Samlit executives investigated for suspected fraudulent business operations

SINGAPORE: A director and compliance manager of Samlit Moneychanger in Chinatown are currently under investigation for their suspected involvement in conducting business with fraudulent intent and their alleged failure to comply with various obligations as a licensed payment services provider.

In a joint statement released on Friday (23 February), the Singapore Police Force (SPF) and the Monetary Authority of Singapore (MAS) revealed that the director is a 43-year-old woman, while the compliance manager is a 34-year-old man at Samlit.

MAS further stated that it has taken proactive measures to secure the funds in Samlit’s corporate bank accounts. These measures include directing Samlit to obtain approval for any fund withdrawals and transfers. The secured funds are deemed sufficient to cover Samlit’s outstanding remittance obligations.

The statement also highlighted that Samlit has not been forthcoming in providing the information required by MAS and has not satisfactorily explained the purported remittance fund flows.

Investigation into Samlit’s frozen remittances to China

Last December, the police reported receiving 430 complaints against Samlit Moneychanger for frozen remittances to China. Beneficiaries in China were unable to access funds due to confiscation by Chinese authorities, prompting MAS to initiate an inspection of Samlit.

During the ongoing MAS inspection, Samlit informed MAS on 20 February of its decision to surrender its payment services license and cease operations.

Concurrently, reports surfaced regarding unusual transfers in Samlit’s corporate and director’s personal bank accounts.

In response to this new information, the Police and MAS have jointly launched an investigation against Samlit.

Allegations include suspected fraudulent trading under Section 238(4) of the Insolvency, Restructuring, and Dissolution Act 2018, and suspected non-compliance with obligations as a licensed payment services provider under the Financial Services and Markets Act 2022 and the Payment Services Act 2019.

MAS emphasized that these investigations do not impact potential private claims by remitters against Samlit.

Despite Samlit’s decision to surrender its license, MAS directed the company to assist affected remitters in providing documentation for appealing to Chinese law enforcement regarding frozen accounts.

Expressing regret over Samlit’s actions, MAS noted the company remains a licensee until 29 February.

Samlit is obligated to ensure beneficiaries receive funds within seven business days, even after license surrender. Failure to do so requires immediate contact with the remitter for further instructions.

Additionally, Samlit must fulfil all outstanding obligations and make provisions for unforeseen liabilities before winding down. MAS and SPF acknowledged the challenges faced by affected remitters, urging them to seek legal redress within Singapore’s legal framework.

The Police said they will not hesitate to take enforcement action against anyone who breaks the law in Singapore, including the organisation of or participation in a public assembly without a Police permit.

“The Government will be reaching out this weekend to the affected remitters who had remitted monies through Samlit to share more information with them, ” the statement added.

The offence of fraudulent trading under Section 238(4) of the Insolvency, Restructuring and Dissolution Act 2018 carries a punishment of a fine of up to S$15,000, or an imprisonment term of up to seven years, or both.

The punishment for offences under the Financial Services and Markets Act 2022 and the Payment Services Act 2019 ranges from a fine of up to S$12,500 to S$1 million (with further fines for continuing offences, if applicable), and imprisonment for a term of up to 12 months, or both.

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

As of 15 December 2023, 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 October last year, three Chinese nationals working in Singapore took legal action against Samlit.

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.

In response to the increasing number of seizures, the 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.