Macau rogue transactions see five-fold increase, but insiders say it could be ten times higher

Police conduct 25 investigations, identify 53 suspects but fail to gather enough evidence

PUBLISHED : Friday, 20 January, 2017, 11:48pm
UPDATED : Saturday, 21 January, 2017, 2:34am

Gaming industry insiders say the number of rogue transactions in Macau could be just the tip of a “very big iceberg’’ after authorities found 5 billion patacas worth transacted over China’s UnionPay banking network.

The gaming hub’s Judiciary Police said transactions using unregistered China UnionPay hand-held terminals amounted to 4.995 billion patacas (US$625.5 million) for the whole of last year. It marked a five-fold increase on the 2015 total for rogue transactions, and comes at a time when Beijing is concerned about capital flight.

According to the gaming website GGRAsia, the amount detected was the result of 25 police investigations of which 20 were handed to the Public Prosecutions Office. Five investigations were not passed to prosecutors as cases due to “lack of evidence”, police told the website.

Gaming shake-up in Macau prompts calls for taxation rethink

A gaming industry insider, however, suggested the actual amount was likely to be far higher.

“That MOP5 billion is almost certainly the tip of a very big iceberg. At an educated guess, I would put the actual figure at 10 times that...closer to MOP50 billion. Almost MOP1 billion a week for 2016,’’ the insider said.

Macau police identified 53 suspects as part of their investigations. Of those, 14 were from Macau; 38 were from mainland China and one from Hong Kong.

Macau racket involving modified China UnionPay terminals busted after millions transacted

The authorities, however, did not say how many illegally-modified hand-held terminals were seized.. The devices – also known as point of sale units – can allegedly be tampered so that the UnionPay network identifies them as being registered and operated in mainland China, where transaction fees are much lower.

Macau casinos’ gross gaming revenue for 2016 was equivalent to US$27.9 billion, making the UnionPay rogue transactions total equal to 2.2 per cent of the gaming hub’s takings.

Mainland visitors to Macau are only allowed to take a daily limit of RMB20,000 (US$2,985) in cash when crossing the border. But they have routinely dodged around this restriction by purchasing items from one of Macau’s pawnshops or jewellery stores using their UnionPay cards and then immediately returning the items in exchange for cash – a process not illegal in Macau.

Meanwhile Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, confirmed it held a meeting earlier this month with Jack Lam Yin Lok, founder of Jimei Group and an investor in Macau junket operations. The regulator said it aimed to gain clarification from Lam on the situation of his business interests in the Philippines.

In December, Philippines’ President Rodrigo Duterte ordered the seizure of all of Lam’s gaming assets for an alleged failure to pay his taxes. Prior to that, Duterte had ordered the arrest of Mr Lam on accusations of bribery and economic sabotage.