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The Money Laundering Risks of Casinos Located on Luxury Cruise Ships

Updated: Jan 29, 2020



Introduction:


Money laundering is an ever-evolving crime. Money launderers look for new avenues to launder money without attracting the attention of law enforcement agencies and regulators. Casinos are an attractive option for money launderers to show instant high value winnings which carry an air of legitimacy.


Casinos located on a luxury cruise ship can provide an ideal location to launder money and are attractive to criminals due to lack of strict regulatory oversight.


This article therefore focuses on why casinos within luxury cruise ships are more vulnerable to money laundering as well as the red flags associated with gambling at sea, as well as the regulatory oversight in various jurisdictions.


High Stakes on the High Seas


Many governments and regulators are unable to enforce legislation on gambling activities within leisure ferries and cruises due to International waters laws.


Cruise ships offering onboard casinos are particularly vulnerable to money laundering due to a lack of regulation in international waters. Cruise ships are often governed by the laws of the country in which a ship is registered when travelling in international waters.


If the ship is registered in an offshore tax haven or a country where the Anti-Money Laundering (AML) laws are weak, cruise ships are unlikely to conduct sufficient AML monitoring and KYC checks on the individuals participating in the gambling activities.


Moreover some casinos operating in cruise ships accept cash, enabling the ability to gamble with illegal funds. Chips are often then converted back legal tender, either in the form of clean cash or cheques.


Further examples of illegal gambling activity include the operation of ‘Junket’ operators. Junket operators are companies that operate in Macau and are involved in identifying high net worth individuals and organized criminal groups, invite them to the casino and issue them credit which may be used to launder money and help them to collect the debt.


Example: A case of how some of China’s richest men laundered money through casino cruise ships which were anchored in Hong Kong’s Victoria Harbour in 2009.


The individuals boarded the ship after transferring funds to the Hong Kong company account owned by a Junket operator who had a running account at the casino. The conspirators were then issued chips against the HK$175 million.


They spent HK$19.7 million on the tables and travel