Banks in Hong Kong have experienced an unanticipated surge of more than HK$20 billion ($2.55 billion) a month in ATM withdrawals, less than a month after Beijing set strict limits on overseas activity.

Chinese officials have been waging a war against capital outflow for the past few years, leading to the closing down of ATMs, the introduction of laws against multi-use cards and even the halting of overseas investment by Chinese firms.

The run on ATMs is apparently fuelled by “money withdrawal gangs”, which have only recently been driven out of Casino city Macau with the implementation of biometric technology.

Almost all of the ATMs in use in Macau are manufactured by US-based company NCR. The facial recognition technology is installed after the original ATMs are made. Macau’s other payment providers, which include Visa and Mastercard, will be required by the Government to retro-fit the technology to their existing ATMs at the bank’s expense.

Withdrawals for visitors to Macau and other autonomous regions are limited to $1,450 a day and $14,500 a year. This didn’t stop committed gamblers from using multiple cards, assigned to different people, to flout the rules.

In Hong Kong, the use of multiple bank cards by someone who isn’t the account holder is legal, and this is a likely reason why ATM withdrawals have surged.

According to the South China Morning Post, the practice has also resulted in a rise in robberies. Groups of thieves wait until a user leaves a machine laden with cash and then attack them to steal the money.

A senior law enforcement source said the problem had reached the stage where on Thursday police chiefs issued an internal, force-wide “crime alert” notice on the subject. Yet the Hong Kong Monetary Authority, for the time being, seems powerless to stop the rise, as the practice isn’t illegal.

“We are monitoring the situation closely and will liaise with police and the banking industry, should it become necessary to introduce appropriate measures in light of actual circumstances,” a spokesman at the firm tod the South China Morning Post.

by Alex Hamilton
Alex is Senior Reporter at IBS Intelligence, follow him on Twitter or contact him at: alexanderh@ibsintelligence.com
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