Macau authorities continue to crack down on the unauthorized use of China UnionPay bank cards to facilitate bogus cash transactions.
On Friday, Macau Judiciary Police (JP) announced the arrests of 23 individuals following investigations of 13 retail shops. In eight of these shops, police seized UnionPay terminals that had been modified to process transactions as if they were occurring on the Chinese mainland.
Mark Sou Sio Keong, the JP’s head of IT crimes, said police had found a local workshop in which the UnionPay terminals were being modified, after which they were sold to other local shops. Sou said police had also seized HKD 7.5m ($967k) in cash during their investigation.
A police spokesman told GGRAsia that the terminals had been modified for “gaming purposes.” The shops in question were registered as jewelry or electronic equipment sales outlets but the spokesman said they were suspected of conducting “pawnshop-like” business.
Macau’s pawnshops have long been a popular method of circumventing limits on how much cash Chinese gamblers are allowed to take off the mainland. The shops sell luxury goods like watches and jewelry to these gamblers, who then immediately return the item for cash, minus a commission.
Ten of the 23 arrested individuals reportedly worked as “tip hustlers” in Macau casinos, directing gamblers in need of cash to the shops to engage in these type of dodgy transactions. Police said the arrests represented the first “large-scale operation of tampering with POS terminals” and the suspicion is that many more modified terminals are in use at other shops.
The terminals had also been modified to avoid the 1.5% handling fee that UnionPay imposes when its point-of-sale terminals are used in connection with local banks. Mainland-based terminals charge a maximum fee of RMB 26 (US $3.75) regardless of the size of the transaction. The shops used this fee discrepancy to collect a percentage of the illegal transaction from customers.
Beijing has been trying to beef up enforcement of its capital controls, including new restrictions on the amount of money UnionPay card users can withdraw from Macau ATMs in a single transaction. The total value of illegal UnionPay transactions in Macau in 2015 was $153m but this figure was expected to top $262m in 2016.
For the record, the International Monetary Fund has identified Macau as having the second-highest concentration of ATMs in the world. In 2005, Macau had 56 ATMs per 100k adults, but this figure rose to 254 ATMs in 2015, second only to South Korea’s 278. Macau’s figure is also significantly higher than the regional average of 52 in East Asia and the Pacific.