Ministry of Public Security targets illegal money exchanges, dismantling over 100 underground banks and seizing $11 billion in illicit capital flow
On December 13, China’s Ministry of Public Security (MPS) revealed a significant operation targeting illegal money exchanges, resulting in the shutdown of 100 black-market banks and the arrest of 846 individuals. This operation, which forms part of a broader campaign launched in May, focuses on cracking down on illegal currency trading, particularly in the Macao Special Administrative Region (SAR).
According to ministry officials, police operations have been ramped up throughout the year, with five major actions already completed in the campaign. Chen Shiqu, the deputy head of the MPS criminal investigation department, reported that more than 80 billion yuan (approximately $11 billion) had been detected flowing through these illicit operations.
A Surge in Illegal Money Exchanges
The crackdown highlights the growing issue of illegal money changing activities in Macau, which has surged since the end of the Covid-19 pandemic. The Chinese government has reported a sharp increase in police interceptions of individuals engaged in illegal currency exchanges, with the number of intercepted people last year rising by 239% compared to 2022, and by 41.3% over 2019. The crackdown is seen as a response to the rapid expansion of these operations, particularly in a region like Macau, which has long been a hub for gambling and high-stakes business activity.
The Ministry of Public Security’s operations have been extensive, targeting not just illegal currency exchange but also a wide array of associated criminal activities. In total, authorities have dismantled 263 organizations suspected of engaging in illegal practices such as fraud, illegal border-crossing, false imprisonment, and illegal business operations linked to money laundering. These operations often involve individuals and groups attempting to circumvent China’s strict capital flow restrictions.
Macau’s Role in the Surge of Black-Market Banks
Macau’s unique economic and legal environment has made it an attractive location for these underground banking operations. “The surge in black-market currency exchanges is clearly linked to the void left by the disappearance of junket operators,” said gaming law expert António Lobo Vilela. Junkets, once a significant part of Macau’s gaming industry, facilitated the movement of large sums of money for high-rolling gamblers. However, with their closure following regulatory changes and the end of the pandemic, a financial gap was created, leading to an explosion in illegal money-changing activities.
Macau lawyer José Abecasis pointed out that these black-market operations are not a new phenomenon, but rather an ongoing issue. “People are always attempting to circumvent China’s restrictions on capital flows out of the country,” he explained. However, Macau’s economic dependence on gaming has made the region particularly vulnerable to such illicit financial activities. As gaming continues to drive the economy, the illegal financial operations have found fertile ground in the SAR.
New Legislation Aims to Crack Down on Currency Exchange
In response to this rise in illegal money exchanges, the Macau Legislative Assembly took a major step forward in October by passing legislation that criminalizes the operation of unlicensed currency exchanges. The amended Law on Combatting Gambling Crimes includes stiff penalties for offenders, including prison sentences of up to five years. Those convicted could also face up to a decade-long ban from entering Macau’s casinos. This move reflects the government’s commitment to addressing the growing problem and tightening control over the region’s financial activities.
Despite these efforts, experts warn that these illegal operations will likely continue to evolve and adapt to the shifting regulatory landscape. The battle against illicit financial activities is far from over, as authorities continue to crack down on underground banks and money laundering operations in Macau and beyond.
