Key Takeaways
- Licensed money lenders in Singapore must register with the Ministry of Law (MinLaw) and pass the Moneylender’s Test before receiving a license.
- The Registry of Moneylenders has currently suspended the granting of new moneylending licenses.
- Unlicensed money lenders often use tactics like unsolicited messages, fake websites, or requests for personal information to appear legitimate.
- Licensed money lenders cannot solicit loans via text, social media or phone calls, and cannot approve loans without meeting you in person.
- Only licensed money lenders and specifically exempted entities, such as pawnbrokers, are legally allowed to lend money in Singapore.
The growth of the moneylending industry in Singapore has made it easier for people to access credit for personal and business needs without approaching a bank. Along with this growth, however, unlicensed money lenders who harass borrowers or use unlawful tactics have also become more common.
If you’re trying to verify whether a specific money lender is licensed, see our step-by-step guide on how to check and verify a licensed money lender in Singapore. This article instead covers how money lenders themselves get licensed, and how to spot the tactics unlicensed lenders use to appear legitimate.
Deception Tactics Used By Unlicensed Money Lenders
Unlicensed money lenders and scammers use several tactics to get targets to take out loans with them.
a) Contacting Targets Directly
Unlicensed money lenders often contact targets with unsolicited loan offers via text messages, emails, flyers, phone calls, or even in person. They present attractive loan offers and may ask for “processing fees” or “GST fees” before disbursing the loan.
b) Running Fictitious Social Media Accounts And Websites
Some unlicensed lenders maintain a strong online presence, mimicking legitimate money lenders, sometimes even with web addresses that closely resemble those of licensed lenders. Many people have difficulty catching on to this tactic.
c) Seeking Your Personal Information
Unlicensed money lenders often try to access personal information for unlawful purposes, including your home address, Singpass credentials, and NRIC number. Some may grant the loan but use predatory practices to harass borrowers afterward, these lenders are commonly known as loan sharks.
To avoid falling into these traps, do not engage with unsolicited offers. Don’t respond to unexpected texts, emails or calls, even if the offer seems attractive and you need funds urgently. Always opt for a licensed lender.
What Licensed Money Lenders Cannot Do
This is a quick guide to what licensed money lenders are prohibited from doing:
1. Send Messages Or Make Unsolicited Calls
Licensed money lenders cannot solicit borrowers through text messages, social media, or phone calls. Advertising rules only permit solicitation through their own website or ads on their business premises. A loan offer sent through any other channel is likely a scam.
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2. Approve Or Grant Loans Remotely
Licensed money lenders must meet borrowers in person at their approved place of business to verify identity before a loan is granted. No loan transaction should be completed entirely online. Unlicensed lenders often prefer doing everything virtually so they can’t be traced.
3. Ask For Payment To Disburse The Loan
A licensed money lender deducts any applicable charges from the loan principal after the loan is granted. They cannot ask you to pay upfront to initiate the process, unlicensed lenders often use this “fee” as a pretext.
4. Request Your Singpass Login
Licensed money lenders cannot ask for your Singpass username or password. An unlicensed lender may pressure you to share this as part of a fake “approval process.”
5. Retain Your ID And Personal Documents
A licensed lender will not retain documents such as your passport, driver’s license, employment pass or work permit. Unlicensed lenders sometimes do this to use as leverage until a loan is repaid.
6. Present A Blank Or Incomplete Contract
If a lender fails to provide a loan contract, or offers a blank, incomplete or unclear one and pressures you to sign quickly, this is a strong warning sign of an illegal lender.
7. Use Threats, Insults Or Intimidation
The law does not allow money lenders to use threats, vulgarities, abuse or violence when pursuing repayment. If a lender behaves this way, you have the right to report them to the Police hotline at 1800-255-0000 or via the iWitness portal.
