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China – Macau considering new spot checks at border

By - 10 July 2013

The Macau government is reportedly looking at whether players crossing the border should be subject to stricter controls on declaring money entering and leaving Macau.

Financial Intelligence Office director Deborah Ng Man Seong revealed the government was contemplating a new procedure whereby tourists from the mainland or elsewhere would have to declare the money they were carrying across the border.

She said the government was ‘analysing the feasibility of implementing a declaration or notification requirement’ to meet recommendations by the international Financial Action Task Force on Money Laundering.

“No timeframe, declaration threshold or penalties are determined yet at the present stage,” she added.

Currently there are no such stipulations to declare how much money each tourist enters. However mainland China customs stipulates that travellers can bring a maximum of 20,000 yuan (26,060 patacas) when moving across the border and can only withdraw as much as 10,000 yuan a day from ATMs.

Victor Yip, a Hong Kong-based analyst at UOB Kay Hian, said: “Such talk may hurt the sentiment on Macau casino stocks. But it won’t hurt the casino revenue because there are so many different ways a traveller can get cash in Macau.”

Whilst Barclays Bank has warned that greater control would harm mass market gaming saying it would lead to a ‘negative impact’ on mass-market gaming revenue, Davis Fong Ka Chio, a Director at the Institute for the Study of Commercial Gaming at the University of Macau disagreed, saying he doesn’t believe the measures would have any derisory effect on mass market gaming as the average mass market spend was 5,000 patacas.

Speaking at the US-China Economic and Security Review Commission in Washington, Professor Nelson Rose, a Professor at Whittier Law School in California and a Visiting Professor at the University of Macau, said: One of the most common ways for Mainland players to get their cash to Macau is through straight smuggling. One Macau executive told me about a farmer who walked into his casino in dirty, torn clothes and took HK$50,000 in cash out of his sock. After he lost it, he took another HK$50,000 out of the other sock. Mainland Chinese like cash, and they don’t trust banks. They even buy houses with cash.”

Professor Rose added: “Millions arrive carrying shopping bags, and many of those bags have wads of yuans hidden at their bottoms. Guards at most border crossings now just wave you through, if they are even there at all.  Spot checks at Macau’s borders with Zhuhai and at the two ferry terminals and the Macau Airport are extremely rare.”

Probably the most common way to get cash to gamble in a casino in Macau is through a junket operator. Professor Rose explained how VIP gaming promoters get their profits out of China.  “Some invest in other legitimate businesses on the Mainland, which are allowed to wire funds to Hong Kong and elsewhere. But some turn to those millions of shopping bags, or other, more nefarious, means.”

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