GGRAsia – Macau identifies US$22.5 mln in bogus UnionPay deals

Macau identifies US$22.5 mln in bogus UnionPay deals

Jun 16, 2014 Newsdesk Latest News, Macau, Top of the deck

The value of transactions using unregistered China UnionPay terminals in Macau amounted to MOP180 million (US$22.5 million) between January and mid-May, Portuguese news agency Lusa reports, citing Macau police sources.

Lusa quotes the police as saying they have identified 41 suspects of making illegal transactions, all from mainland China. They have probed 19 cases since the beginning of the year.

According to Macau’s Judiciary Police, traders legitimately using the China UnionPay Co Ltd system for transactions in Macau must pay the parties involved a maximum fee of 1.4 percent of the amount of the transaction. UnionPay International Co Ltd, a subsidiary focusing on transactions outside the borders of the People’s Republic of China, including the Special Administrative Regions of Macau and Hong Kong, receives 0.2 percent of that fee.

UnionPay International missed out on MOP360,000 in transaction fees for deals allegedly done on unregistered terminals in Macau between January and mid-May, the police told Lusa.

UnionPay sales in Macau totalled US$22.5 billion last year, according to media reports.

It’s been reported, but not confirmed by official sources, that the Macau authorities and China UnionPay are cracking down on a longstanding system in Macau where people pay for jewellery and watches via UnionPay, return the goods and then are given cash for use in gambling, thus circumventing mainland China’s tight cross-border money controls. The use of unregistered terminals in this process is thought to be only the most egregious example of the practice.

The Monetary Authority of Macau has urged the city’s banks to strengthen their oversight of UnionPay transactions. The financial regulator also ordered jewellery shops and pawnshops that operate in casinos to remove their UnionPay card terminals. Media reports have mentioned a July 1 deadline, although the cut-off date has not been confirmed.

Mainland visitors are only allowed to take a daily limit of RMB20,000 (US$3,211) out of mainland China in cash. Gamblers however routinely get around this by purchasing items from one of Macau’s pawnshops or jewellery stores using their UnionPay cards, immediately returning it in exchange for cash – a transaction that is not illegal.

Authorities are now more focused on clamping down unregistered handheld UnionPay terminals. These devices are registered in mainland China and are illegally smuggled into Macau, allowing payments to be recorded as domestic transactions within the PRC, therefore being charged lower fees.