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Second Reading Speech for the Moneylenders (Amendment) Bill
Posted on Monday, November 21, 2005 - 12:00 AM

Speech by Associate Professor Ho Peng Kee, Senior Minister of State for Law and Home Affairs , 21 November 2005.

1. Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time”.

Objective of Bill

2. This Bill seeks to amend the Moneylenders Act by introducing higher penalties to curb the rise in illegal moneylending activities and related harassmentcases.

Background

3. In 1993, we introduced a number of measures to deal with unlicensed moneylending activities. These included: enhancing penalties for carrying out unlicensed moneylending activities and related harassment cases; classifying these offences as seizable and non-bailable; subjecting debt collectors who were hired by illegal moneylenders to the same penalties as the illegal moneylenders and making illegal moneylenders and debt collectors liable to be caned up to6 strokes.

4. But the number of unlicensed moneylending and related harassment cases continues to rise: from some 1,500 cases in 1995 to almost 6,000 cases in 2004. In some instances, parties who did not borrow money were also harassed; for example, new occupants of dwellings that were formerly occupied by debtors and people who had lost or misplaced their identity cards. In addition, the number of arrests made in unlicensed moneylending and related harassment cases increased by almost 20% in one year, from 330 arrests in 2003 to 393 arrests in 2004.

5. We must tackle the rise in illegal moneylending cases resolutely, adopting a comprehensive approach. On the enforcement front, Police formed a dedicated Anti-Unlicensed Moneylending Task Force in June this year. With this Task Force in place, Police will take a more focused approach in intelligence-gathering and investigations against unlicensed moneylending syndicates.

6. Next, police intelligence has uncovered a distinct pattern of higher-tier loansharks operating from overseas after being punished, in order to escape Police detection. Therefore, MHA has put in place measures to deny convicted higher-tier loansharks travel facilities for 10 years from the date of their release.

7. On a wider front, MHA is also collaborating with other agencies such as Minlaw, MAS, HDB and IRAS to curb unlicensed moneylending activities.

8. In addition, MHA will continue to review our legislation to better empower Police to deal with the syndicates, for example, we have provided powers under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act to confiscate benefits derived from unlicensed moneylending activities.

The proposed amendments

9. Sir, with these amendments under consideration, Parliament should send a strong signal to loan sharks that we will not tolerate the conduct of unlicensed moneylending activities, where exorbitant interest rates are charged andborrowers and even non-borrowers are harassed in their own homes.

10. Therefore, this Bill seeks to increase the penalties for unlicensed moneylending under the Moneylenders Act as follows:
(a) First, the existing fines for offenders who carry out unlicensed moneylending activities or harassment cases will be doubled;
(b) Secondly, the meaning of “harassment” will be refined to make it difficult for any accused to argue that an isolated act does not constitute harassment;
(c) Thirdly, in harassment cases, first time offenders who in the course of harassment, cause damage to property or hurt to person will be liable to caning; and
(d) And lastly, repeat offenders of illegal moneylending will be subject to mandatory imprisonment whilst repeat offenders of harassment when hurt to person or damage to property is caused will be subject to mandatory caning.

11. People who use a corporate entity such as a company to carry out unlicensed moneylending activities will not be able to hide behind the corporate veil. If such activities are carried out with their consent, connivance or neglect, they as well as the corporate entity are liable to be prosecuted for the offence of illegal moneylending.

12. Bank accounts are now used by runners to collect debts on behalf of unlicensed moneylenders. Debtors are increasingly being asked to make interest and principal repayments of their debts by depositing them into bank accounts. Such arrangements make it difficult for the police to detect unlicensed moneylending activities. As such, a new provision will create a presumption that any person whose bank account or ATM card has been proven to have been used in the collection of debts by an unlicensed moneylender is presumed to have assisted in the carrying out of unlicensed moneylending activities. But this is a rebuttable presumption and innocent persons should have little difficulty in proving otherwise.

13. In line with the higher punishments proposed, we are also making it clear that offences under the Act will be tried before the District Court.

Conclusion

14. In conclusion Sir, these amendments are needed to send a strong signal that the Government has zero tolerance for unlicenced moneylending activities. The enhanced deterrent effect should also help stem the increase that we have seen in such activities.

15. These amendments are part of a larger exercise to update the Moneylenders Act. The broader review, which addresses issues other than unlicensed moneylending, should be completed by early next year.

16. Sir, I beg to move.

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