GGRAsia – Rogue Macau UnionPay transactions US$262 mln in 1H

Rogue Macau UnionPay transactions US$262 mln in 1H

Jul 25, 2016 Newsdesk Latest News, Macau, Top of the deck

The value of detected transactions in Macau using alleged unregistered China UnionPay Co Ltd handheld terminals amounted to MOP2.1 billion (US$262.5 million) in the first half of 2016, Portuguese news agency Lusa reported on Sunday, citing data from the Macau Judiciary Police.

Between January and June the force opened a total of 12 investigations into cases involving alleged unregistered UnionPay handheld terminals. All those cases were passed to the Public Prosecutions Office for further action, according to Lusa.

The police identified 31 suspects as part of the investigations – 22 were from mainland China, Lusa reported. The authorities also seized 22 illegally modified handheld terminals, also known as point of sale (POS) units. Such devices have typically been 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.

Most cases involving alleged illegal transactions through unregistered UnionPay terminals took place inside casinos and surrounding areas, stated Lusa’s report. “[The alleged criminals] approach gamblers inside casinos, offering them access to cash withdrawal services [using UnionPay] at lower transaction fees [than normal for Macau],” the Judiciary Police told Lusa in a written reply.

The reply added: “Once both parties agree on a sum of money to withdraw, the gamblers are taken inside a car parked outside the casino or close to a pawnshop or jewellery shop, where the POS unit is made available to them.”

In 2015, the Macau authorities investigated a total of 30 cases involving networks alleged to have made illegal transactions through unregistered UnionPay terminals. The transactions in question were worth an aggregate of MOP1.22 billion.

UnionPay International Co Ltd, a subsidiary of China UnionPay that focuses on transactions outside mainland China, including Macau and Hong Kong, missed out on MOP5.58 million in fees for the deals allegedly done on unregistered terminals in Macau in the first half of 2016.

Tighter monitoring

A recent survey conducted by AlphaWise – a research unit of Morgan Stanley – involving 1,000 Chinese gamblers, concluded that UnionPay remained a major method used by many mainland visitors for cross-border access to cash while in Macau. “Dependence on UnionPay cards remains high at 60 percent [of those surveyed],” said the survey report, published last month.

A tighter, real-time monitoring system for payments made via UnionPay bank cards in Macau was unveiled in December by the local monetary authority. At the time, it was stated that the new system would be first “implemented on high-risk merchants near casinos, most of which are jewellery and watches merchants.”

Tighter scrutiny of UnionPay transactions in Macau includes the installation in retail outlets of UnionPay card payment terminals that require holders of China-issued cards to submit an identity document for scanning before their purchase can be confirmed.

Mainland visitors to Macau are only allowed to take a daily limit of RMB20,000 (US$2,985) in cash when crossing the border. Mainland residents gambling in Macau have routinely got around this restriction 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. The retailer involved usually charges gamblers a fee under that system.

In September, mainland Chinese media reported that China’s State Administration for Foreign Exchange – also known as SAFE – had announced new annual limits on automated teller machine (ATM) cash withdrawals made outside mainland China using UnionPay-enabled bank cards. According to the reports, with effect from January 1, 2016, each UnionPay-enabled card has a new, annual, cash withdrawal limit of RMB100,000 at overseas ATMs; which for the purposes of the new rules includes ATMs in Macau.