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Singapore’s finance regulator has demanded that remittance companies suspend remittances to China through non-bank and non-card channels.
The Monetary Authority of Singapore (MAS) has issued a notice directing licensed payment service providers (PSPs) that provide cross-border money transfer services to suspend the use of non-bank and non-card channels when transmitting money to persons in China.
This ban will stay in place for three months, the MAS has said, ending on March 31, 2024.
To provide individuals with cross-border money transfer services to China, remittance companies in Singapore may engage only a bank or an operator of a card network, such as Union Pay International.
Alternatively, a licensed financial institution that has engaged a bank or an operator of a card network can also be used to assist in the transmission of money.
Chinese authorities are freezing funds
The MAS’ action follows reports of remittances to China made by individuals, such as Chinese expats in Singapore, through remittance companies in Singapore being subsequently frozen in their beneficiaries’ bank accounts in China.
The MAS warned that this is happening due to intervention from law enforcement agencies in China.
The authority said that it is not clear why these funds had been frozen. However, to minimise risks to consumers remitting funds to China, the MAS has decided to temporarily suspend the use of non-bank and non-card channels by remittance companies for money transfers to China.
Although customers may now have to pay more to remit funds to China, the MAS said that this suspension is necessary for the immediate protection of consumers, and to stem the number of reported new cases of beneficiaries’ accounts in China being frozen.
The Singaporean regulator said that it has been actively engaging the remittance companies involved. For example, it has held an outreach session for remitters and workers at the Chinese embassy.
“We have told them to render the necessary assistance to the affected customers and to strengthen their complaints handling process,” the regulator said.
“We have also instructed them to review their existing arrangements with partners for the PRC remittance corridor, in view of these complaints and the impact to their customers.”
Going forward, the MAS said that it may terminate or extend the suspension after March 31, 2024 or take further measures as appropriate.
The MAS has also responded alongside the Singaporean Police Force (SPF) to a letter published in Lianhe Zaobao, the largest Chinese-language Singaporean newspaper, that raised concerns about accounts being frozen and the role of money laundering in this.
“It is not clear that the freezing of the remitted funds in China was motivated by concerns of money laundering by these remittance companies,” the joint response says.
The joint statement continues that the MAS and SPF have not received information showing that the remittance companies were involved in money laundering or scams, or that the funds were frozen because the remittance companies had processed the proceeds of money laundering or scams in Singapore.
“Should there be information to suggest otherwise, MAS and SPF will take appropriate regulatory or enforcement action.”
