Junket promoters may have finger in moneylending pie

Junket promoters may have finger in moneylending pie

Some think they could be using a moneylender’s licence to get around tight casino rules

By ARTHUR SIM

(SINGAPORE) It looks like everyone wants a piece of the casino action when it opens.

Easier entry: The criteria for award of a moneylending licence are less stringent and daunting compared to those for a junket promoter’s licence
According to the Insolvency and Public Trustee’s Office, which comes under the Ministry of Law, the number of licensed moneylenders increased by 47 in 2009, up from 173 in 2008, representing a jump of 27 per cent.

Between 2007 and 2008, the number of moneylenders rose just 2.4 per cent from 169 to 173, while between 2006 and 2007, the increase was 12.6 per cent from 150 to 169.

To get a licence, a security deposit of $20,000 has to be placed with the Accountant-General, and it takes about 12 days for applications to be processed.

While there are a considerable number of other requirements which must be met before licences are given, these are less stringent and daunting compared to those for a junket promoter’s licence. Which is why some junket promoters may be seeking a moneylender’s licence instead as, ultimately, both provide the same service: extending credit.

A source has also told BT that junket promoters are indeed trying to circumvent the Casino Regulatory Authority’s (CRA) strict licensing requirements for junket promoters by becoming licensed moneylenders instead.

Suitability checks on junket promoters are said to be as exhaustive as those for the casino licence, and includes the declaration of financial and business dealings and records.

The recently announced Casino Control Credit Regulation, which has strict controls on how credit can be extended by the casino and junket promoters (including providing an approved credit assessment criteria for clients), is not expected to apply to moneylenders.

In Singapore, there are thought to be between 20 and 30 junket promoters in operation, although none has been licensed by the CRA yet.

David Poh, president of the Moneylenders’ Association of Singapore, does say that the opening of the casinos could be one reason why there was a spike in the number of moneylenders in 2009.

But he said that the recent increase in numbers could also simply be because it is now easier to get a licence and that moneylending is increasingly recognised as a profitable business. Mr Poh also noted that there is no cap on the interest rates charged by moneylenders.

There are no official statistics on how many moneylenders, licensed or otherwise, have made loans to people involved in gambling. A recent report in The Straits Times estimated that more than 90 per cent of the people who seek help from moneylenders have debts that are related to gambling.

The same report also cited Christian Care Services as saying that 18 out of 20 cases it saw on moneylender issues cited gambling as the problem.

So, with the casinos set to open, perhaps it is not surprising that the number of licensed moneylenders has increased then.

The government has recently acted against unlicensed moneylenders or loan sharks, regardless of whether they target gamblers or not.

In January, changes to the Moneylenders Act were made such that the assets of suspected loan sharks under criminal detention can be frozen, and prosecutors will have greater access to the financial records of illegal moneylenders and their associates.

The courts will also be empowered to deal with those who orchestrate loan shark operations from overseas.

Tougher penalties include mandatory jail terms and possible caning.

At the moment, however, it is still not a crime to borrow from unlicensed moneylenders.

Source : Business Times - 09 February 2010

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