Third party authorisations cause problems for Singapore casino

by Noah Taylor Last Updated
Third party authorisations cause problems for Singapore casino

A Singaporean casino has paid the price of attracting lucrative Chinese gamblers, according to a Bloomberg report.

Chinese businessman Wang Xi’s first trip to Marina Bay Sands Singapore yielded a $3.7 million win.

After more wins in subsequent trips, his luck turned sour and he racked up millions of dollars in losses.

One particularly hard day saw him throw a glass of water at a staff member and bringing in his father to review his accounts.

The family review yielded a windfall in the form of a lawsuit, where Wang claimed the casino had transferred $6.9 million of his money to third parties in 22 separate transactions without his authorisation.

The forms of wiring his money weren’t signed by him and appear to have been forged, the originals destroyed, the lawsuit said.

The casino settled the case in June, repaid Wang and didn’t admit any wrongdoing.

Wang’s lawsuit and similar one shined a light on the murky world of third-party transfers that gamblers and casinos use to settle accounts.

As gambling is illegal in mainland China, junket operators have stepped in to facilitate gambling, especially in Macau.

The difficulty of transferring money overseas for Chinese nationals has meant the junkets act as an informal bank, providing credit, stashing winnings and settling losses.

In Singapore, Marina Bay Sands prohibits the use of junkets, concerned about the untraceable flow of money and the potential for money laundering.

Casinos instead allow patrons to transfer money to other gamblers they know, covering losses or sharing winnings.

It is a somewhat informal lending club among millionaires.

Marina Bay puts in new measures to improve compliance

The Letters of Authorisation seemed like a way for casinos to avoid junkets while still facilitating high-roller gambling.

Third party transfers are legal and have been used by casinos for years, according to people familiar with operations.

An internal investigation showed 3419 transfers worth more than US$1 billion were shuffled among gamblers by casino employees between October 2010 and December 2018.

The problem for Marina Bay is that it appears several of its employees hijacked the process between 2013 and 2018.

They would get patrons to sign a blank authorisation form to get things started, fill in the amount of the transfer and other details for subsequent wires.

At times, they’d use photocopies of the same document on multiple occasions to expedite the moves, copy signatures if needed and destroy originals, people say.

A former compliance executive interviewed as part of an internal investigation said Marina Bay management was largely unaware of the transfer problem until 2018.

When the executive brought up the issue and tried to tackle it, the operations and legal teams urged him to back off.

Later, his contract was not renewed.

Marina Bay Sands says it’s cut back on third party transfers and heightened security over their usage.

Documents seen by Bloomberg show the amount of transfers dropped to just six in 2018 from 1011 in 2014.

In a June letter to Singapore’s casino regulator, Marina Bay Sands said it took steps in 2018 to increase its scrutiny of all transfers and beefed up the measures this year.

These steps included ensuring that all transfer letters had fresh “wet ink” signatures and that staff received a verbal confirmation from the patrons before moving any funds.

Third party transfers are subject to enhanced due diligence checks, which will include screening of the patron and third party for junket affiliation and declaration of the relationship between the patrons and the reasons for the patron making the third party payment, the casino wrote.

“MBS remains focused on having the highest level best practices of governance, compliance and internal controls that are continuously improved,” it said.

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