Changes to the Pawnbrokers Act - Ministry of Law · PDF fileChanges to the Operational Regime New AML/CFT requirements 2 PAWNBROKERS INDUSTRY BRIEFING . Overview Pawnbrokers Bill submitted

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PAWNBROKERS INDUSTRY BRIEFING

Changes to the

Pawnbrokers Act

Scope of Briefing

Overview

Changes to the Licensing Regime

Changes to the Operational Regime

New AML/CFT requirements

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Overview

Pawnbrokers Bill submitted for First Reading in Parliament on

4 Nov 2014.

Bill seeks to update PB regime, which has changed little in

past two decades:

- Enhance licensing requirements

- Allow more operational freedom, without sacrificing

consumers’ interests

- Address money laundering and terrorism financing risks

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Overview (continued)

Second Reading slated for Jan 2015.

Targeted commencement date for new Act: 1 Apr 2015.

Important note: This briefing covers only the key changes

under the new Act; licensees are encouraged to visit ROP’s

website to review the draft Bill thoroughly.

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Changes to the

Licensing Regime

Flexibility on Duration of Licence

From commencement date (i.e. Apr 2015), new licensees

can opt for licence periods of 1, 2 or 3 years.

For existing licensees, the full flexibility to opt for 1, 2 or 3

years will be implemented in 3 phases, according to the date

of initial licence:

- Phase 1: Ref no. 218/2003 and before

- Full flexibility to renew for 1, 2 or 3 years when renewing in 2015 for 2016.

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Flexibility on Duration of Licence (continued)

- Phase 2: Ref no. 219/2003 – 311/2010

- Renew for 1 year when renewing in 2015 for 2016.

- Renew for 1, 2 or 3 years when renewing in 2016 for

2017.

- Phase 3: Ref no. 312/2010 and after



- Renew for 1, 2 or 3 years when renewing in 2017 for 2018.

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New Application Fee for New Licence

From commencement date, application fee of

$800* will be payable upon application for new

licence.

• Amount subject to confirmation.

Amount confirmed.

Updated 2 April 2015

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New Licence Renewal Fee

Starting with renewals in 2015 for 2016, fee of $100* per

licence will be payable for renewal of licence.

By 15 Aug of the year of expiry of licence, all licensees are

to notify ROP whether they wish to renew the licence.

Fee shall be made payable via GIRO by 1 Sep (if PH, then

next working day).

*Amount subject to confirmation

No renewal fee will be imposed.


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Higher Licence Fee

From commencement date, the licence fee for each year

of licence will be increased from $3,000 to $5,000*.

Fee shall be payable by GIRO.

For licence renewals, fee will be deducted on 1 Dec (if PH,

then next working day).

• Amount subject to confirmation.

Licence fee will remain unchanged at $3,000/- for each year.

Updated 4 May 2015

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Higher Security Deposit

SD amount raised from $20,000 to $100,000.

Existing licensees are to submit banker’s guarantee for

$100,000 before 16 March 2015. Original SD of $20,000 in

cash will be refunded within 2 – 3 weeks.

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Higher Security Deposit (continued)

Up to full SD may be forfeited if licensee:

contravenes a provision of the Act (which contravention is

not an offence)

Registrar is satisfied that a licensee has conducted itself in

an improper or unsatisfactory manner; or

Registrar is satisfied that a licensee is not able to carry on

its PB business in a proper and satisfactory manner.

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Manager also subject to ROP’s clearance

Currently, appointment of new directors and changes in

substantial shareholding are subject to ROP’s clearance.

From commencement date:

- Appointment of new managers also subject to ROP’s

clearance.

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Manager also subject to ROP’s clearance (continued)

- Licensee must, within 7 days, inform ROP if director,

manager or substantial shareholder:

- Becomes a bankrupt.

- Is convicted in Singapore or elsewhere of an offence

involving fraud or dishonesty.

- Is convicted of any ML/TF-related offence under the

Corruption, Drug Trafficking and Other Serious Crimes

(Confiscation of Benefits) Act, the Terrorism (Suppression

of Financing) Act or any regulations made under the

United Nations Act.

