The Monetary Authority of Singapore (MAS) has instructed companies providing money transfer services to suspend the use of non-bank and non-card channels when interacting with individuals interested in cross-border transactions to China.
Between January 1 and March 31 next year, the mentioned firms will be able to engage for the specified purpose only a bank, a card network operator such as UnionPay International, or a licensed financial institution that involves a lender or provider of card infrastructure for transferring money.
MAS made this decision after reports of transactions to China carried out by individuals, mainly citizens of the said country working in Singapore, through companies providing relevant services, and having a negative result. In this case, the negative result is that the funds were frozen in the accounts of their recipients in Chinese banks.
Companies providing money transfer services engage instead of traditional lenders to complete financial operations from Singapore to China. MAS states that this algorithm of the procedure is due to the desire to reduce the costs associated with transactions. The organization also noted that money under the specified methodology was successfully credited to the recipients’ bank accounts in the vast majority of cases. But in recent months, Chinese law enforcement agencies have frozen a significant proportion of these transactions. So far, there is no explanation for the reasons for these decisions regarding funds entering accounts in Chinese banks from Singapore.
MAS has decided to suspend some transactions to China to minimize the risk for consumers who transfer money to this country.
Singapore police said that as of December 15 this year, more than 670 reports of funds being frozen had been received, totaling about 13 million Singapore dollars (9.8 million US dollars). About 430 of these messages relate to Samlit Moneychanger Pte Ltd. The company announced the use of several channels for money transfers to China. The firm also noted strict compliance with Singapore rules.
Singapore residents were advised to refrain from hasty money transfers to China through foreign third-party agents until January 1. Government officials advise individuals to use other channels for financial operations. Ignoring this recommendation may result in the unintentional freezing of funds on accounts.
China is currently restricting the movement of capital. The maximum amount of money that individuals can receive or transfer without special permission is $50,000. Those whose financial needs exceed the limit often use the services of agencies, engaging illegal funds to circumvent controls. Is the excess of the mentioned amount of funds the reason for the freezing of money received from Singapore in Chinese bank accounts, is unknown.
China is currently the third largest recipient country of money transfers in the world. According to data released by the World Bank this week, the total amount of financial receipts will amount to $50 billion this year.
As we have reported earlier, Payoneer Singapore Receives MAS License.