HONG KONG (Reuters) - Authorities in Macau, the world’s biggest gambling hub, have told financial institutions to tackle the illegal use of UnionPay cards to evade exchange controls, China’s latest move to clamp down on illicit capital outflows.

FILE PHOTO - A visitor walks inside Macau Tower overlooking a general view of Macau peninsula, China October 8, 2015. REUTERS/Bobby Yip/File Photo

The announcement from Macau’s monetary authority late on Wednesday adds to a series of measures being implemented in the Chinese territory as it cracks down on such “illegal acts”.

The warning to banks came after pawn shops operating in Macau casinos had their UnionPay point-of-sale terminals removed, state broadcaster TDM said this week.

Macau’s gambling industry has revenues of about $3 billion a month.

A 2014 Reuters investigation found that many mainland Chinese used UnionPay cards to circumvent cash withdrawal limits of 20,000 yuan ($3,200) a day, and either use that money to gamble or transfer it abroad.

Typically, a customer in Macau can go to one of nearly 200 pawn shops inside casinos or on the streets that sell watches or jewelery, and swipe their card to get cash without buying anything, skirting capital controls.

The removal of the point-of-sales machines by Macau banks means that pawn shops inside the casinos are now no longer offering UnionPay cash-back services.

The Monetary Authority said banks needed to undertake “ongoing monitoring of the merchants” in order to prevent the use of point-of-sales (POS) machines “to conduct illegal activities”.

Union Pay was not immediately available for comment.

Industry estimates put the monthly withdrawal volume at HK$ 10 billion ($1.27 billion) from ATMs in Macau prior to the introduction of the facial recognition technology.

Only banks, the Postal Savings Office, money changers and remittance companies can provide money exchange and/or remittance services to the public, the authority said, adding that the provision of financial services by other individuals or shops was a “legal violation”.

“The impact on gaming demand is difficult to estimate, but it can’t be good in our view as it could at least be a modest negative on player psychology if not their abilities to source funds,” said DS Kim, an analyst at J.P. Morgan in Hong Kong.