How Money Lenders Apply For Their Licenses
Money lenders apply for their licenses through the Ministry of Law. To qualify, at least one manager of the business must pass the Moneylender’s Test, an open-book format covering 30 multiple-choice questions based on the Moneylenders Act 2008, Moneylenders Rules 2009, and the Moneylenders (Prevention of Money Laundering, Terrorism Financing and Proliferation Financing) Rules.
The costs involved are:
- Moneylender’s Test fee: $130 (inclusive of GST), non-refundable, per attempt
- Application fee: $600, non-refundable, applies only to new license applications, not renewals
- License fee: $1,500 per year
Applicants and all persons managing the moneylending business must also be of good character, ordinarily resident in Singapore, above 21 years old, and hold a minimum of 4 ‘O’ Level credit passes, including a credit pass in English.
Please note: the Registry of Moneylenders has currently suspended the granting of any new moneylending licenses, as well as applications for additional places of business. This applies to new applications only, not to renewals of existing licenses.
Updating Or Renewing A Money Lender’s License
Updating or renewing a money lender’s license is done entirely online. Examples of updates include a change of business name, address, or contact details, appointment of a new manager, employment cessation, onboarding of new staff, or share allotment and transfer.
For a change of business premises or address, the Registry requires a copy of the landlord’s approval for moneylending use, along with photos of the premises. This must be submitted within seven days of making the application.
Once the Registry approves the change, the business must submit:
- Scanned copies of the tenancy agreement covering the rest of the license period
- Scanned proof of ownership of the premise (e.g. strata title deed or property tax forms)
- Photos of the proposed signage
For share allotment or transfer, the business must submit clear identification for both parties, details of the shares being transferred, the reason for the change, documented evidence of the source of funds, and the relationship between the parties, along with the transferee’s relevant experience.
Note that the Registry must approve any of these changes before they take effect.
Criteria For Exempt Money Lenders
Under the Moneylenders Act, no person may carry on a moneylending business in Singapore without a license, unless the business has been specifically exempted or excluded.
Exempt money lenders primarily lend to corporates, trustees, limited liability partnerships, accredited investors, and real estate trustees. Examples include registered societies, licensed pawnbrokers, and employers lending to their own employees as an employment benefit.
Aside from licensed money lenders, these exempt entities are the only other legitimate sources you can borrow from in Singapore.
Frequently Asked Questions
How does a money lender get licensed in Singapore?
Money lenders apply through the Ministry of Law. At least one manager must pass the Moneylender’s Test, and the business must meet the requirements set out in the Moneylenders Act and Moneylenders Rules.
Is the Registry of Moneylenders currently accepting new license applications?
No. The Registry has currently suspended the granting of new moneylending licenses and applications for additional places of business. This does not affect renewals of existing licenses.
How much does it cost to apply for a moneylender’s license?
Costs include a $130 Moneylender’s Test fee, a $600 non-refundable application fee for new licenses, and a $1,500 annual license fee.
What tactics do unlicensed money lenders use to appear legitimate?
Common tactics include unsolicited contact via SMS or social media, fake websites mimicking licensed lenders, and requests for personal information such as your Singpass login or NRIC.
Are there any legal alternatives to licensed money lenders?
Yes. Certain entities are exempted from needing a license, such as licensed pawnbrokers, registered societies, and employers lending to their own employees. Aside from these, only licensed money lenders may legally lend money in Singapore.
Conclusion
Understanding how money lenders get licensed, and the tactics unlicensed lenders use to appear legitimate, can help you avoid falling victim to scams. If you’re ready to work with a properly licensed lender, contact Lending Bee. We are a licensed money lender registered with the Registry of Moneylenders, offering competitive loans with attractive terms.
Visit Lending Bee at any of our four locations, Orchard, Bedok North, Yishun or Jurong, call us, or apply for a loan now.
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About Ashley Sim
Calling herself a “professional multi-tasker”, Ashley worked as a relationship manager in a bank for five years. She left her job just before the pandemic happened and became a freelance writer for about a year. Now, she’s making the most of her love for writing and knowledge of the banking and financial industry in her role as a content marketing lead. She hopes to help people make better financial decisions through her content and campaigns.
