Finance & Economics

Mainland China Rolls Out New Crackdown on Macau’s Illegal Money Exchanges

Mainland Chinese officials have called for measures to curb the illegal money exchange business at the casino hub in Macau.

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The mentioned measures are part of efforts to continue and expand the practice of countering illegal gambling and clandestine money laundering.

The media on Monday, June 3, released information according to which last week the Chinese Ministry of Public Security in Beijing held a special planning meeting at the national level. In this case, the pooling of resources to combat illegal activities in the financial environment was discussed.

The authorities of the Asian country note that illegal exchange offices and unauthorized currency exchange are currently on a trajectory of rapid spread. Also in this context, officials underlined that the relevant activity is often associated with other sectors of the criminal world, including fraud and smuggling. According to the authorities, the mentioned activity is a factor affecting social stability. Also in this context, officials mentioned the increase in violence, which impacts the volume of illegal financial operations to some extent. It is worth noting that in this case, the state of affairs in Macau is implied. Chinese officials are also calling for closer cooperation with local police.

Beijing, as part of a long-running campaign, is taking action to curb illegal gambling, money laundering, and an underground banking network in Macau. It is worth noting that this region is the only one in China where casinos are officially allowed to operate. At the same time, the corresponding activities are very often carried out outside the legal framework established by Beijing.

Last month, the Macau gambling revenue indicator reached its highest level since the outbreak of the coronavirus epidemic in February 2020. Data from the local Bureau of Gaming Inspection and Coordination indicate that the mentioned figure showed an annual growth of 29.7% in May. This result is partly because new travel permits have been issued for tourists from mainland China to Macau to cover fuel spending.

Over the past year, an increase in crimes related to illegal money exchange has been recorded in the mentioned region of the Asian country. According to information released by the Macau Office of the Secretary for Security, 8,124 people were intercepted in the first half of 2023 due to involvement in the relevant practice. This indicator is almost three times higher than the figure for the same period in 2022 when travel restrictions were still in effect.

Peng Peng, executive chairman of the Guangdong Society of Reform, says that the very fact of discussing the mentioned problem at the national level is evidence that the central government perceives it as a risk to China’s overall financial security. Also, these discussions should be considered in the context of the concept of combating corruption, which is adhered to by the head of the People’s Republic of China Xi Jinping.

Peng Peng says that the government of the Asian country reckons it necessary to hinder the illegal money exchange industry. The expert says that this business, located outside the legal field, may have been formed based on the gambling area, but over time it expanded to serve as an underground banking sector, also becoming a widespread channel of corruption and illegal outflow of money. Beijing is striving to counteract this illegal space. The goals of these efforts are to protect the financial security of the Asian country, solve the problem of corruption, and prevent the illegal outflow of money. The Chinese government is demonstrating a strong commitment to fighting the illegal money exchange industry.

Beijing sees the issue of financial risk management as one of the main factors in ensuring the overall future development of the country. It is worth noting that this point of view is justified since the outflow of money is an obvious reason for the deterioration of the economic situation. The management of the mentioned risks, as outlined by the Chinese authorities, implies a mechanism that includes countering illegal financial activities and declining capital outflows.

In October, the Asian country hosted the central conference on financial work, which is held twice a decade. During this event, officials of the Asian country noted that the preventing and resolving of financial risks is what they described as an eternal theme. Also at the mentioned conference, the importance of managing specified risks was underlined.

In the past, the authorities of Macau and mainland China were well aware of ways to evade strict rules on cross-border money transfer regulation. In this case, one of the options for activity was to use UnionPay cards to obtain cash through fake purchases of goods.

Macau regulators have tightened control over junket operations. High-profile arrests of those involved in unauthorized side betting operations were also carried out. These actions have reduced the financial volume of the illegal business on a certain scale, the profitability of which still continues to be very high. It is worth noting that the mentioned profitability is in principle unacceptable from the point of view of the norms of Chinese legislation.

As we have reported earlier, China’s Capital Outflow Demonstrates Growth.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.