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Fintech implementation in Macau helped decrease STRs

Macau is one of the largest gaming havens in the world thanks to its close proximity to mainland China, where it gets millions of visitors every year from. The bridge that connects the administrative division of Macau and China is slowly becoming more and more crowded. Add to that the connection with Hong Kong and you get a bustling gaming city that could rival even Las Vegas in the volume of tourists and visitors it can handle.

However, with insurmountable numbers comes insurmountable financial issues such as the reporting of those financial transactions. Unfortunately for Macau, it had been labeled as noncompliant with the international Anti Money Laundering rules multiple times in the past simply because of the number of STRs (Strange Transaction Reports) that were coming out of its gaming industry.

However, ever since the local casinos started to force their visitors to process payments via a monitored technological installment, the number of STRs has been decreasing rapidly. The first major implementation of these technologies happened at the end of 2018 and continued in the first quarter of 2019.

The reason being that the world’s biggest casinos which are heavily concentrated in Macau were slowly starting to lose pace due to their lack of technological advancement and access to foreign markets through an online platform during “peaceful times”. The peaceful times are basically working days during non-holiday periods of the year. That is when most casinos fail to meet their quotas and keep their stock prices quite volatile despite the predictability.

Decreased STRs in 2019 after fintech

The first major addition that Macau went through was a cap on cash payments. Customers were forced to either disclose their personal information to the casino if they were making a huge deposit or simply make a transaction that could easily be traced to them in the end.

The reason was that multiple Chinese financial criminals would easily cross the border to Macau and attempt to cover up the crimes by buying and selling chips at several local casinos.

However, ever since the caps and the requirement of technology were introduced, the number of strange transaction reports started decreasing rapidly, but not to a point that it was in 2018.

For example, the gaming industry in Macau occupied 55% of all STRs in the country in 2018. The number grew very quickly in 2019 as in Q1 alone, 70% of STRs were related to these casinos. But, since the implementation of fintech practices, the number has gone down to 66% of the total STRs in 3 quarters, and will hopefully reach less than 55% by the end of the year.

Macau earns recognition thanks to Fintech

After the technology was introduced, it was slightly smoother sailing for Macau-based casinos as they were able to comply with any and all AML guidelines existing in the international community.

As a result, Macau has become the first APG member to be approved for all 40 recommendations on technical compliance, thus earning it the name of a trustworthy market. This will most likely take effect on the companies’ stock prices and global rating in the future.

Can the Fintech practices be applied online?

It doesn’t need to be mentioned that the People’s Republic of China isn’t a big fan of its population taking part in gaming activities on a regular basis. That is why all of the casinos are located in this special administrative division of Macau, as they would be deemed illegal in the mainland and even Hong Kong for that matter.

However, the venues located in Macau are completely reliant on Chinese mainlanders as a source of income, which is why they always do extremely well during Chinese holidays as more and more visitors show up in the city looking for accommodation as well as entertainment.

The Fintech applied in these offline ventures is very limited due to low access to online resources. The appliances pretty much take place only when its time to transact taxes or some kind of funds from one company’s account to another, thus eliminating any type of money laundering schemes.

Several suggestions had been made in the past that future visitors could pre-pay for the amount of credit they want to use as gaming money once they arrive. It would help with the identification of the customers themselves as well as the designation of the funds transacted.

But that much is still under regulatory clouds, as making payments for gaming is strictly prohibited in Mainland China, and it’s not like the CCP is ready to make an exception.

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