Amid a crackdown on unauthorized mainland currency outflows by forcing ATM users to undertake facial recognition before cash is dispensed in Macau, Hong Kong ATMs are reportedly being hit by a massive surge in withdrawals from China’s UnionPay bank cards.
As The South China Morning Post notes, the mainland has been strengthening regulations since last year when a decline in the value of the yuan led to widespread capital outflows.
Mainland people are allowed to withdraw up to 100,000 yuan (HK$117,000) in cash overseas and remit up to US$50,000 worth of foreign currency offshore annually, according to 2016 foreign exchange regulations.
Users of UnionPay cards can withdraw up to 10,000 yuan per day for each card they hold.
To skirt around the foreign exchange controls, some individuals have been using separate ATM cards to make cash withdrawals, prompting the regulators to crack down on the practice.
Regulators in the world’s most lucrative gaming hub are deploying machines with “Minority Report”-style technology to keep tabs on capital outflows from China and watch for potential money laundering schemes. China UnionPay Co.’s network is the first to use the software, which will be installed in all the city’s 1,200 cash dispensers.
“This is aimed at illicit outflows of capital from China,” said Sean Norris, Asia Pacific managing director at Accuity in Singapore. “It’s aimed at people drawing out money in Macau, going to the casino, betting very little, getting forex from there and moving it.”
But now, as SCMP reports, one source explains…
“It seems quite clear that as the introduction of ATM facial recognition technology in Macau has put the squeeze on cash dispensing withdrawals in Macau, the pattern of withdrawals has followed the path of least resistance – and that is to Hong Kong.”
Monetary chiefs in Hong Kong have declined to deny or confirm information obtained by the South China Morning Post that ATMs have seen a “staggering” rise in withdrawals since the casino hub introduced the facial recognition technology in May as part of a bid to stem illegal capital flight from the mainland.
“The rise in ATM withdrawals in terms of volume and number has been staggering. The taps are gushing,” a source with knowledge of the situation said.
The development follows a move by the Hong Kong Monetary Authority to instruct local banks to submit data on cash withdrawals by UnionPay cards throughout the ATM network as the regulator cracks down on unauthorised mainland outflows.
The Monetary Authority spokeswoman added:
“The HKMA endeavours to enhance the security level of banking systems.
“We have been studying the applications of different technologies, including the feasibility, soundness and cost efficiency of facial recognition and other types of biometric authentication technologies, having regard to the technologies used in other jurisdictions.
“However, we have no plans to require ATMs to install facial recognition technology.”
Which leads to one simple question… If everything is so awesome over there, why are Chinese authorities cracking down so hard on what seems like utter panic to get cash out of the onshore market?
And do not be fooled by the “strengthening Yuan” narrative… once again China is continuing to devalue its currency against the world… while maintaining the “Shanghai Accord”-like illusion that it is strengthening again the USD…