Major Credit Card Firm Raided over Illegal Gambling Links Allegations

  • About 100 police officers raided 51 Credit Card Inc.'s Hangzhou offices on Monday
  • Allegations include the use of debt collectors who were harassing and intimidating
  • Financial media outlet Sina also claims the company has illegal gambling links overseas
armed police officers in China
Police forces in China raided fintech firm 51 Credit Card Inc. following numerous allegations including overseas illegal gambling links. [Image: Shutterstock.com]

Latest in China’s extensive crackdown on illegal gambling

A major credit card firm was the latest target of the Chinese authorities as part of a nationwide crackdown on illegal online gambling.

On Monday, about 100 police officers raided the offices of 51 Credit Card Inc. in Hangzhou. According to local media reports, the reasons for the raid included the alleged improper use of data by the firm. 

Allegations of improper use of debt collectors

Executives of the company released a statement about the raids through an official WeChat channel. They said the police were responding to allegations of the company’s “outsourcing of debt collection to third-party agencies.” The debt collectors were reportedly using harassment and intimidation, which led to a significant amount of complaints. 

the debt collectors were reportedly using harassment and intimidation

51 Credit Card Inc. is a fintech company listed in Hong Kong that claims to be the biggest credit card bill management firm in China. The latest figures from the middle of 2019 show that the company’s service has 83 million active users. 

Potential illegal gambling links

According to the financial media outlet Sina, another reason for the raid was that 51 Credit Card Inc. allegedly formed part of a system which saw payments being processed to overseas online gambling platforms. On China’s mainland, all forms of gambling are illegal, except for the state-run lotteries. 

After the news of the raid went public, the share price for the company fell by more than one-third. This led the company to request the suspension of trading of its shares on the Hong Kong Stock Exchange. When trading resumed on Tuesday, the shares rose by about 30%. 51 Credit Card Inc. has been listed on the stock exchange since July 2018.

Calls for online gambling bans in nearby nations

In recent months, China has also put its foot down on illegal gambling overseas. This has seen the country’s authorities request the likes of Cambodia and the Philippines to ban online gambling. Cambodia complied, outlawing the pastime in August. The decision led to about 140,000 Chinese nationals leaving Cambodia

According to Cambodia’s Prime Minister Hun Sen, “Foreign criminals have taken refuge in the form of this gambling to cheat and extort money from victims, domestic and abroad, which affect the security, public order and social order.”

The Philippines did not comply with the request and continues to allow gambling operators to obtain online gambling licenses. The country has brought in a new withholding tax on the gambling industry’s foreign workers. These foreign nationals were, for the most part, not paying taxes in the Philippines. There were also plans to move Chinese casino workers to self-contained communities in the Philippines. 

Ongoing crackdown in mainland China

The authorities in China have taken a stance to keep combating underground banking. This form of banking allows Chinese residents to avoid the capital controls that are in place, which limit the outflow of funds for the likes of gambling. 

The country’s central bank issued a warning in March to financial institutions. It called upon these companies to improve their merchant verification systems to make sure that firms were not hiding away payments that were going to illegal websites. 

Forbidden sites include gambling, pornography, and cryptocurrency platforms, in addition to sites relating to other “emerging crimes”.