What explains big cash advances from Macau?

A staff member demonstrates the roulette wheel at Grand Lisboa Casino in Macau in this 2007 file photo. / AP-Yonhap

Korean financial authorities are taking a harder look on the sharp rise in cash withdrawals by Korean credit card users in Macau.

Gamblers are apparently using their credit cards to pay for bets, but Financial Supervisory Service (FSS) officials are also suspicious about bizarre spending patterns in Asia’s casino capital, which may prove to be indicators of fraud.

Obviously, travelers will prefer to use exchanged local currency and credit cards overseas rather than be burdened with the high fees and interest rates attached to cash advances. The high level of withdrawals in Macau suggests that much of the money was used in casinos, where gamers are often in desperate need of cash.

According to data from the FSS, Monday, Koreans took out 79.9 billion won (about $72 million) in cash from their credit card accounts in Macau from 2008 to June this year, with the number of withdrawals counted at nearly 200,000.

The cash withdrawals were measured at 11.4 billion won in 2008 and 12.7 billion won in 2009 before jumping dramatically to 19.3 billion won in 2010. Last year’s sum at 25.3 billion won suggested that Korean gamers are becoming more compulsive as the economic downturn deepens.

The number of Korean travelers to Macau was 40,000 in 2003, but increased 10-fold to 400,000 in 2011, according to government data.

Authorities are also disturbed by the possibility that credit cards are widely used by Korean gamblers in Macau to commit fraud. Suspected activities include “card kkang,’’ where cardholders are compromised over the control of their cards or collude with cash providers to fake purchases for cash loans.

A typical arrangement is that fraudsters will take the credit cards of their desperate customers and charge them with their swipe machines, although no real transactions take place. After receiving the money through their accounts from the credit cards used, the scammers provide the money through their clients minus their “kkang fee.’’

The suspicions of card kkang in Macau are based on the frequency of big purchases. Money spent by Korean travelers on single-purchases above 1.4 million won accounted for 28 percent of their collective credit card spending overseas. However, when measuring only the spending in Macau, the proportion jumps to a staggering 79 percent.

“We have a tight control over card kkang in Korea, with the Credit Finance Association and other agencies monitoring the fraudulent activities. However, it’s hard to have control over the activities taking place outside the country,’’ an FSS official said.

Korea has traditionally imposed tight restrictions on gambling. There are 17 casinos in Korea with 16 of them open exclusively to foreigners ― only Kangwon Land in Jeongseon, Gangwon Province is allowed to admit locals. <The Korea Times/Kim Tong-hyung>

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