[Fraud] China UnionPay defrauded in Macau money laundering scandal

Source： http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20140510000005&cid=1103 

 

China UnionPay, China's leading issuer of credit cards, has implemented an anti-money laundering campaign in Macau as tens of billions of yuan have been illegally traded at casinos in the special administrative region via the organization's cards and POS terminals, reports Guangzhou's 21st Century Business Herald.

Local police reportedly have plans to reduce the number of days mainland tourists are allowed to stay in Macau from seven to three to five days after the money laundering scandal came to light. The illegal trade was uncovered in March this year when police arrested two suspects at a local hotel.

The suspects bought the China UnionPay's POS terminals through third-party payment systems and then mailed or smuggled the terminals into Macau. They found mainland gamblers who needed cash to continue gambling at casinos and offered them the chance to use their credit cards in exchange for cash or chips. Since the payments were made on a terminal of the Chinese banking organization, they appeared to be legitimate domestic transactions and were able to bypass government controls over currency movements.

Although the gamblers were required to pay a 0.5%-2% service fee and a 0.2% UnionPay fee, the two suspects made over 900 such transactions at casinos and hotels in Macau and made over HK$38 million (US$4.9 million) for themselves over six months. They often changed the POS terminals to avoid detection.

China UnionPay sent staff to conduct training sessions in March and April, which were attended by 17 acquiring banks and five non-financial institutions. The organization pledged to enhance communication and monitoring mechanisms to contain the risks of illicit cross-border payments.

The plan by Macau police to shorten mainland tourists' visits has caused local casino stocks to plunge but Merrill Lynch said it will only centralize the tourists' spending behavior. Even if the region banned travelers from entering with transit visas, the effects are unlikely to be significant since high rollers may still enter Macau with measures such as holding residency of foreign countries or Hong Kong ID cards.

HSBC said the anti-money laundering campaign has not affected Macau's casino industry since it began in March; indeed, the industry reported a 34% increase in revenue in April.