US embassy cable - 05PRETORIA423

C O N F I D E N T I A L PRETORIA 000423 
 
SIPDIS 
 
E.O. 12958: DECL: 01/31/2015 
TAGS: PINR, EFIN, SOCI, SF 
SUBJECT: SOUTH AFRICA: MONEY LAUNDERING AND CASINOS 
(C-TN4-01119) 
 
REF: STATE 255493 
 
Classified By: Jeff Hartley, Minister Counselor for Economic Affairs, 
for Reasons 1.4 (b), (c), and (d) 
 
1. (U) Summary.  Although the gambling industry comprises a 
small portion of its GDP, South Africa has a relatively large 
gambling industry in global terms.  South Africa operates an 
advanced system of casino regulation over its 32 casinos. 
The National Gambling Board conducts continual inspections of 
casinos and coordinates with local and international 
authorities on suspicious activity.  South African casinos 
are subject to the National Gambling Act and Financial 
Intelligence Centre Act (FICA) legislation.  Post is not 
aware of any notable criminal activity involving casinos. 
Small prosecutions have occurred in cases of illegal casino 
operation and when criminals have gambled with stolen stained 
notes in exchange for clean money.  End summary. 
 
2. (U) Given the size of its economy, South Africa has a 
relatively large gambling industry.  South Africa ranked 14th 
on the list of countries based on land-based gross gambling 
turnover (i.e., revenue) in 2000.  This gambling rank was 15 
positions higher than its 29th place (2000) based on the size 
of its economy.  On a local level, total gambling-related GDP 
only accounted for approximately 1% of South Africa's GDP in 
2000.  Employment in this sector accounted for less than 1% 
of total employment. 
 
3. (SBU) South Africa operates a sophisticated system of 
casino regulation.  The National Gambling Board is the 
regulator that oversees the 32 casinos in South Africa.  The 
National Gambling Act of 2004 brought uniform regulation 
standards across the country, and superceded the Act of 1996. 
 Casinos operate extensive surveillance systems and National 
Gambling Board inspectors conduct unannounced and undercover 
visits to casinos.  Most South African customers use Most 
Valued Guest (MVG) cards while gambling.  These cards keep 
track of gambling patterns while offering customers benefits. 
 Casinos closely monitor those who do not take advantage of 
the MVG card.  Regardless of MVG card use, customers must 
provide personal identification when playing with more than 
R25,000 (approximately $4,000) or betting at least R5,000 per 
round (approximately $800). 
 
4. (SBU) The Chief Inspector of the National Gambling Board, 
Mr. Themba Marasha, has completed training in Nevada and 
coordinates with local and international authorities on 
suspicious activity.  Mr. Marasha maintains contacts with 
gaming officials in Nevada and Mississippi and sits on South 
Africa's Money Laundering Advisory Council, which is 
comprised of various government agencies working to combat 
money laundering.  He also heads the Africa Forum, which 
seeks to improve training and regulation across Africa. 
 
5. (U) Under the Financial Intelligence Centre Act of 2001, 
casino employees and owners are required to submit suspicious 
transaction reports (STRs) directly to the Financial 
Intelligence Centre (FIC) when suspicious activity is noted. 
The 156 STRs from casinos comprised only 2% of the FIC's 
total recorded 7,480 STRs for the year ended March 2004. 
Post is not aware of any notable STRs involving casinos. 
 
6. (SBU) Money laundering in South African casinos primarily 
occurs in the form of customers cleaning stained money.  When 
bills are stolen in cash canisters, they are often stained 
with dye if the canisters are not opened properly.  Casino 
customers try to gamble with the stained bills in unmanned 
machines or tables and receive clean bills in exchange. 
According to Mr. Marasha, these cases have resulted in a few 
"small time" prosecutions. 
 
7. (U) South Africa also conducts raids of illegal casinos. 
During fiscal year 2004, 771 casino raids occurred.  The 
raids confiscated over 3,500 gambling machines and 9 gambling 
tables.  Case convictions involving illegal gambling totaled 
45, with nearly all of them occurring in the Limpopo 
province.  These illegal casino operations did not appear to 
have any impact on South Africa,s financial and judicial 
systems and post is not familiar with any notable ongoing 
investigations or prosecutions involving casinos. 
 
8. (C) Post is not aware of any confirmed links between 
organized crime, human trafficking, or narcotics trafficking 
and South African casinos.  However, Mr. Marasha did mention 
a few problems with Chinese card counting syndicates and did 
not rule out the possibility of drug traffickers' involvement 
with casinos. 
FRAZER