Ensuring Licensed Remittance Companies Fulfil Commitments

Mr Chua Kheng Wee Louis asked the Prime Minister (a) whether remittance companies in Singapore that handled the failed transfers of monies to China have an obligation to ensure funds placed through them reach their intended destinations; and (b) whether an update can be provided on the cooperation with its counterpart agency in People's Republic of China to resolve the issue of frozen or confiscated remittances.

Sir, under the Payment Services Act 2019 (PS Act), licensed payment service providers or licensees must ensure that any money accepted for money transfer services is deposited into the designated recipient's accounts, within three to seven business days. Licensees must also provide proper documentary evidence to show that the recipient has received the money transmitted.

Licensees that fail to comply with the three to seven business days money transmission timeframe, unless agreed with their customers, would be in breach of the Monetary Authority of Singapore (MAS)'s requirements. MAS will undertake a supervisory review and/or take enforcement action for such breaches, including reviewing the licensee's suitability to hold a licence under the PS Act. The number of complaints directly received by MAS in 2023 on alleged failed remittances, is lower than 100 and amounts to less than 0.01% of total value remitted from Singapore.

Affected remitters should first approach the remittance company concerned for resolution if their intended recipients did not receive the money. If the matter cannot be resolved, affected remitters may file a claim in the Small Claims Tribunals for amounts up to S$30,000 or consider seeking legal advice on civil action to be taken against the remittance company.

In providing the money transfer services, licensees commonly pass the funds to intermediary institutions, based either in Singapore or overseas, for the onward transmission of the funds to recipients. These intermediaries include banks, operators of card payment systems or third-party agents.

Under MAS' requirements against money laundering and terrorism financing, licensees must conduct due diligence on the intermediary institutions they directly work with. If the licensee fails to perform the necessary due diligence, it will face regulatory or enforcement action by MAS.

For the recent disputes regarding remittances to China, the issues were not about failed remittances. For these cases, the funds had been successfully remitted and deposited into the recipient's bank accounts. However, these funds were frozen or forfeited by the PRC law enforcement agencies.

As of 15 December 2023, the Singapore Police Force (SPF) has received more than 670 reports of funds remitted to China being frozen. 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.

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 temporary suspension will protect consumers from the uncertainty of funds being frozen by the authorities in China.

Relevant Government agencies have also been engaging the PRC government, so that the PRC government can provide information to help affected remitters understand how they can get their accounts and monies in China unfrozen by PRC law enforcement. MAS has also told the licensees to render the necessary assistance to affected consumers, also to strengthen their complaints handling processes and to review the existing arrangements with partners and intermediaries for remittances to China, in view of these complaints and the impact to their customers. MAS and SPF will continue to engage the relevant Chinese authorities and the Singapore licensees and render assistance to affected remitters.

I thank the Minister of State for his reply.

Some remittance companies have a practice of going through third-party payout agents to perform the funds transfer using personal bank accounts. The Minister of State earlier said that MAS has prohibited this practice for three months. Are there plans to extend this prohibition for longer or ban the practice outright in order to better protect consumers?

Secondly, given that most of these funds have left Singapore's jurisdiction and are held up by authorities in China, has MAS been in communication with all the complainants to inform them about the limits of Singapore's jurisdiction beyond the outreach session that was conducted in December, which was attended by just 39 individuals?

Sir, I thank the Member for his supplementary question. MAS will review the temporary suspension before 31 March. As the Member had said, it was for three months. So, we are still working together with the licensees, the remittance companies as well as those affected.

On the second point, maybe I want to also set the context. Both MAS, as well as SPF, have been working with the relevant government agencies in China. But what is also useful is that, in this regard, MAS considers the remittance companies to have discharged their obligations once the funds have reached the intended recipient. So, once these funds have been successfully deposited into the bank accounts, then they have discharged their obligations. But the funds have been frozen or forfeited by the law enforcement agencies, and MAS and SPF are continually engaging the relevant government agencies in China to understand the situation and then also to work with the remittance agencies to see what we can do to assist those affected.

Mr Speaker, just two supplementary questions for the Minister of State. The first is in relation to remittance companies which might potentially exempt themselves from any liabilities by making their customers sign certain waivers. Is this the case for the remittance companies that are currently involved in these cases, especially for one of them, Samlit Money Changer, which I understand from the press release, is responsible for the majority of the cases that have been surfaced, and are these exemptions basically against the current regulations?

The second supplementary question is in relation to, again, these licensed payment institutions, especially the major ones. I understand from MAS' requirements that they must comply with requirements to protect customer money and, in this case, is that protection of customer money about just ensuring that the funds reach their intended destination or that they can be accessed at their intended destinations?

Sir, we are, indeed, reviewing the complaints and have been following up with the remittance companies. In the case of Samlit, we understand that they have considered some civil action as it is a civil matter. But we are working very closely, through SPF as well as MAS, with Samlit and the other remittance licensees that the Police have received reports regarding this particular case.

If these remittance licensees – they are licensed under the PS Act, as I mentioned in my original reply – are found not to meet with the regulatory expectations, we will take action. While MAS cannot compel the remittance companies on compensation, we have told them that they should treat their customers fairly. But if they are found to be in breach, we could take regulatory and enforcement actions, including fines and reprimand. But as I mentioned in my earlier response to the supplementary question, in this case, we found that they have discharged their obligations in terms of remitting, and this is an issue that MAS, SPF and the relevant Government agencies are engaging with the PRC agencies to resolve the matter.