The Monetary Authority of Macao (AMCM) has called for “all financial institutions to establish sound risk management for the provision of any authorized financial services” following the latest crackdown on the use of Union Pay cards.
As reported by Inside Asian Gaming on Wednesday, authorities last week removed Union Pay POS terminals from pawnshops inside a number of Cotai integrated resorts, namely those operated by Sands China, Galaxy Entertainment Group and Melco Resorts. Notably, the crackdown has been limited to those shops operating inside resorts, with pawnshops and jewelry stores located on the streets unaffected.
Responding to media reports, the AMCM said that, “According to the legal and regulatory requirements of the ‘Prevention and Suppression of the Crime of Money Laundering’ and the AMCM’s ‘Anti-Money Laundering and Combating the Financing of Terrorism Guideline’, banks are obliged to perform adequate due diligence on and ongoing monitoring of the merchants in order to prevent the abuse of POS machines from conducting illegal activities.
“AMCM stresses that the Authority does not forbid banks from establishing business relationships with merchants of particular industries, but requires banks to equip themselves with appropriate and adequate risk management measures before they can provide financial services to merchants for normal business.
“When irregular or abnormal transactions are identified, banks should adopt appropriate actions according to respective risk management measures, including terminating the business relationship with merchants, to prevent involvement in any illegal acts.
“Currently, only banks, Caixa Económica Postal (Postal Savings Office), money changers and remittance companies can provide money exchange and/or remittance services to the public in Macau. Provision of financial services by any other individuals or shops constitutes a legal violation.
“AMCM would like to call the attention of the public that they should conduct money exchange and/or remittance transactions through authorized institutions in order to avoid unnecessary losses.”
Although the AMCM’s statement fails to offer any insight into whether the POS terminals removed will be either returned or upgraded, JP Morgan analysts have warned that the impact on Macau’s gaming industry could be significant.
“At least in the near term until the dust settles, even if those shops get POS machines back, we think their ‘rules of engagement’ would have to change – probably not as openly as before when it comes to UnionPay cashback services,” said DS Kim in a note seen by IAG.
“The impact on gaming demand is difficult to estimate, but it can’t be good in our view as it could at least be a modest negative on player psychology if not their abilities to source funds. Time will tell.”
