Singapore’s Regulator Fines Resort World Sentosa US$1.67 Million for Due Diligence Failures

Gamblers Daily Digest -

Singapore’s Gambling Regulatory Authority (GRA) imposed a S$2.25 million (approximately US$1.67 million) fine on Resort World Sentosa (RWS) for failing to comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. 

The penalty stems from RWS’s inadequate customer due diligence (CDD) practices, specifically concerning the failure to verify the identities of individuals depositing S$5,000 (US$3,730) or more in cash between December 2016 and December 2019.

It all started with an investigation conducted by GRA into RWS’ financial reporting procedures and customer due diligence checks. According to the regulator’s statement, RWS had self-reported instances of non-compliance after being ordered to review its processes along with another integrated resort, Marina Bay Sands, in 2020.

The announcement follows in the footsteps of the Pennsylvania Gaming Control Board (PGCB), which fined three operators $73,075 for violating local gambling regulations.

Background

Singapore, which has set its legal gambling age at 21, has a zero-tolerance approach when it comes to regulatory compliance at its integrated resort casino operators. This was made clear again this month when the GRA announced a $1.7 million fine for RWS stemming from deficiencies in its financial controls and know-your-customer (KYC) procedures uncovered over the past three years.

The penalty came after a review ordered by GRA in 2020 found instances of non-compliance that were later self-reported by RWS. An investigation revealed that employees accept cash deposits without conducting legally mandated verification and background checks on the sources of funds. This violated critical provisions of Singapore’s stringent anti-money laundering laws governing casino operations.

According to a CRA spokesperson, the failures centered around RWS disregarding processes meant to prevent money laundering and associate casino operations with organized crime. The land-based casino resort operator, one of only two such venues allowed to operate in Singapore, did not follow rules related to customer due diligence and reporting obligations for premium players and politically exposed persons.

Resorts World Sentosa and Marina Bay Sands are subject to the GRA’s stringent AML/CFT regulations. These regulations require casinos to implement robust CDD procedures to mitigate the risk of their operations being used for criminal activity.

GRA Lengthy Investigation and Findings

The CRA’s action comes after a 20-month investigation into Resorts World Sentosa’s compliance with Singapore’s strict gaming oversight laws. Regulators focused on the casino’s dealings with premium players, who qualify for such status by gambling substantial sums or negotiating for operator incentives.

The GRA initiated a review of RWS’s AML/CFT controls three years ago, following a similar review of Marina Bay Sands. The RWS review identified systemic failures in the casino’s CDD processes, particularly concerning cash deposits exceeding S$5,000. 

Investigators found that RWS neglected the required enhanced due diligence for patrons classified as premium players or those tagged as politically exposed persons (PEPs). PEPs are senior government officials, high-ranking political party members, or those with ties to such VIPs. Singapore mandates extra scrutiny of PEPs and premium players to ensure transparent dealings with potentially influential or risky customer segments.

In RWS’s case, the CRA concluded that the resort fell short of meeting anti-money laundering and know-your-customer regulations. The casino did not follow processes needed to validate sources of funding, perform periodic reviews of patron activity, or submit timely suspicious transaction reports.

The inquiry found that RWS failed to confirm the identities of third-party depositors, violating the Casino Control PCMLTF Regulations 2009. RWS did not document or authenticate these depositors’ identities through reliable sources. The casino lacked proper protocols for recording high-value cash transactions, making it susceptible to money laundering and terrorist financing activities.

The Responsibility Falls on the Operators

CRA’s chairman, Tan Tee How, emphasized that the onus rests with casino operators like RWS to establish and execute compliance measures. Regulators aim to guarantee that gaming in Singapore avoids any connections with crime or money laundering.

GRA characterized the lapses as systemic failures that could have enabled criminal activities if not addressed. While remedial actions have since been taken, the regulator deemed a substantial fine necessary to impress upon RWS the seriousness of adhering to policy. The penalty also aimed to reinforce to RWS and other operators like Marina Bay Sands that breaches will face disciplinary action, with GRA maintaining tight supervision of compliance standards.

This marks the second heaviest fine Singapore’s casino watchdog has ever issued. In 2017, rival casino Marina Bay Sands received a $4.5 million penalty, which was also related to AML procedures and PEP oversight. Marina Bay Sands runs the city-state’s other licensed casino property.

A spokesperson for RWS operator Genting Singapore acknowledged the resort’s responsibility for falling short of compliance regulations. The representative stated that RWS accepts the CRA’s decision regarding the acceptable amount and will continue working closely with gaming officials.

Financial Impact

The penalty is not expected to significantly impact the financial results of RWS’ parent company, Genting Singapore, given the size of its operations. However, it serves as a reminder to Singapore’s integrated resorts to exercise extreme diligence in all transactions to prevent criminal activities like money laundering. 

The S$2.25 million fine is unlikely to have a material impact on RWS’s financial performance. The casino’s parent company, Genting Singapore, reported healthy third-quarter revenue in 2023, with approximately 67% generated from casino operations. Strict adherence to policy is required, given the special oversight and regulations that come with operating a casino license in the country.

Resorts World Sentosa operates on a massive scale as one of only two integrated casino resorts permitted within Singapore’s borders. The property currently encompasses around 2,400 slot machines and 500 table games for casino gambling. 

Guests can choose from 1,600 hotel rooms spanning five on-site brands. RWS is also amid a monumental $5 billion renovation and expansion effort, having recently opened attractions such as the SEA Aquarium and preparing to launch a new beachfront hotel. 

Wrapping Up

At US$1.67 million, the fine amount was not material to RWS’ parent company, Genting Singapore’s balance sheet. However, it serves as an example that, even if unintentional, regulatory missteps in Singapore will still be punished severely. Integrated resorts are expected to exercise utmost diligence in all financial transactions and customer interactions, given the special oversight that comes with their gaming licenses.

Author: Bryan Cook