• About Us
  • The Team
  • Advertise with Us

The latest news on the gaming industry in Asia

() () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () ()
  • Home
  • Macau
  • Philippines
  • Singapore
  • Japan
  • Rest of Asia
  • World
  • Industry Talk
  • Trends & Tech
  • iGaming
  • follow
    • Facebook
    • Twitter
    • RSS Feed
    • LinkedIn

Beijing new grey money curbs with unclear impact on Macau

Feb 15, 2019 Newsdesk Latest News, Macau, Top of the deck  


Beijing new grey money curbs with unclear impact on Macau

It is still too early to assess the effect on Macau’s casino industry of a new round of rules on foreign currency transactions announced by the mainland China government late last month, said brokerage Sanford C. Bernstein Ltd in a note issued on Friday.

It added that, for now, the new rules seemed not to have had a negative impact on Macau’s gaming market, particularly on the city’s junket operators.

“The devil is in the details and enforcement,” analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu wrote. “It’s unclear as of yet what (if anything) the government will target.”

The Sanford Bernstein team added: “The junket conversations we have had so far are that there has been some ‘chatter’ around these new pronouncements, but this seems more like talk and nothing more at this stage. From our sources, there has been no meaningful disruption in money flows in the channels – i.e. ‘business as usual’.”

The Chinese central authorities issued on January 31 a judicial interpretation of laws regulating some types of foreign currency transactions. Such pronouncement took effect on February 1.

“The rules, issued by the Supreme People’s Court and the Supreme People’s Procuratorate (the prosecutor general), highlight a slew of foreign exchange movement transactions, most of which are already illegal in China,” the Sanford Bernstein analysts noted.

They added: “A strict reading of the rules implies almost all avenues of money movement outside of banks is restricted. But the reality is that this was largely the case already. For example, it has always been technically illegal to have pools of capital that match sellers and buyers of renminbi – the backbone of underground banks.”

According to investment analysts covering the casino industry, many Macau junkets use underground banking networks to transfer money between Macau and mainland China. As such, any fresh crackdown on underground banking has the potential to hurt junket liquidity.

Fitch Ratings Inc said in a report earlier this week that it expected China’s shadow financing – which includes underground banks – to decline for a second year consecutive year in 2019. The ratings agency said such decline would however take place more gradually than in 2018, as the Chinese authorities “balance reining in excessive leverage and supporting economic growth”.

“The regulatory crackdown on shadow banking should, if maintained, support the long-term stability of the financial system and reduce risks for asset managers, but is likely to continue to create funding challenges across the economy in the near term, particularly for private-sector enterprises,” said Fitch Ratings.

 Smaller junkets more exposed

The Sanford Bernstein team stated in its Friday note that the new rules gave “law enforcement more tools to work with in targeting activity that was already largely operating outside the bounds of what is allowed”.

The analysts added: “In the end, enforcement will be the key to what happens. It is too early to say at this stage what the impact on Macau may be. If the rules are all strictly enforced and the scope of government action against all forms of money movement is deep and broad, the impact would be severe”.

The brokerage mentioned in its note that “smaller junkets and agents” were those more likely to be impacted by the new rules. “The view from the large junkets is they are broad enough with numerous channels where creative mechanisms are always in play.”

The brokerage also highlighted that a “severe clampdown” on currency transactions between mainland China and Macau could “be a perverse incentive to shift to more under-the-table betting which would negatively impact VIP gross gaming revenue” in Macau.

“Another impact could be further consolidation among the junket entities to create larger more diversified capital bases,” the Sanford Bernstein added.

The brokerage noted that enforcement against illegal money transactions between mainland China and Macau had been on-going for years already. “In what is a porous capital control environment, there are always new methods devised to get around the rules,” its analysts noted.

According to Macau police reports, illegally modified handheld UnionPay terminals, also known as point of sale (POS) units, are often used to evade the normal currency export rules from mainland China. The devices are typically tampered with in such a way that the UnionPay network identifies them as being registered and operated in mainland China, where transaction fees charged by the China UnionPay system are much lower than in Macau.

A number of investment analysts have commented that purchase – and instant return in exchange for a cash refund – of high-value goods at jewellers and pawnshops in the city, is another route for mainland Chinese gamblers to skirt strict controls on export from the mainland of Chinese currency.

Macau authorities regularly conduct operations against the use of unauthorised UnionPay point-of-sale machines and unauthorised foreign currency exchange touts. Last month, Macau’s Judiciary Police told local media that the force had helped disrupt a “large-scale” criminal operation allegedly involving point-of-sale machines that processed HKD1.2 billion (US$153 million) in transactions during 2018 alone.

The Monetary Authority of Macao has been introducing tighter, real-time monitoring systems for payments and cash withdrawals made using UnionPay bank cards in Macau. That includes the use of automated teller machines (ATMs) with the ability to perform facial recognition scans.

Since January 2018 mainland Chinese have been restricted to an annual CNY100,000 (US$14,757) limit per person for cash withdrawals when using overseas ATMs. In the past, China’s regulatory definition of “overseas” transactions has included ones performed in Macau.

In December 2016, the Monetary Authority of Macao already had set a limit of MOP5,000 (US$626) or HKD5,000 per transaction for withdrawals in the city’s ATMs using bank cards issued by mainland China banks.


  • tweet
Related articles
  • Chau ruling marks end of old junket system: observers
    Chau ruling marks end of old junket...

    Jan 18, 2023  

  • Macau 2023 junket tally down 22pct y-o-y to 36: govt
    Macau 2023 junket tally down 22pct...

    Jan 04, 2023  

More news
  • Macau CNY mass GGR maybe 60pct plus of CNY 2019: JPM
    Macau CNY mass GGR maybe 60pct plus of...

    Jan 31, 2023  

  • Pagcor 2022 income up 66pct y-o-y, tops US$1bln
    Pagcor 2022 income up 66pct y-o-y, tops...

    Jan 31, 2023  


Latest News

Macau CNY mass GGR maybe 60pct plus of CNY 2019: JPM

Macau CNY mass GGR maybe 60pct plus of CNY 2019: JPM

Jan 31, 2023  

Macau mass-market casino gross gaming revenue (GGR) for the recent Chinese New Year (CNY) holidays could have recovered to at least 60 percent of that for the 2019 break, when the festivities were in...
Read More
Pagcor 2022 income up 66pct y-o-y, tops US$1bln

Pagcor 2022 income up 66pct y-o-y, tops US$1bln

Jan 31, 2023  

Junket boss Levo Chan heard okaying illicit bets: court

Junket boss Levo Chan heard okaying illicit bets: court

Jan 30, 2023  

Sign up to our FREE Newsletter

UB8V5.qr.16(Click here for more)

Pick of the Day


US$1.08 billion

Total income for 2022 reported by the Philippine Amusement and Gaming Corp



Most Popular

  • Available Macau casino tables busy at tail of CNY holsAvailable Macau casino tables busy at tail of CNY hols January 27, 2023
  • Almost half million visitors to Macau for 7 days of CNY holsAlmost half million visitors to Macau for 7 days of CNY hols January 30, 2023
  • Macau visitor momentum kept for post CNY weekendMacau visitor momentum kept for post CNY weekend January 30, 2023
  • Junket boss Levo Chan heard okaying illicit bets: courtJunket boss Levo Chan heard okaying illicit bets: court January 30, 2023
Copyright 2014-2023 TEAM Publishing and Consultancy Ltd / All rights reserved
  • Code of Ethics
  • Privacy Policy
  • Useful Links
  • Contact Us