GGRAsia – Macau urges banks to tighten grip on UnionPay transactions

Macau urges banks to tighten grip on UnionPay transactions

Jun 11, 2014 Newsdesk Latest News, Macau, Top of the deck

The Monetary Authority of Macau (AMCM) has urged the city’s banks to strengthen their oversight over China UnionPay transactions, as authorities tighten the grip on illegal cash transfers from mainland China.

Macau authorities and China UnionPay Co are reportedly cracking down on the use of bogus transactions done in Macau to circumvent mainland China’s tight cross-border money controls.

“Recently … the AMCM has required banks to further strengthen relevant risk management and on-going customer due diligence in relation to their card acquiring services,” the Monetary Authority told GGRAsia on Wednesday.

The regulator did not elaborate on what measures were taken nor did it comment on their extent. Media reports say guidelines have been introduced to restrict the use of UnionPay cards at shops selling jewellery and other luxury items inside casinos.

On Tuesday, Bloomberg News quoted Ambrose So Shu Fai, chief executive of Macau casino operator SJM Holdings Ltd, as saying the banking regulator had ordered jewellery shops and pawnshops that operate in casinos to remove their UnionPay card terminals.

“It has come to our knowledge that individual shops in the casinos have received such notification from Macau Monetary Authority,” Mr So told the news agency.

Although no deadline has been confirmed to GGRAsia by the AMCM, sources quoted by media reports have said the financial regulator set July 1 as the cut-off date for those terminals to be removed.

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. The seller gets a commission over the first transaction.

Authorities have also been cracking down on unregistered handheld UnionPay terminals. Macau police arrested more than a dozen people in recent months following an investigation into the use of these card-swiping devices. These devices are registered in mainland China and are illegally smuggled into Macau, allowing payments to be recorded as domestic transactions, therefore being charged lower fees.

Casino operators in the city have said any changes regarding UnionPay won’t have much impact on their business. The reported restrictions however are thought by some analysts to have had an impact on mass-market gambling in recent weeks.