Macau could face crackdown as Beijing gets tough on abuse of China UnionPay system

Beijing is set to launch a nationwide crackdown on rampant abuse of the state-backed China UnionPay card payment system which is said to be "seriously impacting the nation's financial security".

An internal memo issued by China UnionPay headquarters yesterday outlines new measures requiring millions of mobile "point of service" (POS) transaction devices across the nation to be properly registered.

It is likely to have a significant effect in Macau as insiders say the countrywide crackdown is linked to widespread abuse of the system uncovered in world's biggest casino hub last year.

The internal memo - seen by the South China Morning Post - sets out a detailed nationwide audit and warns that sanctions will be imposed by the "relevant authorities" if a raft of new controls are not adhered to.

Those authorities are understood to be China's financial regulators and, significantly, the powerful Ministry of Public Security, which has been an important player in identifying problems with China UnionPay in Macau.

The crackdown centres on the use of illegal China UnionPay "point of service" devices - debit-card transaction terminals - used by retailers which have been altered to mask cash transactions to circumvent China's strict currency controls.

The multi-billion-dollar racket sees customers "purchase" goods, only to return them to the retailer and receive cash, minus the retailer's commission.