The Monetary Authority of Singapore (MAS) has issued a Notice directing licensed payment service providers providing cross-border money transfer services (remittance companies) 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).
The ban takes effect on 1 January and runs through to 31 March, 2024. It means that only a bank or operator of a card network - MAS gives the example of Union Pay International - or a licences financial institution that has engaged a bank or an operator of a card netowr, can assist in cross-border money transfer services to China.
MAS said the clamp down "follows reports of remittances to China made by individuals (mostly PRC nationals working here) through remittance companies in Singapore being subsequently frozen in their beneficiaries' bank accounts in China."
This demand is driven by the search for lower cost services. MAS notes that in these cases, 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 is engaging with the remittance companies involved to improve their handling of such cases, provide the necessary assistance, and make required changes to their existing practices.
Having declared a 14-day period for these companies to make the changes, MAS has warned customers not to rush to make remittances to China through these.
"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."
