MACAU BUSINESS
exchange by individuals or entities is deemed a significant breach of administrative regulations, potentially resulting in fines ranging from MOP500,000 (US$62,216) to MOP5 million. However, when non-residents are caught engaging in this violation, they typically face deportation and a ban on re-entering Macau. Law discussion
The issue was previously deliberated in the draft “Law to Combat Gambling Crimes,” currently under review by a Legislative Assembly subcommittee. Despite this, Macau authorities have determined that the draft bill will not specifically address illegal currency exchange, as it falls within the purview of the Financial System Act.
The secretariat noted that these “money exchange gangs” became “more organised” and “more active” in the city during the post-Covid era.
Simultaneously, Macau authorities reported intercepting 11,870 individuals participating in illegal currency swaps in 2023, a significant rise of 238.7 percent from 8,365 individuals in 2022, and a 41.3 percent increase from the pre-Covid count in 2019.
A similar sentiment was echoed by mainland authorities. During the press conference in July, Chen Shiqu, the deputy director of the criminal investigation bureau at the Ministry of Public Security, highlighted that “money exchange gangs” had been a persistent issue. These groups illicitly provide substantial amounts of Hong Kong dollars in cash to mainland Chinese gamblers, along with offering high-interest rate loans.
“As these gangs rapidly expand in size, they have triggered a surge in various other crimes such as theft, fraud, robbery, kidnapping, and even murder. These activities destabilise both Macau and the mainland,” the official emphasised. The ministry also estimated that the masterminds behind this illegal trade profit over RMB1.5 billion annually.
THE ROLE OF JUNKETS Industry insiders and analysts attribute the growth of the illicit money exchange trade in the post-Covid era to the resurgence in gaming demand and the decline of local junkets. A gaming industry source, who declines to be identified, stated, “In the past, gamblers could rely on junkets for credit to play at gaming tables and settle debts later in the mainland. However, with the collapse of the junket sector, these gamblers are seeking alternative sources
32 SEPTEMBER 2024 These ‘money
exchange gangs’ have been ingrained in Macau's casinos for years... and their operations extend beyond mere currency exchange
– Junket veteran, U Io Hung
of funding like this currency exchange service. These gangs have somewhat assumed the role that junkets used to play.”
The number of local junkets has dwindled in recent years due to intensified supervision by authorities and high-profile detentions of junkets involved in illegal gaming activities. Official data shows that the tally of junkets has halved year-on-year to 18 in early 2024, down from 235 during the heyday in 2013. “Some former mainland junket agents have had to explore other ways to make a living,” the gaming industry insider adds. “The risks for mainland Chinese individuals involved in this trade are relatively low — only facing deportation. Consequently, it is easy for the masterminds of these gangs to recruit individuals working in Macau.”
Within the legal framework of Macau, illicit currency exchange is not considered a criminal offence but rather an administrative violation. According to the Financial System Act, unauthorised participation in currency
In light of recent developments in these activities, legislator Leong Sun Iok advocates for a reconsideration of the authorities’ stance. “The existing regulations are too lenient,” the lawmaker observes. “The government should explore the inclusion of provisions in the bill that specifically target such currency exchanges... safeguarding the healthy development of the Macau gaming industry,” he suggests, proposing that authorities examine precedents related to crimes like usury for gambling as a reference point.
Serving as the vice president of the Macau Federation of Trade Unions, the city’s largest labour union, Mr. Leong notes that they have received complaints from gaming operator employees regarding interactions with these gangs. Employees who attempted to intervene in the activities of these individuals found themselves facing complaints lodged by these individuals as casino customers, resulting in disciplinary actions against the staff. Thus, the lawmaker stresses, “The administration should collaborate with casinos to bolster patrols both inside and outside the establishments to combat these pervasive activities.”
CASH OUTFLOWS
While the timing and likelihood of such amendments are uncertain, authorities on both sides have escalated efforts to combat this illicit trade. During the July press conference, the Ministry of Public Security disclosed that they had recently investigated five cases of illegal currency exchange, leading to the arrest of 101 suspects and the dismantling of six underground banks, with involved funds amounting to RMB1.47 billion. In Macau, in the first five months of 2024, 1,924 individuals engaging in illicit currency exchange were detained, a substantial decrease from the 7,851 individuals apprehended during the same period last year.
As authorities assert that their actions aim to prevent crimes and maintain stability, it is
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