* Banks urged to restrict UnionPay transactions at some
shops in casinos
* UnionPay sales in Macau in 2013 totalled $22.5 billion,
almost half of gaming revenues
* Guidelines announced in high-level meeting on May 9, to
take effect July 1
(Adds detail on shops in paragraph 3)
By James Pomfret and Farah Master
MACAU, May 16 Macau authorities have urged banks
to restrict the use of a Chinese state-backed bank card which
racked up $22.5 billion in transactions last year, a person with
direct knowledge of the matter told Reuters, in a bid to curb
the increasingly large amounts of money being illegally taken
out of China.
Macau is the world's largest gambling market, and a popular
destination for Chinese gamers who bet up to millions of yuan at
a time. The crackdown follows a Reuters investigative report in
March that highlighted the illegal use of UnionPay cards to
evade China's strict currency-export controls.
The person, who declined to be identified given the
confidentiality of the matter, attended a high-level meeting
organised by the Monetary Authority of Macau, or central bank,
last Friday during which it laid out guidelines to restrict the
use of UnionPay cards at shops selling jewellery and other
luxury items located on casino gaming floors.
Banks were also urged to restrict loans or funding to
retailers identified by UnionPay as engaging in illegal
transactions, the source said.
"We don't know yet whether all the existing stores will be
closed, or whether only the newer ones will be closed ... We
will only know for sure when they send us their formal
guidelines," the source added.
Chinese nationals, who are only allowed to take up to 20,000
yuan, or $3,200, out of China in cash a day, often get around
this limit by pretending to purchase expensive items from such
stores using their UnionPay cards.
Instead of actually receiving the items, the punters are
given hard cash.
The source said the monetary authority didn't specify the
exact scope of the restrictions or say whether the guidelines
were binding or carried any penalties. Any measures would take
effect on July 1, the source added.
UnionPay has already identified about 70 retailers it
suspects of fraudulent transactions in Macau, Hong Kong and
Japan, according to a company list obtained by Reuters. An
updated blacklist of merchants was expected to be published
along with the new Macau rules, the source said.
The Monetary Authority of Macau, in a statement emailed to
Reuters, declined to comment about the guidelines. There was no
immediate comment from Shanghai-based China UnionPay.
Any measures that would reduce the amount of Chinese money
coming into Macau would impact the territory's economic growth
because of its overwhelming dependence on mainland Chinese
gamblers. Macau's gambling revenues grew by almost 20 percent in
2013 to $45 billion. This year, Fitch analysts expect growth of
The one-hour meeting with representatives of banks in Macau
and other UnionPay clients was hosted by Wilson Wong, deputy
director of the banking supervision department at monetary
authority, the source said.
Wong told the meeting the bulk of the 180 billion patacas
($22.5 billion) of UnionPay transactions in Macau last year came
from shops inside or near the casinos, according to the source.
That figure is equivalent to around half of Macau's total
gambling revenues last year of $45 billion.
Wong was not immediately available to comment.
Macau's authorities have come under pressure to crack down
on illicit money flows and accelerate the gambling hub's
transition to a more family-friendly leisure destination since
Chinese President Xi Jinping started implementing a broad
Shanghai-based UnionPay told Reuters last week it had
stepped up controls in the former Portuguese colony, including
targeting cross-border point-of-sale machines (POS) rigged to
banking networks in mainland China that are used by touts on
Macau casino floors to help gamblers access additional cash from
UnionPay cards for gambling.
Such China-linked POS terminals have proliferated in Macau
as a means to escape the scrutiny of authorities, and accounted
for some $6 billion in transactions according to Karen Tang, a
gaming analyst at Deutsche Bank.
Some industry experts, however, doubted the Macau
authorities would be too stringent with their restrictions.
"It (the Macau government) doesn't have real determination
to stop these irregularities," said a senior Macau banker who
declined to be named due to the sensitivity of the issue.
"It's just a superficial attempt to try to show Beijing that
Macau is doing something, but in fact they're not doing anything
Local media reports say Macau police have been sweeping more
casinos for illegal POS machines.
A shop at one out of three casinos visited by Reuters this
week, however, was using them openly and six jewellery and pawn
stores clustered near casinos still offered illegal cash-back
"You can just go there to get money with your card," said a
uniformed security guard, pointing to a jewellery store on the
gambling floor of the Grand Lisboa casino. He declined to be
named as he was not authorised to speak to the media.
"It's their business. They can do what they want ... we
won't stop them."
($1 = HK$7.7519)
(Additional reporting by Clare Baldwin; Editing by Anne Marie
Roantree and Miral Fahmy)