At some point, some of us will need to borrow money to stay afloat, whether it’s to cover a large-scale purchase, to start a new business, or for personal reasons. Especially in times of financial hardship, a loan shark in Singapore may surface with deals that are too good to be true. But debtor beware, these schemes can be as risky and problematic as they are attractive.
Thus, as debtors, it is important to know whether the options presented to you are legal or illegal. According to the Singapore Police Force, unlicensed moneylending (UML) happens “when an unlicensed individual, often called an ‘Ah Long’ or loan shark, lends money to another individual”. Unlike banks and other legal lending agencies, UML is dangerous because loan sharks may use harassment, intimidation, violence, and various illegal methods to chase debtors.
Instead of going to loan sharks for money, it is highly recommended to borrow money through legal means in order to protect your safety and well-being. For instance, you could borrow from family or friends—where they draw up an IOU with the terms, amount, and relevant information. You could borrow money from licensed moneylenders, which we will discuss more in detail in this article.
Licensed vs Unlicensed Moneylenders
Licensed moneylenders, as defined by the Moneylenders Act, is a “a person who, whether as principal or agent, carries on or holds himself out in any way as carrying on the business of moneylending, whether or not he carries on any other business.” However, not just anyone can be a money lender.
According to Section 5 of the Moneylenders Act, a person can be a licensed moneylender if they have a licence, are excluded moneylenders, or are exempt moneylenders under the law. Excluded moneylenders are those who are not prohibited from lending money under the Moneylenders Act—for instance, a pawnbroker licensed under the Pawnbrokers Act. On the other hand, Exempt moneylenders are those who have been exempted by the law based on the government’s discretion. This, of course, is subject to approval.
Those without a license are unlicensed moneylenders and might be loan sharks. Do not, under any circumstances, engage with them.
How loan sharks in Singapore operate
As illegal moneylenders probably won’t be duty-bound to the same rules and regulations as licensed ones, you need to be careful whom you choose to take a loan from. Watch out for those who:
1. Advertise through SMS, flyers, and email
A licensed moneylender can only advertise his or her services through:
- Business or consumer directories through print and online media
- Websites belonging to the licensee
- Advertisements placed within or outside the approved place of business. This includes the side of the wall or on the door of the establishment.
If someone tries to solicit a loan through phone calls or texts, chances are, he or she is an illegal moneylender or a loan shark. Licensed moneylenders, after all, are prohibited from soliciting and badgering people.
2. Will lend you any amount
To get a loan from a bank or licensed moneylender, a debtor needs to show documentation—proof of income like payslips, income tax statements, and the like. That guarantees that eventually, the debtor can pay back his or her loan.
If someone willingly approves any amount without checking these details, that person may be a loan shark. And do take note that there are limits on how much you can borrow too, as defined by the Ministry of Law:
Annual Income |
Singapore Citizens and Permanent Residents |
Foreigners Living in Singapore |
| Less than S$10,000 | S$3,000 | S$500 |
| At least S$10,000 and less than S$20,000 | S$3,000 | S$3,000 |
| At least S$20,000 | 6 times of monthly income | 6 times of monthly income |
3. Charges high and unreasonable interest rates
For offers that sound too good to be true, a loan from a loan shark can come with high interest rates. Worse, they might also demand the money back at any moment.
The maximum late interest rates a licensed moneylender can charge is 4% for every month that the loan is repaid late. Aside from that, licensed moneylenders can charge a late fee of up to $60 per month, but anything above that is illegal. Plus, a moneylender cannot charge interest rates on any amount that is not yet due.
4. Does not offer a loan contract
A licensed moneylender will get all the needed information, such as the debtor’s identity, residence, and monthly income for the contract. Loan sharks usually don’t ask for this since they don’t have a contract in the first place. This puts the debtor in a very vulnerable position.
This is because a loan from a loan shark is illegal in the first place—very much the opposite of a legal, binding contract. Without an IOU, any form of documentation, or even a list of terms of conditions that include repayment schedule, interest fees and late fees, the debtor’s safety is not guaranteed. Plus, a loan shark may resort to illegal means of getting his or her money back.
5. Charge hidden fees
Licensed moneylenders will not ask the debtor to pay anything before receiving your loan. On the other hand, loan sharks may charge hidden fees—disguised as admin fees—that they ask from every debtor. If anything, the most that a moneylender can get is a 10% admin fee, but this is only granted once the loan is approved and will thus be deducted from the principal amount.
Also take note that the collective charges—interest, late interest, admin fees, and late fees—cannot exceed the principal amount. Should the debtor be unable to pay his or her loan, licensed moneylenders can charge you legal costs as ordered by the court.
