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Alarmed by a decision to suspend all non-bank and non-card remittances to China, lawmakers in Singapore are checking for further signs of turbulence in the remittance market.
In the past week, representatives of the Monetary Authority of Singapore (MAS) have faced questions from lawmakers on their decision to impose temporary restrictions on certain remittances.
The restrictions were imposed following a spike in remitted funds that were frozen or forfeited upon arrival in China.
Prior to the restrictions being imposed, the Singapore Police Force (SPF) had received 670 reports of funds remitted to China that had been frozen, totalling $13m in value.
Gerald Giam of the opposition Workers Party has since asked the MAS how many complaints it has received regarding failed remittance transactions in the past year, and whether providers are legally obliged to complete those transactions.
Louis Cha, also of the Workers Party, asked a similar question and submitted a request for an update on Singapore’s talks with Chinese law enforcement.
In response, minister of state and MAS board member Alvin Tan said the regulator received fewer than 100 complaints about “alleged” failed remittance transactions in 2023.
He added that these disputed transactions made up less than 0.01 percent of the total value of outbound remittances from Singapore during the year.
Tan also reminded Giam that, under the Payment Services Act 2019 (PS Act), payment service providers (PSPs) must ensure that funds accepted for money transfer services arrive in the designated recipient’s account within three to seven business days.
However, Tan stressed that the MAS’ decision to impose the restrictions was not related to failed transactions.
On the contrary, all of the funds in question were successfully remitted and deposited to their designated recipients’ bank accounts in China.
“MAS and SPF are seeking information from Chinese authorities to establish the reasons and concerns that led to the freezing of recipient bank accounts in China,” he said.
“To minimise risks to consumers remitting funds to China, MAS has decided to temporarily suspend the use of non-bank and non-card channels by licensees for money transfers to China.
“While consumers may now have to pay more to remit funds to China, this suspension will protect consumers from the uncertainty of funds being frozen by the authorities in China.”
The MAS has also asked PSPs in Singapore to strengthen their complaints handling process and review their partners and intermediaries that offer remittances to China.
For those consumers who believe their funds were wrongly frozen or forfeited, they can attempt to claim compensation from their remittance provider through Singapore's Small Claims Tribunals (SCT).
To be accepted by the SCT, each claim must be no more than S$30,000 ($22,500) in value and must be filed within two years after the event that gave rise to the claim.
For reasons unknown
It has now been almost a month since the MAS and SPF first sounded the alarm about the remittances freezes, but it remains unclear as to why these particular funds were frozen.
In an earlier joint statement, the two agencies said that counterparts in China have provided no evidence that the funds are linked to scams or money laundering.
The temporary restrictions will be in place until March 31, 2024, at which point they will be reviewed and may be extended.
According to the SPF, about 430 of the reports of frozen funds were related to a single provider, Samlit Moneychanger.
Last month, representatives from Samlit and two other remittance providers attended an “outreach session” organised by the MAS and the SPF.
Representatives of the Chinese embassy in Singapore also attended, as did 39 affected consumers.
The SPF said the affected consumers are “mostly” Chinese nationals who work in Singapore.
“To keep transaction costs low, the remittance companies had processed the affected outward remittances through overseas licensed agents and not through a direct bank transfer from Singapore to China,” said the SPF.
“While such non-bank channels were not prohibited, recent actions taken by PRC law enforcement agencies with respect to such channels have made them more risky.”
The remittance companies in Singapore have been asked to issue confirmation letters detailing the sender of the frozen funds and the source of the frozen funds.
It is hoped that these will facilitate the unfreezing of the funds by Chinese authorities.
However, should evidence emerge that the funds are linked to financial crimes, the MAS and the SPF said they will take swift action.
