China’s Central Bank Calls for Stemming Cross-Border Gambling Flows

The central bank of China made an announcement Thursday regarding talks held with other Chinese government departments concerning measures for combatting cross-border flow of funds for gambling purposes, GGRAsia news outlet reports. The announcement raised fears the discussed reinforced efforts, among which new anti-money laundering (AML) measures, would be directly affecting Macau gambling, concerns even a subsequent release from JP Morgan Securities that the proposal is not related to the Special Administrative Region could not ease.

Fight Gambling by Cutting its Money Supply

During the official talks, Fang Yifei, deputy governor of People’s Bank of China (PBC), called for a higher level of collaboration between the various government departments when investigating cases of cross-border fund transfer for gambling purposes. Mr Yifei, as part of the new AML measures, insisted on firming the approach towards large-sum and suspicious transactions, improvements in customer identification practices and enhanced general monitoring to prevent money laundering attempts.

Confusion was born due to the lack of details regarding the types of gambling activities targeted by the government, as well as the funds destinations when moving across the border, raising strong concerns Chinese officials are considering cutting off the money supply for Macau casinos.

Casinos in the Special Administrative Region of China are still fighting the ramifications of the ongoing coronavirus-induced health crisis, as despite being open for customers for more than two months already, revenues are plunging with more than 90% and the industry is stifling under the grip of the imposed travel restrictions from mainland China and other neighbouring countries.

To alleviate concerns regarding the held talks that involved representatives of the Ministry of Public Security, the General Administration of Customs, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, the Payment and Clearing Association of China, as well as bank card services provider China UnionPay Co Ltd, and the NetsUnion Clearing Corp, JP Morgan Securities issued a memo the day following the talks announcement.

Macau Casinos at the Cross-Hairs?

Analysts from the investment arm of the bank said there is a certain degree of uncertainty involved, as cross-border gambling is a term historically used by Chinese officials regarding illegal gambling. On mainland China any type of gambling or promotion of gambling activities is considered illegal, including gaming in Macau, but with regards to the recent actions from Chinese police that have busted a number of illegal gambling rings, JP Morgan Securities believes the Chinese government is targeting junket operations, particularly those from the Philippines and Cambodia.

“We note the China government has recently broken up a series of illegal online casino rings across different provinces (e.g. Shaanxi in April, Fujian in May, Jiangsu in June, etc.), which leads us to think the meeting was probably more related to those incidents. In short, we wouldn’t necessarily think the meeting focused on Macau and/or ‘legal’ casino operations; the news seems like a non-event to us.”

Official Memo, JP Morgan Securities

Whether this will be the case, or this is another restriction aimed at casino operators in Macau is not clear at this point.