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Macau racket involving modified China UnionPay terminals busted after millions transacted

Barry Huang | Reuters

Beijing's crackdown on capital flight has scored a success after police in Macau disrupted a racket in which illegal China UnionPay terminals were being used to make millions of dollars worth of illegal cash transactions in breach of China's strict currency controls.

In a joint operation targeting more than a dozen shops in and around the city's casinos, investigators from the Judiciary Police and Monetary Authority arrested 23 people who are now facing charges of computer fraud and involvement in organised crime.

Investigators said the racket revolved around the illegal modification of UnionPay hand-held terminals – also known as point of sale units – which allowed them to be used for "gaming purposes", an act outlawed under China's strict banking rules.

The police seized 10 UnionPay hand-held terminals on suspicion they had been illegally modified to register Macau-based sales transactions as having taken place on the mainland, where transaction fees are smaller.

In one shop, detectives discovered what they described as an "underground workshop" with equipment they believed was used to modify the terminals, which were thought to have been smuggled out of the mainland.

The total cash value of the suspected illegal transactions carried out via the modified terminals was still being investigated, the police said.

Last year, Portuguese news agency Lusa quoted data from the Macau police which put the value of transactions in Macau using suspected modified UnionPay hand-held terminals at 2.1 billion patacas in the first half of 2016. The news agency previously reported that in 2015 the cash value of such suspected illegal transactions was 1.22 billion patacas.

More from the South China Morning Post:
Singapore casino at risk of Beijing crackdown over capital flight through potential misuse of UnionPay network
Macau world'ssecond densest ATM hotspot
Beijing targets ATMs in Macau to cut currency flight

The arrests came a week after the Post reported that Beijing's crackdown on capital flight could be about to extend to Singapore amid concerns that large sums of money may have been funneled out of the mainland in violation of China's strict currency controls through casinos in the city state.

The concerns center on a casino "resort entertainment" voucher program which gives UnionPay card holders access to gaming chips – a purchase which a top official at the People's Bank of China said was outlawed.

The city state's gaming watchdog, the Singapore Casino Regulatory Authority, has still not commented on the report.

Marina Bay Sands insisted it was doing nothing wrong, saying the voucher scheme complied with terms and conditions of use for China UnionPay cards.

Ron Reese, senior vice-president of global communications and corporate affairs for the Las Vegas Sands Corporation, said: "Marina Bay Sands operates the resorts entertainment voucher program in accordance with the terms and conditions of China UnionPay cards."

The latest arrests follow a series of raids by Macau authorities over the past two years in the wake of a 2014 call by President Xi Jinping for the city to get its casino house in order and diversify an economy which has become overreliant on gaming.

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