If you need funds to finance a personal emergency quickly, you can consider borrowing money from a licensed money lender.

Unlike unlicensed money lenders, legal money lenders are regulated under the Moneylenders Act of Singapore. This Act dictates that money lenders must possess a license to offer their financial services to the public.

Hence, all licensed money lenders in Singapore have to comply with the rules and regulations outlined in the Moneylenders Act. Violation of the guidelines in the Act can land a licensed money lender in trouble.

In 2018, licensed money lender new rules were introduced to further professionalise the moneylending sector.

This guide will elaborate on the Moneylenders Act, the Moneylenders Rules, and how the licensed money lender new rules protect borrowers like you.

What The Moneylenders Act Is About

The government of Singapore came up with the Moneylenders Act mainly to protect borrower interests.

The Act explicitly mentions how licensed money lenders should function and operate. In addition, it encompasses various compliances, disclosures and reports a money lender must submit to the government periodically.

It is mandatory for licensed money lenders in Singapore to read and understand the document.

Here is a summary of the rules and laws mentioned in the Moneylenders Act.

Compliances That Legal Money Lenders Must Follow

All licensed money lenders in Singapore must follow the procedural requirements laid out in the Act with no exception to any aspect of moneylending, be it interest rates or advertising.

They also need to ensure that they audit their accounts and file for returns regularly. The policies listed in the Act, such as Customer Due Diligence measures, help reduce the risk of money laundering.

Note: The Act applies to all licensed money lenders – their branches, franchises, and subsidiaries incorporated in Singapore.

Interest Rate Limits

According to the Moneylenders Act, legal money lenders are not allowed to charge an interest rate of more than 4% per month on secured and unsecured loans.

Borrowers have the right to sue a licensed money lender if it breaches the limit on the interest rate.

What’s more, money lenders have to clearly state the agreed interest rate and other fees related to the loan on an official agreement.

If a borrower cannot pay an instalment on time, a legal money lender can charge a maximum penalty of $60 per month. Money lenders can’t charge an admin fee that amounts to more than 10% of the principal amount while granting loans.

Reputable licensed money lenders in Singapore such as Credit 21 offer affordable interest rates on various kinds of loans to reduce the financial burden of borrowers.

Loan Recovery Methods

Money lenders aren’t allowed to resort to aggression or harassment to recover loans from borrowers.

However, if a borrower can’t repay a loan on time, the money lender has the right to seize his or her property and other assets – with the Ministry of Law’s consent.

But the money lender must provide sufficient warnings to the borrower before proceeding.


The Moneylenders Act also specifies limitations to how licensed money lenders can advertise in Singapore. They can only advertise in the following ways:

  • Print and online consumer or business directories
  • Their own websites
  • Their own physical offices

Potential borrowers or clients can make a report to the authorities if they feel a money lender has broken these rules.

Due Diligence And Reporting

Legal money lenders must obey due diligence strategies, financial reporting necessities, and filings as required by the Act.

Furthermore, they must notify the Ministry of Law if they make any significant changes to how they function as a business. The Act discusses detailed disclosure requirements that lenders must study and follow.

Record-keeping Conditions

Money lenders must maintain a detailed report regarding the loans they grant to the borrowers. Upon successful reporting, these documents must be submitted to the Ministry of Law for auditing.

The Registry of Moneylenders and other legal authorities have the right to ask for these documents from the money lender.

Moneylenders Rules

The Moneylenders Act was initiated in 2008. To further strengthen the borrowers’ security and protect Singapore against money laundering and financial terrorism, the government amended the Act to include more laws in 2009. These licensed money lender new rules came to be known as the Moneylenders Rules.

Here is a summary of the most fundamental Moneylenders Rules in Singapore.

Note: These rules apply to all money lenders that grant secured or unsecured.

Group Policy

Licensed money lenders that have one or more branches or subsidiaries operating in Singapore must formulate a group policy to prevent money laundering. This then needs to be extended to all their branches or subsidiaries.

In addition, if a lender possesses a branch or subsidiary in a country other than Singapore, it must apply more stringent moneylending laws to its business.

Any money lender that fails to do so shall be charged for not abiding by the law.

Assessment Of Risks

As a licensed member of the Registry of Moneylenders, a money lender should take proper steps to identify risks related to financial terrorism that may arise due to its moneylending activities.

