MAS to suspend non-bank and non-card channels for remittance to China from Jan 1, 2024
THE Monetary Authority of Singapore (MAS) has directed remittance companies to suspend the use of non-bank and non-card channels in providing individuals cross-border money transfer services to China for three months from January, it said on Monday (Dec 18).
From Jan 1 to Mar 31, 2024, they may engage only a bank, an operator of a card network such as UnionPay 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 comes after reports of remittances to China made by individuals – mostly Chinese nationals working here – through remittance companies in Singapore being subsequently frozen in their beneficiaries’ bank accounts in China.
Remittance companies engage third-party agents overseas instead of banks to complete the remittance from Singapore to China to keep transaction costs low, MAS said, with the monies successfully deposited in beneficiaries’ bank accounts “in the vast majority of cases”.
But “a very small proportion” of such transactions have seen monies received frozen by Chinese law enforcement in recent months, it noted, adding that the reason for the freezes is unclear.
Nonetheless, MAS has decided to implement the temporary suspension to minimise risks to consumers remitting funds to China.
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“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,” it said.
MAS added that it has been engaging the remittance companies involved and instructed them to assist affected customers, strengthen their complaints-handling process, and review their existing arrangements with partners for the remittance corridor with China.
The 14-day period before the suspension takes effect on Jan 1, 2024 provides time for remittance companies to make necessary changes to their existing practices and complete existing remittances, it said.
It also warned against rushing to remit monies to China through overseas third-party agents during this time, instead urging the public to use other channels, such as banks or card networks, to prevent any inadvertent freezing of monies or accounts.
MAS said it will continue to closely monitor the situation, and may terminate or prolong the suspension after Mar 31, 2024, or take further measures.
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