Singapore’s regulator ordered remittance companies in the city-state to halt the use of non-bank and non-card channels when transmitting money to China, following a fund-freeze scare.
The city-state will start the three-month suspension on January 1, the Monetary Authority of Singapore said in a statement late Monday.
The move follows reports that remittances to China through Singapore were frozen in their beneficiaries’ bank accounts in China by law enforcement agencies. The reason was unclear.
China limits capital flow, capping the amount of foreign currency individuals can receive or remit to US$50,000 ($66,603.75) without special approval. People who have needs that exceed the limit often resort to remittance agencies that sometimes use illegal means to help evade such controls.
Investors are closely monitoring China’s moves to tighten regulation on the sector, following an outflow spike this year. The exodus of money from the world’s second-largest economy peaked in August and has turned more moderate since then, with the November amount roughly in line with monthly average outflows in the first quarter.
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The Singapore Police Force had received more than 670 reports of remittances being frozen, with about $13 million of funds affected, according to a separate statement. Some 430 of the reports were against Samlit Moneychanger Pte Ltd.
Samlit said in an emailed response that it offers multiple channels for remittance to China in compliance with Singapore rules, declining to comment on how much money is sent to China via its operation on a daily basis.
The government ordered the suspension to “minimize risks to consumers remitting funds to China,” the MAS said. To keep transaction costs low, remittance companies tap overseas third-party agents, rather than banks, to complete the assets transfer from Singapore to China, it added.
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Despite the warnings, some people were still using Samlit to wire money to China on Tuesday. Zhao Jianbin, a worker in Singapore from Jiangsu province, sent some money in the morning to his family.
The long-time Samlit customer has been in Singapore for some 20 years. “I have been using this out of habit. Banks are troublesome,” said Zhao, adding that he wasn’t too worried about funds being frozen. “I’m not concerned because it has never happened to me before. I don’t remit large amounts.”
China is among the world’s third-largest remittance recipient countries, netting US$50 billion in 2023, according to a report published by the World Bank this week. The report didn’t provide details on sources of funds for the mainland.
The MAS also asked remittance firms to assist the affected customers. It will monitor the situation, while assessing whether to extend the suspension or take further measures.
