An official of China’s Ministry of Public Security revealed that Chinese citizens transfer an excess of CNY 1 trillion (roughly $146.5 billion) outside the country each year for gambling purposes.
The official, Liao Jinrong, is the director general of the ministry’s international cooperation department. Jianrong believes that the massive outflow of Yuan each year could represent a threat to the country’s economic security.
In a speech in Beijing, Jinrong stated that Chinese citizens who transfer these funds for gambling are intensely vetted by casino operators.
The financial knowledge that these foreign operators gain from such vetting have been pinpointed by Jinrong as a potential source of economic concerns in the country.
While Jinrong did not specifically name illegal junkets as the chief culprits for the annual outflows, it is common knowledge that a number of Chinese criminal organizations have been caught recently for assisting local punters transfer funds outside mainland China. Junket operators focus on VIP gamblers who are known to spend millions of dollars at casinos around the world.
Casino operators tie up with these junket operators and pay them a commission for bringing over these wealthy Chinese VIP gamblers.
Economic Outflow to Face Stricter Controls
China most recently made headlines for imposing a severe crackdown on the long accepted gray market of foreign junkets. A number of sources have indicated that Chinese authorities are currently focusing on controlling the flow of the Yuan outside the country, which has led to the tightening of restrictions and enforcement on gambling activities.
The change in policy, while officially unconfirmed, has led to some junket operators playing safe by launching policy changes on how they handled account transfers. Suncity Group, the Macau-based junket firm, has already announced new rule changes.
China’s Crackdown on Gambling Continues
The increase in illegal gambling activities carried out by Chinese gamblers has caused a number of prominent local experts to carry out research which shows that a lack of control in this area could lead to the destabilization of the Yuan in global commerce.
In response, China’s State Administration of Foreign Exchange launched an initiative to stem the tide of cross-border fund transfers, the lifeblood of the junket industry. China has also ramped up its enforcement of current gambling rules, having pursued 10 cases in the period of 2017 to 2019, in which citizens were fined for their gambling-related transfers. The total amount of fines involved in these cases is $2.8 million.