Singapore restricts remittances to China

Three-month halt on use of third-party agents follows reports of funds being frozen

Singapore’s financial regulator has ordered remittance firms in the city state to halt the use of nonbank and non-card channels when sending money to China, following a fund-freeze scare.

The three-month suspension, to start on January 1, follows reports that remittances to China through Singapore were frozen in their beneficiaries’ bank accounts in China by law enforcement agencies. The reason was unclear.

Remittance companies have been directed to use only bank and card channels when transferring money to China, according to the Monetary Authority of Singapore (MAS) statement.

As of December 15, Singapore police had received more than 670 reports of remittances being frozen, with about S$13 million (HK$76 million) of funds affected, Singapore Police Force and the MAS said. Some 430 reports were against Samlit Moneychanger.

The government had ordered the suspension to “minimise risks to consumers remitting funds to China”, the MAS said.

To keep transaction costs low, remittance companies tapped overseas third-party agents, rather than banks, to complete the assets transfer from Singapore to China, it added.

“In recent months, for a very small proportion of such remittances, the monies received in beneficiaries’ bank accounts have been frozen by the PRC [People’s Republic of China] law enforcement agencies,” the MAS said.

“It is not clear why these funds had been frozen.”

The MAS said it might terminate or extend the suspension after March 31 next year or take further measures as appropriate.

Despite the warnings, some people were still using Samlit to wire money to China yesterday.

Zhao Jianbin, a worker in Singapore from Jiangsu province, sent some money in the morning to his family. The long-time Samlit customer has been in Singapore for some 20 years. “Banks are troublesome,” Zhao said. “I’m not concerned because it has never happened to me before. I don’t remit large amounts.”

China limits capital flow, capping the amount individuals can receive or remit to US$50,000 without special approval. People who have needs that exceed the limit often use remittance agencies that sometimes use illegal means to evade such controls.

The MAS also warned against rushing to remit money to China via overseas third-party agents before January 1.