Chinese expats sue Singapore moneychanger as China freezes transferred funds

SINGAPORE: Three Chinese nationals working in Singapore have taken legal action against a money changer firm in Singapore following Chinese authorities froze the money the individuals had transferred to their home country.

According to Bloomberg News, the trio is pursuing a claim of 347,501 yuan (approximately US$48,946) from Samlit, a licensed money changer located in Chinatown. along with other allegations of breach of agreements.

The lawsuit was filed in October last year in the Singapore courts.

Samlit has refuted the accusations, asserting that it fulfilled its obligations and cannot be held responsible for events occurring after the money reaches designated accounts in China, as stated in court documents.

In the lawsuit, one of the claimants, Mr Tan Mingshi, recounted that Chinese police froze 250,000 yuan (approximately US$35.213) transferred into his wife’s bank account in 2022 due to suspected money laundering.

The funds were released only after he returned to China, following police instructions to transfer 142,226 yuan to “scam victims,” according to court documents.

Ms Peng Fang Fang, another claimant, entrusted S$40,000 to Samlit for the equivalent of about 195,600 yuan to be sent to her Chinese account, only to have a significant portion frozen by the Chinese authorities.

Mr Qi Chao, the third claimant, stated that most of the S$10,576 transferred to his Chinese bank account was frozen as the police probed his “illegal activities” related to the transfer, according to the court filing.

Similar to Mr Tan, Ms Peng also returned to China to cooperate with the police, while Mr Qi complied with police instructions.

Their lawyer, Pang Khin Wee of Hoh Law, clarified that none of the claimants has been accused of any wrongdoing related to the fund transfers. He noted that they are all long-term residents and blue-collar workers in the city-state.

In Samlit’s defence filed with the court, the company argued that none of the claimants provided “satisfactory” evidence supporting their claims of frozen funds.

MAS imposes three-month suspension on non-bank remittances to China amid frozen funds issue

As of 15 December, authorities in Singapore have recorded over 670 complaints to the police regarding frozen remittances to China, amounting to a total of S$13 million (approximately US$9.7 million).

The majority of these complaints, almost two-thirds, are associated with Samlit.

In response to the increasing number of seizures, the Monetary Authority of Singapore (MAS) has mandated that remittance firms use only banks or operators of a card network, such as Union Pay International, when transmitting funds to China.

This directive aims to address the common practice of remittance firms using overseas agents to cut costs instead of opting for direct bank transfers.

The restrictions are effective for three months starting 1 January, with the possibility of an extension.

MAS clarified the directive was not prompted by any specific money laundering concerns, as mentioned on its website in December.

Both MAS and the Singapore police have stated that there is no information indicating the involvement of remittance companies in money laundering or scams, and the freezing of funds is not linked to these firms transferring proceeds from criminal activities.

Singapore seeks clarity from China on recovering frozen funds

During a Parliamentary sitting on 10 January, Alvin Tan, Minister of State for Trade and Industry assured that Singapore is actively seeking clarification from the Chinese government regarding the process for remitters to recover their frozen funds.

In response to Parliamentary Questions raised by Workers’ Party MPs Gerald Giam and Louis Chua, Mr Tan stated that MAS would reassess the temporary ban on non-bank and non-card remittances to China before 31 March.

Mr Louis Chua, MP for Sengkang GRC, asked about the obligation of remittance companies in Singapore to ensure that transferred funds reach their intended destinations.

Minister Tan clarified that the issue at hand was not a result of failed remittances but rather concerned funds that were successfully remitted and deposited into the recipient’s bank accounts.

Unfortunately, these funds were subsequently frozen or forfeited by Chinese law enforcement agencies.

“In this regard, MAS considers the remittance companies to have discharged their obligations once the funds have reached the intended recipient,” said Mr Tan.

Mr Chua further asked about the protections for consumers who have engaged such providers, in light of the concerns of late.

Mr Tan responded by confirming that they are actively reviewing the complaints and diligently following up with the remittance companies.

In the specific case of Samlit, he conveyed an understanding that the company is considering civil action, as it pertains to a civil matter.

Mr Tan underscored the close collaboration between SPF, MAS, and the remittance companies implicated in reports received by the Police.

He emphasized that if these remittance licensees, governed by the Payment Services Act (PS Act) as previously mentioned, are found to fall short of regulatory expectations, decisive action will be taken.

“While MAS cannot compel the remittance companies on compensation, we have told them that they should treat their customers fairly. ”

“But if they are found to be in breach, we could take regulatory and enforcement actions, including fines and reprimand, ” Mr Tan added.

In a recent Facebook post, Mr Chua advised that given the recent cases of frozen remittances, individuals should encourage the use of official channels, such as licensed financial institutions, banks, or card network operators, for money transfers.

The Embassy alerts Chinese nationals in Singapore on prudent banking choices

In December last year, the Embassy of the People’s Republic of China in Singapore issued a notice cautioning its compatriots in Singapore about the suspension of non-bank and non-card channels for remittances to China.

The Embassy reiterated its warning to Chinese citizens in Singapore to exercise extreme caution when using non-bank channels for remittances, as there is a risk of funds being frozen.

It strongly advised against using remittance companies for domestic transfers and encouraged individuals to choose legitimate bank remittances.

“In case of funds being frozen in domestic accounts, individuals are urged to proactively contact relevant public security authorities in China to understand the situation and seek guidance. ”

The embassy assured continued assistance within legal and duty-bound limits to protect the legitimate rights and interests of individuals and emphasized the importance of asserting rights lawfully and reasonably to “avoid unnecessary complications and ensure effective issue resolution.”

In 2023, China, as reported in a December World Bank study, emerged as the world’s third-largest recipient of remittances, accumulating a total of US$50 billion (S$67 billion).

This surge in seizures coincides with China’s intensified efforts to combat what it perceives as extensive criminal networks that extend beyond its borders, reflecting a response to the increasing number of its citizens residing abroad.

Across Asia, countries ranging from Singapore to Myanmar are contending with the proliferation of scams and money-laundering incidents emanating from the world’s second-largest economy.

Notably, Singapore is witnessing the unfolding of its most significant money laundering case, with over S$3 billion in assets seized from ethnic Chinese individuals in the city-state thus far.