Mainland crackdown on illegal use of payment cards in Macau casinos

Macau is facing a major capital-flight crackdown amid Beijing concerns that tens of billions of yuan in illicit funds are being funnelled out of the mainland and into casinos in contravention of national currency controls.

China's state-backed bank payment card UnionPay last night announced a raft of measures in what it described as a "committed" drive to "combat overseas money laundering, capital flight and other illegal bank card use" in the former Portuguese enclave.

Gaming insiders and security sources in Macau told the South China Morning Post that the anti-corruption drive launched by President Xi Jinping had taken the problem of payment card transactions to worrying levels, much of it driven by hundreds of illegal hand-held payment devices used in and around the booming casinos.

Analysts say the amount involved could have been more than 40 billion yuan (HK$50.3 billion) last year.

Mobile UnionPay payment devices from the mainland have illegally entered Macau at a rapid rate and are being used for unauthorised dealings that appear as domestic transactions, thereby circumventing currency controls. The mobile swipe devices are also used to evade tax on the mainland, which is why they require authorisation 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, said a well-placed gaming analyst.

"The growth in payment cards is huge, because of China's corruption crackdown. Mainland gamblers in Macau don't want to reveal how much they gamble, so they use cards," the analyst said. The phenomenon meant under-reporting of gaming revenue, he added.