa and banking restrictions, and squeezed the junket industry, sending Macau’s economy tumbling into a two-year decline.
Since 2016, Macau’s casinos have been required to hire compliance officers and keep daily records of all transactions, assuming more due diligence and operational obligations, as well as taking more pre-emptive measures to combat money laundering.
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