Loophole May Expose Singapore Casinos To Chinese Regulatory Crackdown
The crackdown by Chinese authorities on capital outflows from the Mainland could impact Singapore as concerns emerge that Singaporean casinos are being used to funnel out capital through the use of the China UnionPay banking network.
A resort entertainment voucher program operated by a Singaporean casino is at the heart of the issue. Introduced in 2015, this program allows gamblers to use a UnionPay card to access gaming chips at the Marina Bay Sands casino. Under this program, gamblers can use their cards to buy the vouchers which can then be used to purchase gaming chips.
Xie Zhong, director of the payment settlement department at China’s central bank has clarified that UnionPay’s cards should not be used in casinos. Singapore’s gaming body, the Singapore Casino Regulatory Authority and China UnionPay have so far not commented on the issue. However Marina Bay Sands has defended its program stating that it isn’t breaking any laws.
In a statement on Reese, senior vice-president of global communications and corporate affairs for the Las Vegas Sands Corporation, said,
The resort entertainment voucher programme at Marina Bay Sands was designed to give guests increased flexibility in purchasing a variety of goods and services. We are pleased to be part of the Union Pay network, which allows Chinese consumers to purchase goods and services at locations in countries around the world. Marina Bay Sands operates the resorts entertainment voucher programme in accordance with the terms and conditions of China UnionPay cards.
Over the past year China has rolled out several currency control measures in order to restrict the outflow of capital in the face of a slowdown in its economy as well as steady depreciation in the value of its currency.
One of the major measures was to prohibit the issuance of credit cards that allowed transactions in dual currencies. This implies that all Visa or MasterCard cards in the country will be replaced with China UnionPay cards as they expire, which will allow the Chinese central bank to better track money flows.
Concerns regarding the misuse of China UnionPay cards which is the country’s largest currency clearing company emerged first in the gaming hub of Macau, triggering a crackdown. Such transactions are now banned in Macau and according to a Macau gaming expert none of the local banks would handle the clearing of any irregular usage.
It is also forbidden to use China UnionPay to buy investment-linked insurance products in Hong Kong. A recent audit report from the international anti-money laundering and terrorist financial watchdog, the Financial Action Task Force stated that while Singapore’s financial institutions had an appreciation of the money-laundering risks they were still not in full understanding of the flow of illicit cash into and out of Singapore.
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