In May, the Ministry of Public Security (MPS) launched a crackdown on a practice known as huanqiandang, in which individuals provide high-interest loans to Chinese gamblers.
During a press briefing on December 13, ministry officials revealed the capture of 846 individuals across five separate raids, all associated with around 100 illegal banking operations, according to China Daily. These establishments reportedly handled transactions totaling RMB80 billion, or approximately £8.68 billion, €10.472 billion, and $11 billion, as stated by Chen Shiqu from the MPS criminal investigation department. In addition, the ministry has pinpointed 263 organizations likely involved in similar criminal activities, including fraud.
### Rise in Activity Post-Pandemic
A special report from Macau Business highlights a noticeable rise in such illegal operations after the Covid-19 pandemic subsided. During the pandemic, Macau experienced several prolonged shutdowns spanning almost three years. When borders reopened in January 2023, there was a significant influx of gamblers returning to its numerous casinos.
Data from the government shows that law enforcement dealt with nearly 12,000 individuals engaged in unlawful money exchanges last year, representing a 239% increase over 2022 figures and a 41.3% rise from 2019 numbers. António Lobo Vilela, an expert in gaming law, described the situation as the “elephant in the room” that remains overlooked. He attributed this growth to the elimination of junkets, which, back in 2019, generated approximately $17 billion.
Lawyer José Abecasis noted that these covert activities have existed for some time. Many people seek ways to bypass China’s capital flow restrictions, he explained, but they thrive particularly in Macau, where gaming is the predominant economic force.
### Expanding Beyond Casinos
Authorities assert that illegal money exchanges not only promote increased lawlessness, such as theft, money laundering, and illegal immigration, but have also extended beyond the gaming sector, impacting broader society. Peng Peng, executive director of the Guangdong Society of Reform, informed the South China Morning Post that while these operations might have originated in the gambling industry, they have become prevalent avenues for corruption and unlawful monetary exodus. He emphasized the need for government intervention to curb these illicit banking operations to safeguard China’s financial security and combat corruption.
In October, the Macau Legislative Assembly introduced new legislation criminalizing unlicensed currency exchanges. The updated Law on Combatting Gambling Crimes features prison sentences of up to five years for offenders. Furthermore, those found guilty might face prohibitions from entering city casinos for as long as ten years.