What Are Illegal Moneylenders in Singapore?

The country’s facing an economic crisis, an unfavourable update. Thus, economists encourage everyone to be ready for possible uncertainties in 2023. Seeking a loan may be an alternative to resolve financial issues, but illegal moneylenders in Singapore shouldn’t be an option.

The inflation rate is high, while economic growth has slowed. Improvements are still coming—threats to one’s profession and career. The calculated global gross domestic product or GDP for 2023 shows the growth progress will slow to about 1.7%. It’s hugely lower than the previous year’s 2.9% GDP.

With the current status of Singaporean citizens, permanent residents, and foreigners, preparations for unpredictabilities are a must. It’s attainable by setting up various types of financial safety nets via lenders in Singapore.

Who Can Help in Countering a Person’s Financial Crisis?

The statements and predictions shared by an economist for Singapore foreshadow a more challenging future for everyone in the country. It is a hit or miss for the communities in Singapore. 

In addition to the current economic concerns, people will notice a rougher way of living. Daily necessities now have higher price tags. It could be burdensome for most people unless an approach focuses on discipline and applicable adjustments.

The usual resolution for money problems is borrowing funds from banks or financial institutions. Yet, due to the strict procedures of these businesses, individuals in dire need of funds might seek illegal moneylenders. 

But do these people or companies have the legal capacities to lend and help counter one’s financial crisis? 

Is involvement with an illicit moneylender of the country worth the money or trouble? 

In Singapore, licensed and unlicensed moneylenders are known for their specific roles in the lending industry. One has accreditation, while the other functions outside the Ministry of Law’s jurisdiction. 

With financial challenges possibly happening, you should prepare. You can learn further about the lending industry and which lenders to trust. 

Uncover the truth about illegal moneylenders. Know the proper actions you can pursue to counter unlawful lending activities.

How Does Moneylending in Singapore Operate?

The concept of financing and moneylending isn’t new to any country, including Singapore. Such is the country’s vast array of financial institutions, like banks and moneylending businesses. All of these legitimate lenders can provide either a secured or unsecured personal loan to the communities residing in Singapore.

Companies that proffer legal moneylending services in the country have the entitlement to impose a monthly interest rate. It can range from 1% to 4%, higher than banks and other financial institutions. 

Furthermore, moneylending in Singapore operates with astounding accuracy and competence. The Ministry of Law Singapore spearheads the education, guidance, and lawful approaches concerning moneylending operations in Singapore. 

With these, the laws for moneylending in Singapore are clear and strict. It’s to ensure the safety of the business owners. Most importantly, the security and to serve legal rights of those seeking financial assistance from such institutions. 

Legal Obligation

Moneylending companies in Singapore have legal obligations to fulfil their contracts with their borrowers and vice versa. 

Moneylenders and borrowers must abide by the contractual terms. Accredited lending businesses should specify and ensure all borrowers understand the policies and financial obligations within the legal contract. 

The loan terms and conditions include late payment charges, interest payments, repayment schedules, etc. 

It’s the approach that the Ministry of Law deems essential that communities must comply with as it aims to deliver a fair trade between lenders and borrowers. It’s MinLaw’s specific purpose and legislative intent. 

It prohibits anyone from operating a lending business in the country. Unless these businesses have the authorisations if they are an “excluded moneylender” or “exempt moneylender.” 

The lack of permission to operate as moneylenders in Singapore has severe consequences. For one, they’ll be ah longs or loan sharks and immediately alerts people regarding their illegal lending practices.

What are Illegal Moneylenders?

In many ways, an illegal moneylender is the complete opposite of a legal moneylender. These individuals or groups operate in an abusive, manipulative and rough manner. 

The Moneylenders Act and International Syndicated Loans from Singapore’s Law Gazette mention these groups. It clearly states that any person or group who fails to qualify as a legal moneylender shall acquire the branding of unlicensed or illegal moneylenders. 

In addition, under section 14(s) of the MLA, any contract for a loan, guarantee, or security provided for a loan shall be invalid or legally binding.

Moreover, any amount of cash paid by or on behalf of the illegal moneylender will not be redeemable in any court of law.

How Illegal Moneylenders in Singapore Function?

Illegal moneylenders in Singapore are rampant in the country. Their activities are notorious because they often include scamming, bullying, and harassing their victims. 

These individuals have specific target markets that fall under the categories of gamblers, unemployed or retrenched individuals, or workers earning meagre incomes. 

Promotional Advertisements and Messaging

Initially, they will attract victims by blasting messages through SMS, WhatsApp, or other social media platforms. Yet, in many cases where victims shared their experiences with an illegal moneylender, the typical way to communicate is through WhatsApp.

