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Everything About the $13 Million Remitted by People in S’pore That Has Been Frozen in China

2023-12-20 , 11:50 am

Singapore Temporarily Halts Third-Party Channels for Remittances to China Amid Freezing Concerns

Remittance companies in Singapore are temporarily stopping the use of certain channels for cross-border money transfers to China starting January next year.

This announcement was made by the Monetary Authority of Singapore (MAS), who announced on Monday, 18 December, that starting from 1 January 2024, remittance companies are advised to engage only banks, card network operators like UnionPay, or licensed financial institutions working with banks or card network operators for such transfers.

This was also the advice given during a 18 December outreach session organised by the Singapore Police Force (SPF) and MAS.

The session aimed at individuals, primarily Chinese nationals working in Singapore, whose funds had been frozen by Chinese law enforcement agencies after they had sent money to their beneficiaries’ bank accounts in China through third-party agents.

It was also attended by representatives from the Chinese Embassy in Singapore, as well as three remittance companies – Hanshan Money Express, Samlit Moneychanger and Zhongguo Remittance.

The restriction will be in place from 1 January to 31 March 2024 and will be reviewed after three months.

How Did This All Start?

Here’s a story for you:

Sushi chef Li Chang Jiang used Samlit Moneychanger’s services to send several thousand dollars to his daughter in China seven months ago.

However, her account got frozen just four days later.

Li and his family are still unable to access the funds, totaling around S$21,000 which is equivalent to about six months of his salary.

Li’s story is just one of the many that has been occurring in Singapore this year.

The police got over 670 reports of remittances being frozen through third-party channels by 15 December. The total amount involved was around S$13 million.

Out of the 670, about 430 of the reports were against Samlit Moneychanger, SPF and MAS said in a joint media release.

The Consumers Association of Singapore (CASE) received 39 complaints between 1 January to 14 November of this year.

The consumer watchdog’s president Melvin Yong told The Straits Times that the affected individuals had their recipient bank accounts in China frozen by the authorities there. Some of the customers also had their remitted funds confiscated.

According to Lianhe Zaobao, about 1,000 Chinese nationals are affected, with around 30 million yuan (S$5.6 million) in funds involved.

Crowds have also gathered at the Chinese Embassy in Singapore and at remittance companies in Chinatown seeking help.

How Do Remittance Companies Work?

When customers at remittance companies request transfers, they are provided with two options: one through banks and UnionPay, and the other through designated agents for overseas remittance services.

The remittance companies inform customers that the former has lower risks but lower exchange rates, while the latter involves more favourable exchange rates but higher risks, leaving the choice to the customer.

During visits to some remittance companies in Chinatown by reporters, it was observed that a terms and conditions form specifying that customers are free to use any bank or agent for overseas remittance transactions was placed on the counter.

Customers are required to read and sign the form, indicating their understanding and agreement.

Most of the time, the money sent through these channels is deposited in the beneficiaries’ bank accounts in China without issue.

“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,” said MAS, referring to the People’s Republic of China.

To this day, there is still no clear reason why these funds are frozen.

Some Reasons Consumers Opted for Third-party Agents

“Why would you even opt to go through a third-party agent when there are risks involved?” some might scoff.

Respondents were asked why they do not use banks for remittances. Most mentioned the convenience of remittance companies for overseas transactions, especially for older individuals.

A 55-year-old IT professional named Huang stated that he remembered having to wait in long queues at the bank for remittances, with high fees and low exchange rates. In contrast, some remittance companies in Chinatown, some with over 20 years of history, felt more reliable.

While the exchange rates of both options generally differ only slightly, especially for individuals working hard to send money back to their families in China, every cent counts.

Amid recent incidents of remittances to China being frozen, customers opting for third-party agents have significantly reduced.

More individuals are overcoming language difficulties to explore mobile banking transfers and remittance applications developed in the market in recent years.

Reporters interviewed a 54-year-old construction worker, Xu, who has been in Singapore for 15 years and had more than 21,000 RMB (nearly S$4,000) frozen by Chinese authorities after using a third-party agent for remittance.

After being informed by friends, he learned that he could remit money to China through a mobile app. He visited DBS Bank, sought assistance from staff, and downloaded the relevant mobile app.

As the software interface was in English, he took careful notes during the staff’s guidance for future use.

Jiang Feng, a 35-year-old chef, also mentioned that he used to queue at the bank but had turned to remittance centres in Chinatown.

However, considering the recent freezing risks, he is now considering other remittance platforms.

He said that he had been initially worried due to his inability to understand English, and was afraid that he could not undo some steps on his phone. However, he would be willing to consider other platforms, including banks, if it is safer and the exchange rate is not much lower.

In the Meantime…

“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,” said MAS and SPF in the joint release.

The Foreign Ministry of Singapore has been in contact with the Chinese Embassy in Singapore several times in the past month. These engagements aimed to express the Singapore government’s concerns regarding the impact on remitters in Singapore.

The Singapore Embassy in Beijing has also raised the matter with the Chinese foreign affairs ministry, with SPF doing the same with its counterparts in China.

Additionally, the goal was to understand the necessary steps for affected remitters to take in order to have Chinese authorities unfreeze their money and accounts.

“This includes issuing a confirmation letter to affected remitters upon request, to prove that their monies had been remitted through them into China, with information on the source of funds, such as through employment, to facilitate the unfreezing of the accounts,” MAS states.

“We urge the affected remitters to provide all the information necessary to facilitate the unfreezing of their accounts by the PRC law enforcement agencies, and to seek redress within the legal framework of Singapore.”

MAS concludes by saying that they will closely monitor the situation and practices of remittance companies, and will either seek to extend or terminate the suspension of third-party remittance agents after 31 March 2024 based on developments.