Cyprus Casinos pushes back on money laundering warning


melco-cyprus-casinos-moneyval-money-laundering-reportA company controlled by casino operator Melco Resorts & Entertainment (MRE) is pushing back against a European watchdog’s warning that the company’s Cyprus casinos could become a money laundering hub.

Earlier this week, the Council of Europe’s MONEYVAL anti-money laundering body issued a report that contained a warning regarding the growing casino business on Cyprus, which is run by Cyprus Casinos (C2), a subsidiary of the Hong Kong-listed Melco.

C2 opened its first casino in Limassol in June 2018, a ‘temporary’ facility that has since been joined by a number of smaller satellite casinos while C2 completes construction of its City of Dreams Mediterranean integrated resort, which is scheduled to open in late-2021.

Moneyval’s report notes that an on-site visit to the Limassol casino in May 2019 suggested that its anti-money laundering/counter-terrorist financing (AML/CTF) systems “had weaknesses.” Moneyval’s assessment team said the casinos was “currently operating at or beyond the limits of its AML/CTF compliance and risk management system.”

While Moneyval said the Limassol staff “appear to understand” the risks associated with casino services, they “appear to not fully appreciate the quantitative magnitude of those risks when attached to operations of the casino’s current size – much less its anticipated future size.”

Moneyval noted that C2 was “planning aggressive expansion,” including “attracting foreign junket operators and attracting foreign VIP customers.” Moneyval suggested that until C2 can “demonstrate an effective AML/CTF program at its current level of activity,” the Cyprus Gaming Commission “should consider not permitting it to expand that activity.”

A day later, C2 issued a statement saying it welcomed “a strong and compliant regulatory framework.” C2 said it was “working closely” with Cyprus regulators “to implement all AML regulations” and the company was “dedicated to industry-leading and best practice AML/CTF procedures in all our operations.”

Gambling regulators in Malta recently imposed a €2.34m penalty on Blackrock Media Ltd for “operating a gaming service through a Maltese legal entity without being in possession of the necessary authorization.” Maltese officials stated that the fine was proof that it was committed to implementing the recommendations in a 2019 Moneyval report on Malta’s AML/CTF risks.