China Seeks to Stem $146bn Annual Outflow to Foreign Gambling Operators

China continues to clamp down in a bid to stem the outflow of $146 billion annually to foreign gambling operators.

Ministry of Public Security Rolls Sleeves Up to Clamp Down on Gambling

A new report by the Ministry of Public Security claims that Chinese gamblers remit $146 billion a year to cross-border operators. Liao Jinrong, an official at the ministry, argued that this posed a threat to national security during a keynote on Thursday at the Ninth China Payment and Settlement Forum in Beijing.

Liao outlined the key destinations where capital was flowing to, including Myanmar, the Philippines, and other Asia-Pacific jurisdictions. Chinese authorities have been aggressive in clamping down on illegal gambling at home but also abroad in places like the Philippines and Cambodia.

The country has targeted payment processors who were willing to conduct payments for illegal gambling operations and slapped them with debilitating fines, hoping to send a clear sign to others not to indulge in similar activities.

In his speech, Liao outlined the difficulties of fighting illegal gambling as well as the new challenges brought on with the fast adoption of alternative payment methods, such as cryptocurrencies.

Facing New Challenges in Cross-Border Gambling

Earlier this month, China busted an online gambling operation that was conducting payments with Tether (USDT) and arrested some 76 suspects. Once again key in stemming the use of cryptocurrency gambling transfers lies on the shoulder of individual financial institutions, which Liao urged to act against such operations.

In the meantime, China has also developed its own set of tools to help it clamp down on illegal gambling, starting with a dedicated online platform where citizens can post tips on one another.

The People’s Bank of China has also been working on solutions to curb cross-border gambling operations, including new anti-money laundering (AML) measures, and more. According to Liao, though, the main issue was the inadequate supervision exercised by payment service providers.

Third-party institutions, e-commerce platforms, and merchants were at the root of abetting such transactions and were the leading cause of why there was such a great funds outflow from China, Liao argued.

However, the government has taken a few steps of its own, he assured. China has already made the cost of opening an account at non-financial institutions costlier and authorities now have more efficient ways to identify unusual transactions.

In addition, account holders will now have to state their legal names instead of opting for nicknames. So far, these measures have been efficient in uprooting a fair deal of the money going abroad.

The announcement follows that of the State Administration of Foreign Exchange which vowed to work on more advanced solutions and curb underground banks and cross-border gambling.