Samlit Moneychanger under probe for suspected fraudulent trading after cases of frozen remittances to China

SINGAPORE: Remittance company Samlit Moneychanger and two executives are under investigation for suspected fraudulent trading following cases of money transfers being frozen in China.

In a joint media release on Friday (Feb 23), the police and the Monetary Authority of Singapore (MAS) said they have started investigations against Samlit's director - a 43-year-old woman - and its compliance manager, a 34-year-old man.

They are also suspected of failing to comply with various obligations Samlit has as a licensed payment services provider.

Samlit, located at People's Park Complex in Chinatown, is planning to wind up its business amid the investigation. 

It was reported last December that hundreds of police reports had been made by workers whose remittances were frozen by Chinese authorities. Most of the reports were against Samlit Moneychanger.

It was not clear why those funds had been frozen.

But to minimise risks to consumers, the Monetary Authority of Singapore (MAS) announced on Dec 18 that remittance companies providing cross-border services to China must only engage a bank or a card network like Union Pay to assist in money transfers.

Following the reports of frozen funds, MAS started an inspection of Samlit. 

"Samlit, however, has not been forthcoming in providing the information required by MAS and has not satisfactorily explained the purported remittance fund flows," said the police and MAS.

They added that while MAS' inspection was ongoing, Samlit notified the financial regulator on Feb 20 of its intention to surrender its payment services licence and discontinue its business.

"Reports were also received about unusual transfer activities in Samlit’s corporate bank accounts and its director’s personal bank account," said MAS and the police.

In light of the new information, the authorities decided to launch a joint investigation against Samlit.

MAS said it has also taken steps to secure the funds in Samlit’s corporate bank accounts, including directing Samlit to seek approval for any fund withdrawals and transfers.

"This is necessary given the circumstances surrounding Samlit’s sudden surrender of licence. The secured funds are sufficient to meet Samlit’s uncompleted remittance obligations," said MAS and the police.

SAMLIT'S OBLIGATIONS

The investigations are separate from and do not affect any potential private claims by remitters against Samlit, said the authorities. 

"In the meantime, MAS has directed Samlit to continue to provide relevant documentation to affected remitters to facilitate their appeal to law enforcement agencies in China regarding the unfreezing of their beneficiaries’ accounts, even after the surrender of its licence," read the joint press release.

"MAS regrets that Samlit has not taken a more responsible course of action but has chosen to surrender its licence at this time."

Samlit's licence will last until Feb 29, 2024.

It has also been ordered to ensure that beneficiaries of uncompleted remittance transactions receive the funds within seven business days, even after the surrender of its licence.

If the funds have not been received within the time limit, Samlit will have to contact the remitter immediately for further instructions. 

It is also required to properly discharge all outstanding obligations, including making adequate provisions for unforeseen liabilities, prior to winding down.

"The authorities understand the frustrations faced by the affected remitters and urge the affected remitters to seek redress within the legal framework of Singapore," said the police and MAS.

"The police 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."

If found guilty of fraudulent trading, Samlit's director and compliance manager face a fine of up to S$15,000 (US$11,160), a jail term of up to seven years, or both.

If convicted of failing to comply with their various obligations as a licensed payment services provider, an offender faces a fine ranging from S$12,500 to S$1 million – with further fines for continuing offences – and a jail term of up to 12 months, or both.