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CHINESE CRACKDOWN ON MACAU MONEY LAUNDERING

Friday May 9,2014 :  CHINESE CRACKDOWN ON MACAU MONEY LAUNDERING
 
Government seeks to control use of bank cards.
 
Spurred on by complaints from microlenders and pawn shops who see as much as 40 percent erosion of their business through luckless gamblers resorting to bank cards rather than selling property to cover land gambling debts, the Chinese government has embarked on a crackdown at UnionPay, the only legal domestic bank-card organisation available to Chinese punters.
 
The government's primary concern is to halt money laundering through Macau casinos, along with a desire to limit capital flight.
 
The South China Morning Post reports that Macau was the prime target for the crackdown owing to "...hundreds of illegal hand-held payment devices used in and around the booming land casinos." It quotes analysts' estimates that the devices may have handled nearly $6.5 billion last year alone.
 
News of the crackdown initially spooked casino investors, although the market has settled down since on calming reports that the drive is not as severe as was first thought.
 
Gamblers gave up a record $3.92 billion in Macau casinos in April, up 11 percent year over year, following a rise of almost 20 percent in Q1. But that revenue was likely under-reported, according to the Post article, which says that mobile UnionPay devices allow users to cloak how much they gamble.
 
The Post puts the district's reported revenue at $45 billion last year, quoting one analyst who estimates that around $90 billion could have gone unreported over the years.
 
The SCMP report notes that Macau police have carried out a handful of raids in and around casinos in recent months and seized devices and cash, as the problem reached dimensions that the central government felt it could no longer ignore.
 
Further evidence of intensified government interest in the gambling enclave came from the investment bank Union Gaming Group, which said that Macau may again tighten visa rules for visitors from mainland China to curb currency outflows.
 
However, BNP Paribas Hong Kong analyst D. Kim sounded a more optimistic note, saying: “The reported clampdown on UnionPay card usage will have no real impact on gaming demand as the clampdown is targeted at illegal use of mobile payment terminals and it has nothing to do with legally-installed UnionPay systems."



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