Macau’s Secretary for the Economy and Finance Francis Tam has denied that the government has urged banks to restrict the use of China UnionPay cards to obtain cash from pawnbrokers, jewelry stores and other outlets.
But he said the government may take action if needed to close loopholes in the mainland’s currency controls, which are being flouted on a huge scale, according to news reports, by Chinese gamblers eager to get more cash out of the country and into the city’s casinos than legal limits allow.
China prohibits its citizens from exporting more than the yuan equivalent of US$3,200 per trip and restricts them to an additional $1,600 per trip from cash machines outside China. The total is capped at $50,000 a year. However, it is reported that Macau has been flooded in recent years with unregistered hand-held UnionPay swipe machines from the mainland, allowing gamblers to withdraw cash in transactions that appear on the surface to have been conducted in China. The devices are also used to evade tax on the mainland, which is why they require authorization for use there.
Macau police have carried out a handful of raids in and around casinos in recent months and seized devices and cash. But the problem has reached dimensions that the central government could no longer ignore, say observers, some of whom estimate the illegal trade may have involved as much as 40 billion yuan ($6.28 billion) last year.
UnionPay, which is owned by the Chinese government, says it plans to put an end to the illicit transactions, and the South China Morning Post reported that the Macau government had given the casinos until July 1 to remove illegal card-swipe devices from their properties.
The crackdown has investors worried that Macau’s world-leading gaming revenues could be impacted, and combined with the government’s recent announcement that smoking will be banned from public gaming areas come October, has sent jitters through the market, although most brokerage houses say they expect little or no effect on revenues from either measure.
Casino share prices have dropped 25 percent so far this year, evaporating the 27 percent gain achieved in the second half of 2013.