Loan shark harassment
Paint splashed all over you front door, threatening graffiti, and menacing calls—these are typical examples of loan shark harassment. Loan sharks are illegal moneylenders who often use illegal methods—usually force and harassment—to get back the money they’ve lent. Some instances of loan shark harassment include:
1. Physical violence
A classic use of force to get his or her money back. This instance of illegal conduct occurs when the loan shark hurts the debtor. According to section 321 of the Penal Code, Voluntarily Causing Hurt (VCH) occurs when a person “does any act with the intention of thereby causing hurt to any person, or with the knowledge that he is likely thereby to cause hurt to any person and does thereby cause hurt to any person.” On that same note, the Penal Code defines injury as “any harm whatever illegally caused to any person, in body, mind, reputation or property”.
These include, but are not limited to, knocking the debtor unconscious, punching and kicking, or even using weapons to harm the debtor. If the debt collector—in the case the loan shark—is charged with VCH, he can face up to two years of imprisonment, a fine up to $5,000, or both, depending on the case.
If the debtor has severe injuries, this is classified by the Penal Code as Grievous Hurt. As defined in Section 320, this includes emasculation, disfiguration, fracture, dislocation, severe body pain, or any endangerment to one’s life. For these crimes, the loan shark can face up to 10 years of imprisonment, a fine, or caning.
2. Intimidation or threats
Aside from brute force, loan sharks may also threaten and intimidate the debtor into paying. According to Section 503 of the Penal Code, criminal intimidation occurs when one “threatens another with any injury to his person, reputation or property, or to the person or reputation of any one in whom that person is interested, with intent to cause alarm to that person, or to cause that person to do any act which he is not legally bound to do, or to omit to do any act which that person is legally entitled to do.”
Simply put, these include the use of profanities and verbal threats but may also include gestures that will eventually lead up to harm. A loan shark gesturing to splash paint on the debtor’s property, for instance, can be counted as a threat. Any act that scares or pressurises the debtor is intimidation in itself—what more if accompanied with the intent to hurt. In addition, the loan shark can be charged for harassment under the Protection from Harassment Act.
The punishment for causing alarm and distress can range from a $5,000 fine and/or an imprisonment term of up to six months. On the other hand, causing fear or provocation of violence will get loan sharks a fine of up to $5,000 and/or an imprisonment term of up to 12 months. And for repeat offenders in these cases, the maximum penalty can be doubled.
3. Vandalism
If the loan shark does vandalise your property, this constitutes an offense under the Vandalism Act. Vandalism is defined by the law as destroying or damaging property, in this case, that of the debtor, in the form of “writing, drawing, painting, marking or inscribing on any public property or private property any word, slogan, caricature, drawing, mark, symbol or other thing.”
Typically, vandalism by loan sharks include splashing paint, writing on the walls outside the debtor’s property, or even posting the notice of collection. First-time offenders can face a fine of up to $2,000, imprisonment of up to three years, or in some cases, caning.
Aside from being charged with vandalism, loan sharks can be considered a nuisance under the Miscellaneous Offences or Public Order and Nuisance Act. If guilty, the loan shark can be fined up to $1,000. But this applies for minor cases like pasting a notice of collection on the debtor’s door.
4. Stalking
According to Section 7 of the Protection from Harassment Act, unlawful stalking occurs when the act “causes harassment, alarm or distress to the victim, the accused, intends to cause harassment, alarm or distress to the victim, and (the loan shark or stalker) knows or ought reasonably to know (that such act) is likely to cause harassment, alarm or distress to the victim.”
However, for the act to be considered stalking, it is important to note the frequency. One-time occurrences don’t count. Thus, the more instances of it occurring, the more likely the loan shark can be charged for unlawful stalking.
Beyond simply following the debtor around and causing him or her discomfort, this can also happen when loan sharks enter or linger around a place where the debtor is or when they repeatedly take photos and videos of the debtor. Unlawful stalking can even happen electronically with the loan shark sending repeated emails and badgering the debt collector on a regular basis.
Aside from frequency, the resultant emotions caused by such an act will be taken into consideration during sentencing. If the debtor feels alarmed or distressed because of such an act, it constitutes an offense. For these cases, the loan shark can be fined up to $5,000, face imprisonment of up to a year, or both. As for repeat offenders, Section 8 expressly defines the punishment to include a fine of up to $10,000, imprisonment of up to a year, or both.
Where to get help
Anyone who has been approached by a loan shark or has engaged with one can contact:
– Credit Counselling Singapore: 6225-5227 (www.ccs.org.sg)
– National Council on Problem Gambling: 1800-6-668-668 (www.ncpg.org.sg)
– ConCare: 1800-222-0000 (www.msf.gov.sg/comcare)
– X-Ah Long Hotline: 1800-924-5664
– Registry of Moneylenders: 1800-2255-529
