Unregulated 'bank transfer helpers' may soon be out of business

Unregulated 'bank transfer helpers' may soon be out of business

Source: Straits Times
Date Published: 21 Dec 2018
Author: Ng Jun Sen

Proposed rules aim to mitigate risks of money laundering and terrorism financing.

A growing breed of financial service middlemen operating online may find themselves out of business or running afoul of the law when new rules kick in next year.

Calling themselves "bank transfer helpers", they advertise on online sites such as Carousell, offering to help customers send money overseas for a price. A search on Carousell showed at least eight such listings in the past month.

Based on user reviews, the transfer services appear to be aimed at people who do not have easy access to a credit card or an e-wallet, such as students and foreign workers, but who want to transact online with foreign merchants or transfer money to a foreign bank account.

The middlemen operate by meeting up with customers, collecting the amount to be transferred in cash, and then using bank accounts or electronic payment systems under their name to send money. Some are charging commission of about 3 per cent of the transferred amount.

On whether the unlicensed and unregulated transfer services are legal or permitted, a spokesman for the Monetary Authority of Singapore (MAS) said this "depends on the specific nature of the services provided, which is not always apparent from the advertisements cited".

She added that widely accepted stored-value facilities and remittance services are currently regulated under the Payment Systems (Oversight) Act and the Money-changing and Remittance Businesses Act respectively.

But a new Payment Services Bill, which is scheduled to come into force in the later part of next year, will replace the existing regime and expand the scope of regulated activities beyond stored-value facilities, remittance and money-changing services to include payment account issuance, domestic money transfer, and merchant acquisition services.

When the Bill is passed in Parliament, those providing such services will require licences unless they are granted exemptions. They will also be regulated for money laundering and terrorism financing risks, the MAS spokesman said.

Some in the remittance industry have flagged that these unregulated bank transfer helpers could end up acting as proxies for criminals to launder money or finance terrorism.

The MAS spokesman said the new Bill "will broaden the current payment regulatory framework in Singapore to mitigate risks arising from such new payment services".

The unregulated transfers are being made via digital banking services, such as DBS Bank's iBanking and PayLah, or through e-wallet and payment apps such as PayPal.

In response to queries, a DBS spokesman said unusual transactions come to its attention from time to time, including those carried out in the manner described in the Carousell listings.

She added: "The bank reviews these transfers to determine their legitimacy. Where necessary, we also engage the relevant authorities to carry out the reviews."

The MAS spokesman said that to battle white-collar crime, financial institutions such as banks are required to find out more about their customers' backgrounds and monitor their transactions.

"Banks are hence required to know their client well, including the purpose of the account and nature of account activities. On an ongoing basis, banks must review the transactions of their customers to assess that they are consistent with the customer profile and are legitimate," she said.

If the banks determine there is a risk that the transaction benefits criminals or terrorists, they are required to stop the transaction and file a suspicious transaction report with the police.

There were 35,471 such reports last year alone, about half of which were flagged by banks, based on data from the Commercial Affairs Department.

The Straits Times understands that some reports have been made against such bank transfer helpers.

"MAS conducts regular checks on our banks' risk management for anti-money laundering and countering the finance of terrorism. We will not hesitate to take action against any bank that breaches these requirements," said the MAS spokesman.

Protocols such as these were formed after Singapore joined the Financial Action Task Force (FATF), a global watchdog against international financial crime, in 1992.

However, the FATF also recognised that "an overly cautious approach" to these safeguards can end up excluding legitimate businesses and consumers from the formal financial system.

Last year, the FATF published additional guidelines on adapting due diligence checks to support financial inclusion, while mitigating money laundering and terrorism financing risks. This includes exemptions from money-laundering controls if there is a proven low risk of criminal activity.

When the Payment Services Bill is passed in Parliament, those providing such services will require licences unless they are granted exemptions. They will also be regulated for money laundering and terrorism financing risks, the MAS spokesman said.


Number of reports last year of transactions with high risk of benefiting criminals or terrorists, about half of which were flagged by banks, according to the Commercial Affairs Department.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.




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