Criminalisation of unlicensed money exchange in Macau is a complex topic and would need careful handling to respect the Chinese authorities’ wish to control cross-border currency flow, while also recognising legitimate interests of Macau’s open, market economy, say some observers in commentary to GGRAsia.
A 2019 work report by the city’s Public Prosecutions Office suggested there needed to be “a balance between the free exchange of currencies” in Macau, and “combatting gains from the illicit money exchange trade”.
Earlier this month Wong Sio Chak, Macau’s Secretary for Security, mentioned the city’s authorities were considering the actual criminalisation of unlicensed money changing, due to concerns about exchange touts lurking in or near casinos. It was a reiteration of the local security forces’ concerns that such dealings were often associated with crimes including scams, robberies, assaults, and even murders.
Carlos Coelho, a lawyer and partner at Macau law firm MdME, told GGRAsia the criminalisation of illicit exchange of currency specifically for the purposes of gambling is “doable” within the framework of a new law on illicit gambling, mentioned in the city government’s 2023 policy address. No draft of such a proposed law has yet been published.
Another commentator, Ben Lee, managing partner at IGamiX Management and Consulting Ltd, told GGRAsia: “Most of these so-called illegal money changers are, in essence… touts,” fulfilling a role associated in the past with manipulation of cross-border money movement via the China UnionPay Co Ltd bank card system.
The illicit money-changers “bring in their mobile UnionPay POS [point-of-sale] terminals over from the mainland which, paired with a mobile phone, allow the transactions to be conducted as though they were in the mainland,” stated Mr Lee.
The gaming consultant added: “Previously, they used to whisper ‘swipe card?’ at anybody walking past them in the casinos. These days, they whisper ‘Hong Kong dollar?’ instead, believing this affords them some latitude from criminality.”
Current legal status
The trade has flourished amid the long-standing issue of how to get money for gambling from the Chinese mainland to Macau, and how to ensure it is in a format that can be used at the city’s tables and electronic games. Bets at Macau casinos are mainly denominated in Hong Kong dollars, but many of the casinos’ customers are from mainland China, which imposes controls on the amount of China’s currency, the yuan or renminbi (RMB), that can be brought across the border, per trip.
Unlicensed exchange of money is presently punishable under the city’s Financial System Act as a contravention, which can result in a fine and a publication of the sanction in local newspapers, explained Mr Coelho.
The Macau government has not so far made any public statement on the mechanics of criminalising unauthorised money-exchange activity. Macau’s top security official Secretary Wong has, however, asked for further support and enhanced intelligence exchange with mainland security forces to tackle the trade.
Industry consultant Mr Lee told GGRAsia: “Talking to various stakeholders, we [estimate] that these illegal [currency exchange] transactions account for somewhere between 50 percent to 60 percent” of annual gross gaming revenue (GGR). This was based on “the sheer number of touts in the casinos, and chats with casino hosts,” he added.
The consultant further noted that in his view, “any major clampdown on these touts would have a significant impact on our GGR, as it would dry up the accessibility of funds from the mainland, and drive up the costs of such transactions where they are still available”.
U Io Hung, head of a trade body called the Macau Gaming Promoter Professionals Association, representing junkets, the traditional mediators of high-stakes gambling in Macau, told GGRAsia: “The scope of the illicit money swaps [conversions] that the government wants to criminalise could be huge. These are activities not only restricted to touts that are lurking around on the gaming floors – near the restrooms or smoking lounges – they are also a trade that is carried out by some pawnshops” near to casinos.
Another Macau-based lawyer, Sérgio de Almeida Correia, queried the government’s cause-and-effect analysis, i.e., the idea that unauthorised money changing itself, led to crime.
“What the Secretary [for Security] says to justify criminalisation is not correct. It’s not the exchange of money that causes ‘scams, illegal detainment of individuals, assaults and even murders’. What causes this is the gambling activity itself, which takes place outside the [money-changing] system,” Mr Correia suggested to GGRAsia.
“What needs to be controlled is this kind of approach in casinos … to keep these people away from the casinos,” he added.
Financial regulation updates
The amended Financial System Act of Macau – due to come into force from November 1 – does not itself include any provision for criminalisation, noted lawyer Mr Coelho.
It “may be an issue to arise within the expected review of the illegal gambling law – Law No. 8/96/M – as foreseen in the 2023 Policy Address,” the lawyer stated.
He added: “Secretary Wong Sio Chak’s concerns on illicit money exchange are legitimate concerns and, based on the statistics presented, this indeed is a matter to be addressed.”
“Further, addressing such concerns is in line with the overall objectives of the revised Macau Gaming Law… which stipulate that gaming operations must be aligned with Macau policies against cross-border illegal flow of capital,” said Mr Coelho. He observed there were alternatives.
“The regulators with jurisdiction on the matter – AMCM [the Monetary Authority of Macau] and DICJ [the Gaming Inspection and Coordination Bureau] – should be on top of the matter and strengthen the supervisory measures in loco. This should be followed by the enforcement of penalties to perpetrators in a more expedite manner,” Mr Coelho said.
The lawyer also suggested: “A potential solution to mitigate the problem would be allowing the use of virtual currencies within casinos, particularly digital RMB. This would allow the authorities to monitor financial transactions – i.e., monitor how much money is brought to Macau – with far greater accuracy. The usage of digital RMB would take the intermediaries responsible for currency exchange activities out of the picture, clearly simplifying the process for currency exchange.”
Currently, the only entities that are authorised to operate foreign exchange businesses in casinos are the gaming concessionaires, according to information published by the Monetary Authority of Macau.
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