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Power to give directions

Registrar may issue written directions setting out

the manner in which a licensee is to conduct the

business of pawnbroking

Failure or refusal to comply is an offence

punishable upon conviction with fine not exceeding

$20,000

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New licensing actions that can be taken against

errant licensees

-Suspension of licence (currently, licences can only

be revoked but not suspended)

-Variation of licence conditions

Existing licensing requirements which will remain

unchanged

Maintain paid-up capital ($2m for first pawnshop, $1m for

each additional outlet).

Only PB business allowed at place of business (unless

otherwise authorised).

PB business allowed at place of business only (unless

otherwise authorised).

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Existing licensing requirements which will remain

unchanged (continued)

Maintain adequate insurance coverage for licence renewals:

-At least 100% of month-end value of outstanding pledges,

averaged over 12-month period from July to June of

preceding year

-Insurance policy must be submitted to ROP by 1 Nov of year

of expiry.

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Changes to the

Operational Regime

Opening hours

No restrictions on opening hours

Where licensee is closed for business on the last

day of the period for redemption, the redemption

period extends to the next day the pawnbroker is

open for business, and no interest shall be

charged in the intervening period.

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Less restriction on display of sign and rates

Licensee must display a sign stating the licensee’s

name, and the words “Pawnbroker’s Shop”,

“Pawnbroker” or “Pawnshop” in English.

Licensee must also display the maximum interest

rate of 1.5% per month, as well as permitted fees (to

be covered later), in English.

Other languages are permitted but not mandatory.

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Pawnbrokers’ duties – before granting a loan

Due diligence

Licensee will have flexibility to conduct due diligence as it sees fit in satisfying itself that item is

not fraudulently obtained, or the subject of money laundering or terrorism financing (to be

covered in detail later)

• Licensee can ask for guarantor or proof of purchase (as per current regime), but these will no

longer be mandated specifically.

• In the event the pledge turns out to be stolen property, licensee shall be liable under common

law to compensate losses incurred by rightful owner.

Loan offer

If licensee is inclined to offer loan, it must inform the customer of the following:

- Loan amount

- Valuation of pledge (made on best effort basis)

- Monthly interest rate

- Redemption period, which must be 6 months or such other longer period as mutually agreed.

Pawnbrokers’ duties – when granting a loan

Licensee to issue pawner with pawn ticket containing the following information:

-Unique identification number

-Loan amount

-Description of pledge, including the manufacturer’s serial number or embossed marks

-Valuation of pledge (new)

-Expiry date of redemption period. [Note: Must include the statement ‘The pledge can be

redeemed on or before <the date of the last day of the redemption period>. ]

-Interest rate

-Date of pawning

-Pawner’s name, gender (new) , address, and identity card number (as verified with identity

document)

- The name and address of the pawnbroker’s place of business

Licensee must keep a copy of pawn ticket signed by pawner.

Licensee cannot contractually restrict pawner’s right to sell the pawn ticket. By the same

token, licensee is permitted to buy the pawn ticket issued by itself or other pawnbrokers.


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Please refer to Pawnbrokers Rules

2015 Rule 12 for full list of

requirements

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Pawnbrokers’ duties – when pawner extends redemption

period

Redemption period may be extended one or more times by

agreement between the pawnbroker and a person entitled to

redeem the pledge

Redemption period may be extended even after expiry, and

extension can be for any duration

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Pawnbrokers’ duties – when pawner extends redemption

period (continued)

Licensee must:

- Offer fresh valuation of pledge

- Cancel original pawn ticket

- Issue new pawn ticket

The rights and obligations under the agreement recorded in

the original pawn ticket are deemed to have merged in the

agreement recorded in the new pawn ticket.

Pawnbrokers’ duties – application for replacement

pawn ticket

Applicant needs to include the following in his application to

the licensee:

- Applicant’s particulars

- Grounds of application, substantiated with relevant

evidence

- Affirmation that applicant has not assigned the pawn ticket

to someone else

- Copy of police report, if pawn ticket had been stolen or

fraudulently taken

- Payment of $10 processing fee

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Pawnbrokers’ duties – application for replacement

pawn ticket (continued)

(Statutory declaration administered by Commissioner for

Oaths no longer needed - *For tickets issued under PBA

2015.)

Having made reasonable inquiries as to the truth of the

matters stated in the application, licensee may issue

replacement pawn ticket and cancel original pawn ticket.


