China To Crack Down On ‘Cross-Border’ Gambling Funds

On Thursday the People’s Bank of China announced that it had recently been in talks with other Chinese government departments on combating the “cross-border” flow of gambling funds. The deputy governor of the bank, Fang Yifei, also called for enhanced official efforts on measures to tackle money laundering (AML).

But a Friday note from the brokerage JP Morgan Securities (Asia Pacific) Ltd played down the possibility that the comment could be targeted at casino gambling funds moving cross-border from the mainland in Macau.

The website of the bank had carried the announcement, which was confirmed by several mainland China media outlets, including official Xinhua news agency.

Mr Fang is said to have called for greater cooperation in prosecuting cases involving ‘cross-border gambling funds’ from different government agencies.

He also urged firmer measures to tackle large-scale and suspicious transactions, and stronger customer identification procedures, as well as improved surveillance against money laundering in general.

The statement did not discuss the types of targeted gambling activities nor did it specify where the money would go as it went across the border.

The Bank ‘s latest meeting included members from the Ministry of Public Security, the General Customs Administration, the China Banking and Insurance Regulatory Commission, the Foreign Exchange State Government, the China Payment and Clearing Association, the China UnionPay Co Ltd Bank Card Service Provider, and the NetsUnion Clearing Corp.

The activity or promotion of online casino gambling or bricks and mortar type on the Chinese mainland is illegal, as is the marketing of such gambling outside the boundaries of the mainland, including any play in Macau.

JP Morgan’s Friday memo indicated the comment was a “non-event” in the Macau sense.

“It’s difficult to know… the exact scope of subject matter,” since in the Chinese context “‘cross-border’ gambling often refers to ‘illegal gambling’, particularly online casino operation by junkets (a.k.a. proxy or video betting), such as those from the Philippines and Cambodia,” wrote analysts DS Kim, Derek Choi and Jeremy An.

“We note the China government has recently broken up a series of illegal online casino rings across different provinces (e.g. Shaanxi in April, Fujian in May, Jiangsu in June, etc.), which leads us to think the meeting was probably more related to those incidents,” said the JP Morgan team.

“In short, we wouldn’t necessarily think the meeting focused on Macau and/or ‘legal’ casino operations; the news seems like a non-event to us,” added the brokerage.