Some aspects of the business in which a money lender must assess its risk include:

  • Borrowers and their agents, connected parties, and beneficial owners
  • Countries that borrowers and their agents, affiliated parties, and beneficial owners reside or operate in
  • Countries the money lender has operations in
  • Manner by which the loans are disbursed and repaid
  • Size of the money lender’s business

Suspicious Transaction Reporting

The Ministry of Law requires licensed money lenders to report any suspicious transactions. Since the definition of a suspicious transaction might vary, the Moneylender Rules has outlined the circumstances that qualify as suspicious transactions:

  • A money lender cannot successfully execute the Customer Due Diligence measures for any reason
  • A borrower is unable or unwilling to give out information demanded by the money lender or decides to withdraw the loan application when asked to deliver information
  • A loan is part of an unusual series of loans with no clear financial or lawful intention

Employees And Officers

It’s fundamental for licensed money lenders to implement strict screening procedures while hiring and appointing proper personnel as employees.

Whether these employees are based in Singapore or a foreign branch of the moneylending business, they must undergo appropriate training.

The training must cover the laws for the prevention of money laundering and the financing of terrorism.

These include the Rules, the Corruption Act, Drug Trafficking Act, Other Serious Crimes Act, the Terrorism Act, and the United Nations Act.

Customer Screening

To ensure compliance with the Moneylenders Rules, a licensed money lender must screen its customers before granting loans. The money lender must:

  • Conduct background checks on every borrower and agent
  • Evaluate every borrower and agent against lists disclosed by the Registry of Moneylenders and any relevant law enforcement authority

What Are The New Moneylending Regulations About?

The above-mentioned Moneylenders Act and Moneylenders Rules were introduced in 2008 and 2009 respectively.

However, recently in 2018, the Ministry amended these laws. This was done to further strengthen the functionality of the moneylending sector in Singapore and enhance the protection of borrowers against scams.

As a result, they became known as the Money Lenders (Amendment) Act 2018 and Money Lenders (Amendment) Rules 2018.

Furthermore, these licensed money lender new rules enforce licensed money lenders’ regulations. They also provide licensed lenders with a legal advantage over unlicensed loan sharks.

Credit 21 is a money lender in Singapore that adheres to all moneylending regulations and prioritises borrower interests.

How Licensed Money Lender New Rules Protect Borrowers

The Moneylenders Act and Moneylenders Rules protect borrowers by implementing loan caps to limit the amount one can borrow from all licensed money lenders combined.

As released by the Ministry of Law, the breakdown of the loan cap is as follows:

Borrower’s Annual IncomeSingapore Citizens And Permanent ResidentsForeigners Residing In Singapore
Less than $10,000$3,000$500
$10,000 to less than $20,000$3,000$3,000
$20,000 or more6x monthly income6x monthly income

A self-exclusion framework was also introduced to protect borrowers from falling into a debt trap.

In addition, borrowers can keep a check on their borrowing habits and take part in debt assistance schemes.

Licensed money lenders cannot grant loans to individuals who are have signed up for self-exclusion from loans.

Strengthened Regulations For Licensed Money Lenders

For added safety, money lenders require the approval of the Registry of Moneylenders to get licensed.

The approval of the Registry of Moneylenders is also required to become a shareholder of, or to increase shareholdings in, a licensed money lender.

Additional Measures To Professionalise The Moneylending Industry

On 30 Nov 2018, the Singapore government executed the first phase of licensed money lender new rules in the form of the Moneylenders (Amendment) Act 2018 and Moneylenders (Amendment) Rules 2018 to further protect borrowers .

In the first quarter of 2019, the government implemented the second phase of licensed money lender new rules to professionalise the moneylending industry.

Consequently, all money lenders will have to incorporate themselves as a shareholding company with a minimum paid-up capital of $100,000. They will also need to submit yearly audited accounts to the Registry of Moneylenders.

Licensed Money Lender New Rules Help To Protect Borrowers

Although the primary intent of the Act is to keep borrowers safe from illegal money lenders such as loan sharks, borrowers must do their part too.

So if you intend to get a loan, it is crucial to verify the license and other credentials of the money lender before applying for a loan.

Always ensure that the money lender you approach has a license. Also, be aware of your rights by understanding the licensed money lender new rules and how they affect you as a borrower.

Credit 21 is a trusted licensed money lender in Singapore that offers some of the most affordable interest rates and fees. We would be more than happy to help you in any way we can.

Contact us today or apply for a loan using your Singpass now. The entire process only takes five minutes.