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Despite raids, Macau pawn shops still help flout currency rules

* Five Macau pawn shops raided by police this week

* Gamblers use the shops to skirt China's currency export caps

* Despite raids, pawn shops still letting people exceed caps

* Estimated HK$1.57 tln a year channelled through Macau

By Farah Master

HONG KONG, Aug 30 (Reuters) - Just days after authorities raided five pawn shops in the Chinese territory Macau, many of the neon-lit stores in the world's biggest gambling hub are still letting punters make fake purchases to skirt rules on how much cash they can take out of China.

China's money export caps are among the tools it uses to control its currency and economy, and authorities believe the ruse facilitated by pawn shops in the former Portuguese territory is also used by corrupt officials and business people to send ill-gotten cash out of the mainland.

At 10.30 am on Thursday, three Chinese men gathered in a tiny pawn store less than 100 metres from Macau's onion-shaped Lisboa casino. One, with spiky black hair and navy cotton trousers, watched as the female cashier counted wads of HK$1,000 bills he had just signed for through multiple bank cards.

Placing three stacks totalling HK$300,000 ($38,700) into his black leather bag after signing at least two bank card receipts, he pulled out another card and told the cashier in mandarin to give him another HK$200,000.

The transaction, which took less than 10 minutes, shows the ease with which Chinese gamblers in Macau, which generates more than five times the gambling revenue of Las Vegas, can use credit cards to skirt China's currency restrictions, which limit withdrawals to 20,000 yuan or US$3,200, and its money-laundering rules.

The use of China's state-backed UnionPay card, which has a virtual monopoly in China, has been a convenient way for people to get money out of the country.

Typically a customer in Macau can go to one of close to 200 pawn shops that sell watches or jewellery, and swipe their card to get cash without buying anything.

No one knows for sure how much Chinese money is being channelled illegally into Macau. Tam Chi Keong, an assistant professor at the Macau University of Science and Technology, puts the total at HK$1.57 trillion a year through various channels.

Reuters asked UnionPay and the Macau police for comment on the improper use of card machines and cards by shops and customers in Macau. Neither had immediately responded.


Macau police arrested 17 people on Monday for their alleged involvement in fraudulent bank card use, but three days later, a Reuters survey found that money was still moving freely through its pawn shops.

Of 13 shops polled, four would not let people use credit or debit cards to get cash, but eight said customers could withdraw any amount as long as they had the funds in their account, while one said it would allow up to 50,000 yuan per card.

In one instance an elderly female assistant told Reuters in mandarin that they could permit withdrawals of any amount using UnionPay cards, but her male colleague quickly interjected.

"No, we don't do that," he said, then spoke to her under his breath in Cantonese, shaking his head in disagreement.

Others were open about the legal dangers.

"We cannot right now because of the police checks," said a young male attendant at a store selling diamond accessories. "Have to wait a while. Not sure how long. Maybe a month or so."

While the raids this week specifically targeted UnionPay cash terminals where the transaction location had been illegally altered to the mainland instead of Macau, it is sending a broader signal to the industry, said the executive of a local firm that arranges casino trips - known as junket operators.

"It is a sign from China to tell people to be careful. UnionPay will still be used as it is one of the main ways for people to get money out like that," he said.

He said a crackdown on underground banking was having a bigger impact. That especially hurts high roller VIPs and the junket operators that act as pseudo banks, advancing credit to players and collecting their debts thereafter.

Macao's gambling revenues have plunged for the last 14 months as wealthy punters have stayed away, intimidated by President Xi Jinping's crackdown on corruption and conspicuous consumption by party officials.

Over the past week, China's central bank and the public security ministry announced a new anti-money-laundering pact and a three-month crackdown on underground banking.

"It is unlikely things will get better for at least a year," said the junket operator. ($1 = 7.7500 Hong Kong dollars) ($1 = 6.3865 Chinese yuan renminbi) (Reporting by Farah Master; Editing by Will Waterman)