changes to the pawnbrokers act - ministry of law · pdf filechanges to the operational regime...
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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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PAWNBROKERS INDUSTRY BRIEFING
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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PAWNBROKERS INDUSTRY BRIEFING
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 year when renewing in 2015 for 2016.
- Renew for 1 year when renewing in 2016 for 2017.
- 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.
Updated 2 April 2015
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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.
Updated 2 April 2015
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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.
Updated 2 April 2015
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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 INDUSTRY BRIEFING
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 INDUSTRY BRIEFING
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 INDUSTRY BRIEFING
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 INDUSTRY BRIEFING
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
Updated 02 April 2015
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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
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THANK YOU
Tel: 6325 1500