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Pawnbrokers’ duties – Notice by owner of pledge wrongfully

pawned

Owner needs to do the following when serving notice on the

licensee:

- Provide his particulars

- Affirm that he is the rightful owner, furnishing relevant evidence

(e.g. copy of police report)

- Pay $10 processing fee

(Statutory declaration administered by Commissioner for Oaths

no longer needed - *For tickets issued under PBA 2015.)

If there is a court order relating to the pledge, the licensee must

deal with the pledge according to the court order.

Updated 2 April 2015 28


Pawnbrokers’ duties – Notice by owner of pledge

wrongfully pawned (continued)

If there is no court order, the licensee may, with the benefit of

indemnity from liability, refuse to allow its redemption, for a

‘freeze period’ defined as:

- 3 months, if no legal action has commenced in respect of the

pledge; or

- If legal action has commenced, for so long as the action is

pending.

(No interest shall be chargeable during the freeze period)

If the licensee allows the pledge to be redeemed during the

freeze period, it will not be indemnified from any future claims

by the rightful owner. 29


Pawnbrokers’ duties – when person redeems pledge

Licensee shall allow any person with a pawn ticket (and who

delivers the outstanding amount) to redeem the pledge

unless:

- the licensee knows that the person is not entitled to do so

(e.g. he stole the pawn ticket or obtained a replacement pawn

ticket by giving false or incomplete information)

- the licensee has reason to believe that the person is not

entitled to do so, even after having taken reasonable steps to

probe further.

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Pawnbrokers’ duties – when person redeems pledge

(continued)

Upon redemption, licensee shall:

- Give pawner a receipt

- Cancel the pawn ticket

- Record the particulars of redeemer, if different from pawner.

If licensee is unable to deliver pledge, it is liable to

compensate the pawner the valuation amount.

If licensee is unable to deliver pledge in original condition,

pawner can choose either to be compensated the valuation

amount, or take back the pledge and be compensated for the

reduction in its value. 31


Pawnbrokers’ duties – in regard to unredeemed

pledges

Licensee must send the pawner a notice of forfeiture within

2 months after the expiry of the redemption period

Notice must be sent by registered mail or email, and

contain the following information:

- Pawnshop’s name, address and business hours.

- Pawn ticket number

- A statement that the pledge is liable to forfeiture in 1

month unless redeemed

- Amount payable to redeem the pledge or extend the

redemption period

- Valuation of the pledge as at the issuance of notice 32


Pawnbrokers’ duties – in regard to unredeemed

pledges (continued)

Pledges unredeemed after 1 month shall become the

licensee’s property.

Pledges taken in after 1 Apr 2015 need not be sold by

licensed auctioneers.

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Timeline for abolishing auctions

Unredeemed pledges taken in before 1 Apr 2015 still need to

be sold by auction.

Monthly auctions will continue until Oct 2015.

- For auction groups A & B, last auction will be on 17 Oct

2015

- For auction groups C & D, last auction will be on 24 Oct

2015

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Timeline for abolishing auctions (continued)

Last set of returns on results of sales of pledges (Form 3) to

be submitted by 1 Nov 2015.

- If there are any outstanding unredeemed pledges which for

whatever reason could not make the Oct 2015 auctions,

licensee is to inform ROP by 1 Nov 2015 also.

Last set of returns on unclaimed surpluses to be submitted

by 14 Mar 2016.

If required, ROP will organise one final auction to sell off any

outstanding unredeemed pledges.

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Record keeping requirements

Licensee is still required to keep records in electronic form and in English for 5 years from termination of

loan, and made available for inspection by ROP.

Two separate sets of records in Pledge Book and Disposal Book


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Pledge Book

- Pledge no.

- UIN of pawn ticket

- Date of pawn

- Date of expiry of redemption period

- Pawner’s name, sex, address & ID no.

- Owner’s name, sex, address & ID no.

- Loan amount

- Agreed interest rate

-Description of pledge

- Valuation of pledge

- If pledge is redeemed / forfeited:

- Date of redemption / forfeiture

- Interest charged.

- Particulars, if redeemer is not pawner

Disposal Book

-Pledge no.

