Hong Kong police launch investigations into suspicious China UnionPay withdrawals amid capital flight concerns

Development follows the introduction of facial recognition technology at Macau ATMs and a surge in Hong Kong China UnionPay ATM withdrawals

PUBLISHED : Tuesday, 22 August, 2017, 10:01am
UPDATED : Tuesday, 22 August, 2017, 10:01am

Hong Kong police have launched “a significant number” investigations into the suspicious use of China UnionPay bank cards to withdraw cash from ATMs in the city amid growing concern over illicit capital flight from the mainland, according to sources with knowledge of the situation.

The development comes as SAR monetary chiefs continue to neither deny nor confirm that the city’s network of ATMs is experiencing a “staggering” surge in withdrawals by people using China UnionPay bank cards in the weeks following the introduction of facial recognition technology in cash dispensing machines in the neighbouring casino hub of Macau.

Sources have told the South China Morning Post that a number of cases of suspicious ATM withdrawals are under investigation by the police, including one on Hong Kong Island last month in which a mainland person was arrested after being caught trying to use “20 to 25” China UnionPay bank cards, all of which had different account holders.

“The person was arrested on suspicion of using stolen bank cards but was later released after the named card holders told detectives that they had given that person the authority to use the cards,” the source said.

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“This was just one case, and there have been a significant – and rising – number like it ever since Macau introduced ‘know-your-customer’ facial recognition technology earlier this year,” the source said.

On Monday night, in response to a set of detailed questions, a spokeswoman for the Hong Kong Monetary Authority said: “We don’t have comments on this.”

In response to the same questions, a spokesman for the Hong Kong Police said: “ Police maintain close liaison with the Hong Kong Monetary Authority and the financial industry to monitor and respond to any changes in financial crime trends.”

The rise in local withdrawals since the facial recognition technology was introduced in Macau follows a move by the Hong Kong Monetary Authority to instruct local banks to submit data on cash withdrawals by UnionPay cards throughout the city’s ATM network as the regulator cracks down on unauthorised capital outflow from the mainland.

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Media reports – not denied by the authority – said the instruction meant commercial banks were required to submit data and documentation regarding the volume and timing of withdrawals by UnionPay cards for the first six months of this year.

The Monetary Authority insists it “has no plans’’ to install facial recognition technology in the city’s ATMs.

Mainland authorities have been strengthening regulations since last year when a decline in the value of the renminbi led to widespread capital outflows.

Mainland people are allowed to withdraw up to 100,000 yuan (HK$117,000) in renminbi overseas and remit up to US$50,000 worth of foreign currency offshore annually, according to the country’s 2016 foreign exchange regulations.