Arrests follow China UnionPay POS scam

Macau police have made 23 arrests in connection with illegally modified China UnionPay POS payment terminals.

In joint raids, the Judiciary Police and Monetary Authority of Macau visited 13 shops looking for modified handheld payment terminals. People connected to eight shops were taken into custody on suspicion of committing computer fraud and being involved in organised crime.

A Judiciary Police spokesperson says the terminals had been modified for “gaming purposes”.

Mainland visitors to Macau have a daily limit of RMB20,000 (US$2985) in cash when crossing the border.

Those who go to Macau to gamble have routinely circumvented this restriction by buying items from a Macau pawnshop or jewellery store using their UnionPay cards, immediately returning the items in exchange for cash – a process that is not illegal under Macau law, reports GGR Asia. The retailer usually charges a fee under that system.

The eight shops involved in the case were registered as either jewellery or telecommunications products sales outlets, but were suspected of running a “pawnshop-like” business, the police spokesperson says.

Ten of the arrested persons are suspected of working as “tip hustlers” in casinos, the police say. These persons typically solicit gamblers with UnionPay cards who need fresh cash, inviting them to leave the casino floor to visit a nearby shop to obtain money, says the head of the Judiciary Police’s IT crimes division, Sou Sio Keong.

Ten UnionPay handheld POS terminals were also seized by police on suspicion they had been illegally modified to register Macau-based sales transactions as having taken place on the mainland, where transaction fees are smaller, says Sou.

“Underground workshop”

In one of the shops they raided the police also uncovered an “underground workshop” where they found devices they suspect were used to modify the UnionPay terminals.

“The bureau [Judiciary Police] believes some mainland Chinese POS units were smuggled into Macau and, after modification, were sold to the shops,” Sou says.

He says such the terminals have typically been changed in such a way that the UnionPay network identifies them as being registered and run in mainland China. Sou says the shops involved in the case charged users a fee of RMB26 for each transaction.

The value of detected transactions in Macau using suspected modified UnionPay handheld terminals amounted to MOP2.1 billion (US$262.9 million) in the first half of last year, Portuguese news agency Lusa has reported. In the previous calendar year the cash value of these illegal transactions was MOP1.22 billion. Most cases occurred inside casinos and in surrounding areas.

“It is the first time we have uncovered such a large-scale operation of tampering with POS terminals,” says Sou. The police are not ruling out the possibility that more shops in Macau may have been using illegally modified terminals.

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