The messages appear as appealing promotional advertisements. Its content mainly promises an impressive loanable amount accessible, with exceptionally low-interest rates than licensed moneylenders. 

Role Plays as a Legal Moneylender to Gain Victim’s Trust

Because of the extensive efforts of the Singapore government, police, and the Ministry of Law, more people have become aware of illegal moneylenders’ strategies or behaviour.

Thus, to coax more desperate victims, they role-play as legal moneylenders. They pretend to work or are in connection to legal money lending companies in Singapore and convince the victims that they are legitimate.

With tactics like these, many targets engage and transact with illegal moneylenders. As soon as the victims begin to trust Ah Long, then follow the subsequent requests for the victims’ personal and work-related information like asking for:

  • The National Registration Identity Card (NRIC) photos of both the front and back of the card
  • Driver’s licence
  • Work permits
  • ATM cards
  • Passports
  • Employment pass
  • SingPass user identification and or simply asking for the SingPass password
  • Borrower’s photo
  • Information of the victim’s employer or company

In Singapore, the Personal Data Protection Act protects a borrower’s details.

When a borrower makes a transaction with a legal moneylender, the latter will verify the former’s information from The Moneylenders Credit Bureau (MLCB).

Licensed lenders in the country ask for the borrowers’ personal and employment details. However, if a supposed accredited lender asks excessively unnecessary for details concerning work, credit history and other vital information, they’re possibly an illegal moneylender.

Illegal Moneylenders Prefer Online Transactions to Meet Face-to-Face

Another sign that the person is an unlawful moneylender is that they prefer to accommodate the loan request and overall transactions online. 

Moneylenders are legally responsible for providing a Note of contract for loans to their borrowers. It is a red flag when someone promises to grant a loan without seeing the borrower face-to-face. 

It is critical to note that loan transactions require legal contracts that moneylenders and borrowers must sign face-to-face. Or you may apply for a loan online but only through the legal moneylenders’ official site.

Demanding Upfront Payments to Secure or Process Loan

Illegal moneylenders or Ah Longs are scammers. They make pledges to process a person’s loan only if the individual sends them an upfront payment. 

As soon as Ah Long receives the compensation, they’ll give back a certain amount of money but will ask for a more significant sum in the guise of processing or securing the loan. 

The Ministry of Law condemns this practice and breaks the Moneylenders Act. Licensed moneylenders cannot request upfront payments to secure or process their borrower’s loan.

Real Nature of Illegal Moneylenders in Singapore

Illegal moneylenders, Ah Longs, or loan sharks do not hesitate to show their real nature upon acquiring vital information they can use against their victims. Sometimes, they’ll send a meagre amount to the borrower, claim a different amount, and accuse the former of tricking them into not paying the supposed loan interest rate.

It’s when the harassment and bullying begin. Loan sharks will send threats to the borrower 24/7, which affects the individual’s emotional and psychological health. 

The intimidation done by these loan sharks does not end there. They will further target the borrower’s family, employers, company, and anyone associated with them to impose their concerning presence. 

Extreme aggravation from illegal moneylenders follows as soon as the borrower opts to ignore them or fails to pay on time. The ah longs will go to lengths to pester the borrower by leaving a note at the latter’s home, car, or workplace. In many documented reports, the loan sharks spray, vandalism, or splash red paint on the borrower’s properties. 

What’s worse is they do not simply stop there. They are more than inclined to deal physical harm to the borrower. At times, these loan sharks’ have the severe determination to leave problems to the borrower and would burn the latter’s property. 

These actions are harmful techniques of manipulation to extract money from their victims forcibly. 

Attain Safety and Legit Lending Service by Reporting Illegal Moneylending Activities

The stress, anxiety, and pressure from loan sharks are intense. Many victims choose to keep quiet because they feel scared of being subject to punishment. 

Involvement of sanctions when doing business with illegal moneylenders may occur; it is best to contact the authorities and deal with the problem according to the law.

When caught, the court will charge illegal moneylenders under the Moneylenders Act. Anyone convicted, assisting, or carrying in a criminal or unlicensed moneylending business shall pay a fine of $30,000 minimum up to $300,000 maximum. They’ll also face a jail period of up to four years and canning of up to six strokes. 

It is essential to report all of the loan shark’s harassment and activities to follow arrest and acquire punishment accordingly. Also, when victims or eyewitnesses file a complaint regarding the loan sharks to the authorities, it strengthens the campaign to halt their illegal activities as soon as possible.

To file any complaint regarding unfair practices from illegal or legal moneylenders, contact the Registry at 1800-2255-529. Get additional assistance from the Singapore Police Force at ‘999’ or the X-Ah Long hotline at 1800-924-5664. 

Thus, only request a loan from a legal moneylender to ensure transactions are legitimate and safe. Click here to apply for one today. 

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