Casino stocks have plunged following a report in the South China Morning Post that in China's latest crackdown on capital outflows, Beijing is cutting in half the amount of money account holders of China UnionPay can withdraw from ATMs in Macau, the world’s largest gambling market.

The Monetary Authority of Macau’s ATM withdrawal cut is understood to be a reaction to attempts by illicit money movers to circumvent Beijing’s move at the beginning of this year to cap at 100,000 yuan (HK$112,600) the annual amount that UnionPay card holders could withdraw.

The limit imposed by the Monetary Authority of Macau takes effect Saturday, cutting the withdrawal limit from 10,000 to 5,000 patacas, and follows the discovery that as much as 10 billion patacas in China UnionPay ATM withdrawals were made in one month alone. The latest capital control also comes amid so far unanswered claims that the customer voucher scheme run by Marina Bay Sands casino resort in Singapore – which allows China UnionPay card users to buy gaming chips in breach of China’s strict currency controls, a scheme we profiled over a year ago – has seen billions of yuan flow out of the mainland.

In immediate reaction, shares of Wynn Resorts Ltd. fell as much as 12%, Las Vegas Sands dropped 12% and MGM Resorts International sank 7%.

As SCMP reports, a Macau finance industry insider - who apparently was not familiar with how money is laundered through Macau - told the Post: “What has happened is that individuals are turning up at ATM machines with stacks of cards from individual account holders and are withdrawing 10,000 a time. “The authorities have decided it is time to act and Beijing is backing the move.’’

Two years ago, Beijing put the squeeze on the multi-billion yuan flow of illicit cash through Macau by imposing a crackdown on the use of UnionPay point of service machines, which were being used to disguise overseas transactions as local mainland ones. It also cracked down on the practice of pawnshops paying cash for products such as jewellery and watches bought with UnionPay cards to subvert currency controls. The pressure appears to have had a possible knock-on effect in other casino jurisdictions like Singapore.

The latest crackdown on the gambling mecca shows just how seriously Beijing is taking the recent record drop in the Yuan, and how far it is willing to go to plug every possible capital flight loophole. Macau political commentator Sonny Lo said: “At the end of the day, national security is at stake for Beijing when it comes to the integrity of their currency and its outflow in massive amounts. This is what is behind these increasing moves by Beijing to stem capital outflow.”

While the Yuan may ultimately be a winner, US casinos in Macau, who will have far less "disposable cash" to launder, are clearly the biggest losers, at least judging by the market's kneejerk reaction.