A Reuters report has revealed the use of China UnionPay cards as a method of smuggling money into Macau and potentially overseas. The report detailed the practice of mainland Chinese entering special merchants stores and pawn shops in the gambler’s mecca Macau before swiping their cards under the guise of making purchases. Without actually buying anything, the customer received large sums of cash allowing them to surpass the official limit of 20,000 yuan, or $3,200.
Staff of the Hong Kong jewelry chain Chow Sang Fook located in the Grand Lisboa casino have said that customers were able to buy up to 10 million yuan ($1.5 million) gold bullion and immediately sell it back to the store to receive the amount in cash. A spokesman of the company who stated that customers did not have a limit to how much they could swipe on their cards at the store and the bank’s approval is all they required. This conduct appears to be specific to UnionPay as the card’s main rivals Visa or MasterCard do not allow this practice of cash-backs.
Vendors with mobile union pay card machines were claimed to wander the gaming floors to allow gamblers to withdraw cash from China by an executive of Las Vegas Sands.
These practices have been gathering momentum with assistant professor Tam Chi Keong of the Macau University of Science and Technology estimating that a total of HK$1.57 trillion a year is directed illegally into Macau.
No one is sure why there hasn’t been a major clampdown on this conduct by China’s authorities but there have been suggestions that they do not want to hurt its old friend Macau where 80% of the revenue is sourced from the gambling industry.
Regardless, the China UnionPay card is only on its way up with the company following Visa as the card with the most transactions. This has been part of the Chinese government’s wider efforts to internationalize the Yuan. Unfortunately for them, this plan of financial super-glory also comes with capital flight and the wider oh-so-favorite problem of government corruption scandals. A report in 2008 identified the UnionPay cards as the major facilitator of cross-border transfers of corruption money.
All in all, one just can’t help but feel sorry for those who have gone through all the effort to smuggle money, when the system seems so apparently easy to get through.
By Mandy Liang