Beijing takes aim at Macau gaming industry to cut currency flight

Move to slash in half the amount China UnionPay bank card holders can withdraw from ATMs in enclave expected to take effect Saturday

PUBLISHED : Friday, 09 December, 2016, 12:03am
UPDATED : Friday, 09 December, 2016, 12:54pm

Beijing is about to turn its guns back on the gaming industry in its battle against the multi-billion-yuan outflow of capital from its economy as Macau prepares to slash in half the amount of cash China UnionPay bank card holders can withdraw from ATM machines in the city.

The move to cut the daily withdrawal limit from 10,000 to 5,000 patacas is expected to take effect from Saturday and follows the discovery that as much as 10 billion patacas in China UnionPay ATM withdrawals were made in one month alone.

It also comes amid so far unanswered claims that the customer voucher scheme run by Marina Bay Sands casino resort in Singapore – which apparently allows China UnionPay card users to buy gaming chips in breach of China’s strict currency controls – has seen billions of yuan flow out of the mainland.

The Monetary Authority of Macau’s ATM withdrawal cut is understood to be a reaction to attempts by illicit money movers to circumvent Beijing’s move at the beginning of this year to cap at 100,000 yuan (HK$112,600) the annual amount that UnionPay card holders could withdraw.

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The Monetary Authority declined to answer questions from the Post.

A Macau finance industry insider told the Post: “What has happened is that individuals are turning up at ATM machines with stacks of cards from individual account holders and are withdrawing 10,000 a time.

“The authorities have decided it is time to act and Beijing is backing the move.’’

Two years ago, Beijing put the squeeze on the multi-billion yuan flow of illicit cash through Macau by imposing a crackdown on the use of UnionPay point of service machines, which were being used to disguise overseas transactions as local mainland ones.

It also cracked down on the practice of pawnshops paying cash for products such as jewellery and watches bought with UnionPay cards to subvert currency controls.

The pressure appears to have had a possible knock-on effect in other casino jurisdictions like Singapore.

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An investigation by the Post has uncovered claims that a voucher scheme operated by Marina Bay Sands casino resort in the Lion City could be an attempt to get around China’s currency controls. The scheme allows certain customers using UnionPay cards to exchange vouchers for casino chips in apparent contravention of the terms and conditions of use of the UnionPay cards.

By press time Thursday night, Marina Bay Sands – which had defended the practice – Singapore’s Casino Regulatory Authority and China UnionPay had not responded to questions from the Post about the scheme.

Macau political commentator Sonny Lo said: “At the end of the day, national security is at stake for Beijing when it comes to the integrity of their currency and its outflow in massive amounts. This is what is behind these increasing moves by Beijing to stem capital outflow.”

At the end of the day, national security is at stake for Beijing when it comes to the integrity of their currency
Sonny Lo, Macau political commentator

The latest moves follow a fall in China’s foreign ­exchange reserves in November despite Beijing’s attempts to close the door on ­capital outflows.

The larger-than-expected decline in the world’s biggest stockpile of foreign exchange exposed the flaws in Beijing’s current ­approach of selling state reserves to support the yuan and was likely to force the authorities to take a stricter line on outbound investment and payments, analysts said.

The reserves shrank by US$69.1 billion last month to US$3.052 trillion, according to data released by the People’s Bank of China. The mainland has lost nearly US$1 trillion worth of reserves since the figure peaked in June 2014.

Documents obtained earlier by the Post show capital outflow controls are already in force involving forex clearance for outbound investment of more than US$5 million, plus stricter reviews in place over very large deals. Both outbound investment and these mega deals are set to limit the speed and size of capital flow.

Additional reporting by Gary Cheung and Wendy Wu