-Date of pawn

-Description of pledge

-Loan amount

-Where pledge was sold:

-Sale price

-Sale date

-Buyer’s particulars

-Where pledge was otherwise disposed of:

- Disposal date

- Manner of disposal

Please Refer to Pawnbroker Rules

2015 Rule 8(1) for full list of

requirements

Reporting requirements to remain unchanged

Submit annual audited financial statements by 1 30 Apr of following

year.

Submit monthly business returns by 14th day of following month:

- Number of pledges taken in pawn

- Total amount of loans given

- Number of pledges redeemed

- Total amount of loans repaid

- Total amount of interest collected

- Total amount of loans outstanding at month-end (including loans

of previous months)

- Number of unredeemed pledges disposed of

- Total amount of loans corresponding to unredeemed pledges

disposed of Updated 2 April 2015 37


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New AML/CFT

Requirements

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Anti-Money Laundering & Counter-Financing of Terrorism

(AMLCFT)

Licensee shall develop programmes and measures to prevent

money laundering and terrorism financing (MLTF), and to

communicate these to his employees and officers.

These include:

Appropriate steps to identify, assess and understand the MLTF

risks in relation to –

Its pawners

The countries or jurisdictions which its pawners are from

Its products, services, transaction and delivery channels

Measures which are appropriate and having regard to the size of

its business

Group-level programme (for chain operators)

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AMLCFT (continued)

Internal policies, procedures and controls (PPCs)

Compliance management arrangements, appointment of

compliance management officer

Screening procedures when hiring and training employees

Monitor the implementation of the internal PPCs (enhance if

necessary)

Independent audit function to test PPCs

Identify MLTF risks that may arise in relation to new

technologies

Customer Due Diligence (CDD) checks

Record keeping of AMLCFT related checks

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Customer Due Diligence (CDD)

CDD checks must be performed:

-Before giving any relevant loan (i.e. a loan, or multiple loans related to same pawner,

exceeding $20,000)

-If MLTF is suspected

-If there is doubt as to the accuracy of information provided in earlier CDD

CDD checks include:

-ID verification of pawner

-Ascertain whether pawner is acting on behalf of another person, if so, to obtain and

verify ID of that person, and verify that pawner is authorised by that person

-Ascertain whether pawner is a politically exposed person (i.e. person entrusted with

prominent public function) and if so, to apply the necessary measures.

Licensee must complete CDD for existing pawners within 12 months from

commencement date

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Enhanced Customer Due Diligence (EDD) and

Simplified Customer Due Diligence (SDD)

EDD measures (e.g. examining the purpose and background of

loan, closer monitoring of relationship with pawner, etc) must be

performed if:

Loan is unusually large

Pawner takes loans with no apparent economic or lawful purpose

Pawner is from a higher-risk foreign country (as notified by ROP)

Licensee suspects MLTF risk

SDD measures may be performed if:

Licensee has assessed MLTF risk to be low (and documented the

basis), and

Licensee has obtained ROP’s prior written approval

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Suspicious Transaction Reports (STRs)

Licensee must assess whether to submit STRs where:

- CDD could not be completed

- Pawner is unable or unwilling to provide any information requested by

licensee or decides to withdraw loan application when requested to

provide information

- The loan is part of an unusual pattern of loans with no apparent

economic or lawful purpose

If any CDD measure cannot be completed to prevent a tip-off, the

licensee must determine whether to lodge a Suspicious Transaction

Report (STR) and record the basis of the decision.

All STRs to be sent to: Suspicious Transaction Reporting Office,

Commercial Affairs Department, 391 New Bridge Road #06-701

Police Cantonment Complex Block D S(088762)

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Terrorist Screening

Before giving any relevant loan, licensee must screen

customers against the following lists of known terrorists

before they proceed with any transactions

http://www.un.org/sc/committees/1267/AQList.htm

http://www.un.org/sc/committees/1988/1988List.htm

If licensee has reason to suspect that a customer is a

terrorist or involved with a terrorist entity, the licensee must

decline or terminate the transaction and make a police

report

http://www.un.org/sc/committees/1267/AQList.htm

http://www.un.org/sc/committees/1988/1988List.htm

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THANK YOU

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Tel: 6325 1500

mailto:[email protected]

Documents

Changes to the Pawnbrokers Act - Ministry of Law · PDF fileChanges to the Operational Regime New AML/CFT requirements 2 PAWNBROKERS INDUSTRY BRIEFING . Overview Pawnbrokers Bill submitted