The Monetary Authority of Singapore (MAS) today issued a Notice directing licensed payment service providers providing cross-border money transfer services to suspend for the next three months the use of non-bank and non-card channels when transmitting money to persons in the People’s Republic of China (PRC).
Specifically, in providing individuals cross-border money transfer services to China, remittance companies in Singapore may engage only a bank or an operator of a card network (e.g. Union Pay International), or a licensed financial institution that has engaged a bank or an operator of a card network, to assist in the transmission of money. This restriction will last for a period of three months, from 1 January 2024 to 31 March 2024. It follows reports of remittances to China made by individuals through remittance companies in Singapore being subsequently frozen in their beneficiaries’ bank accounts in China.
To keep transaction costs low for customers, remittance companies engage overseas third-party agents, rather than banks, to complete the remittance from Singapore to China. In the vast majority of cases, the monies sent through these channels are successfully deposited in the beneficiaries’ bank accounts in China.
However, in recent months, for a very small proportion of such remittances, the monies received in beneficiaries’ bank accounts have been frozen by the PRC law enforcement agencies. It is not clear why these funds had been frozen. Nonetheless, 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 remittance companies for money transfers to China. While customers may now have to pay more to remit funds to China, 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.
MAS has been actively engaging the remittance companies involved. "We have told them to render the necessary assistance to the affected customers and to strengthen their complaints handling process. 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."
The temporary suspension on the use of non-bank and non-card channels will take effect 14 days from the date of the notice, on 1 January 2024. The 14-day period provides time for the remittance companies to make the necessary changes to their existing practices, and for existing remittances to be completed.
MAS cautions members of the public against rushing to remit monies to China through overseas third-party agents during this 14-day period. Individuals should use other channels for remittances into China, such as through banks or card networks, to prevent any inadvertent freezing of monies or accounts. Such channels are offered by the remittance companies and remain available for customers.
MAS will continue to closely monitor the situation and practices of remittance companies. MAS may terminate or extend the suspension after 31 March 2024 or take further measures as appropriate.
Re-disseminated by The Asian Banker