Has a loan shark tried to scam you lately? Probably not. This is because the Singapore government has been doing its best to protect borrowers like yourself from unlicensed or rogue lenders.

However, illegal moneylending is still a problem.

According to Channel NewsAsia, 237 people were apprehended in late 2020 for unlawful lending activities. Since this figure is likely a fraction of the reality, more locals are still at risk of falling into illegal moneylending.

In this article, we’ll look at how to check money lender license and how to spot illegal lenders.

Let’s get started.

How To Check Money Lender License

As of Dec 2021, the Ministry of Law (MinLaw) in Singapore stopped issuing moneylending licenses.

As an alternative, the Ministry established procedures and requirements that prospective lenders must meet to be registered. We will discuss this later.

Nevertheless, it is easy for you to confirm the validity of a money lender’s licence status. This is because the Ministry of Law has provided a list of licensed money lenders in Singapore.

With this list, which is available on the MinLaw website, you can check if a money lender is a licensed lender. It is if it can be found on the list.

If the money lender is indeed on the list, be sure to compare its name, address, phone number, website address and license number with the details provided in the list to confirm that they match. Many unlicensed lenders impersonate the websites of licensed lenders.

A licensed money lender will also display its moneylending license prominently in its business premises.

In addition, you can:

Check Its Mode Of Advertising

Since 1 Nov 2011, the law limits licensed money lenders to promote their services solely through:

  • Their official websites
  • Local consumer or business directories in print or digital media
  • Advertisements put up within or on the exteriors of their business premises

Advertising through any other means is against the law and probably the work of an illegal money lender.

In addition, unlicensed money lenders or “Ah Longs” (as they are often called in Singapore) use unlawful means to advertise their services. They spam users through SMS, phone calls, WhatsApp, email, and flyers.

So be wary of anyone who contacts you by phone, SMS, WhatsApp, or email and claims to represent a licensed money lender or financial institution.

Check The Lender’s Loan Contract

According to Singapore’s Moneylenders Act, licensed lenders must meet you in person and explain the contract terms. This is mandatory by law.

They must explain the fees, rates, and penalties (late fees, fines, and the consequences of loan default) regarding your loan to you in person. This is to ensure that you understand the contract before signing it.

How Money Lenders Apply For Their Licenses

When issuing moneylending licenses, the Ministry of Law conducts a Money Lenders’ Test. This test only takes 5-10 minutes and aims to ensure only qualified entities become money lenders.

One is also required to pay a fee of $130 (non-refundable) and provide the following documents:

  • A photo ID and two passport-size pictures
  • Copy of property tax
  • Latest bank statements
  • Latest financial report of a moneylending firm

The final test will be to pass the Test-Qualified Manage criterion. This criterion confirms that a potential money lender can adhere to Singaporean legislation and provide quality services.

Renewal Of A Money Lender’s License

The renewal of a money lender license is done online on the MinLaw website. However, a lender must uphold excellent character for the renewal to be successful.

It is also necessary to present certain documents, such as a letter of consent from the owner of the property where the moneylending business will be located.

Lastly, a money lender must submit its license renewal application and pay the requisite $1,500 fee one month before the licence expires.

Criteria For Excluded Money Lenders

Excluded money lenders refer to entities that have been incorporated or given the authority to lend money under the terms of the Moneylenders Act.

They include:

  • Any organisation recognised by the Co-operative Societies Act as a credit society
  • Any pawnbroker who has a Pawnbrokers Act licence

Those who only lend money to:

  • Corporations
  • Limited liability companies
  • Business trust trustees or trustee-managers
  • Real estate investment trust trustees

Those who:

  • Exclusively loan money to accredited investors
  • Provide money only to their staff as a perk of employment

Rules And Regulations For Licensed Money Lenders

Singapore law has rules and regulations that licensed money lenders must abide by. The most important rules are as follows:


  • Interest rates: For secured and unsecured loans, licensed lenders can only impose a monthly interest rate cap of 4%.
  • Late interest: The maximum monthly late rate that lenders may impose is 4%. This rate only applies to amounts that are past their due dates, not amounts that are still owed but not yet due.


  • Late costs: Late fines should not exceed $60 per month.
  • Legal costs: Where a request for recovery of a defaulted loan has been filed by the money lender, the court will determine the legal fees.
  • Loan processing fee: The maximum processing fee is 10% of the principal amount.

What Licensed Money Lenders Cannot Do

By law, licensed money lenders are not allowed to:

Call Or Send Text Messages

As mentioned, licensed money lenders are not permitted to contact you by SMS, phone calls, or email. Any loan application call or SMS you receive is likely to be from a loan shark or rogue unlicensed lender.

Lend Money Remotely

You can now fill a loan application online. However, verification, contract signing, and loan processing must only be done physically at the money lender’s office.

In addition, no licensed money lender operates 24/7. While you can fill in the application at any time, you would have to wait for the normal business hours for the loan application to be processed.

Asking For Upfront Payments

Licensed money lenders are allowed to only to charge a processing fee after the loan is granted. This fee is deducted from the principal amount, after which the balance is disbursed to you.
No payment should be requested before the loan has been processed and disbursed. Anyone who asks you to make any upfront payment is acting against the law.

Harass Or Threaten You

It is against the law for lenders to use verbal or physical abuse against borrowers.

They are also not allowed to use violence or force, threaten to hurt you or your family members, or damage your property.

Deceptive Tactics Used By Unlicensed Money Lenders

Let us now look at some tricks illegal money lenders use to get you to buy their lies.

Impersonating Legal Money Lenders

Illegal money lenders might claim to hold a moneylending license. They impersonate legal lenders and use their details, including phone numbers, addresses, and business names.

Since these details are already on the aforementioned list, it will be easy for you to trust the lender. So do check for any discrepancies.

However, to be sure that the money lender is not a fraudster, you can contact the stated phone number or stop by the listed address.

If it is indeed an illegal lender, report it to the Registry of Moneylenders.

Creating Phony Websites Or Contracts

Illegal money lenders are getting smarter. Some market themselves as legal money lenders to gain your trust and confidence.

This means that the “Ah Long” may use channels used by licensed lenders to advertise its services to you, such as creating phony websites.

Such websites aim at phishing personal information from you. They might request for your Singpass user ID and password. Such requests are illegal as the information collected may be used for illegal activities such as identity theft.

Or these illegal lenders might ask you to sign an unfinished or blank Note of Contract for the loan. They may even retain your NRIC, or employment pass, passport, driver’s licence, work permit, and ATM card.

Lending To The ‘Unlendable’

To acquire a loan from a licensed money lender in Singapore, you first have to satisfy the legal requirements.

You must, among other things, be a Singaporean or permanent resident, at least 21 years old, and employed.

Illegal money lenders target borrowers who would not be offered a loan by licensed lenders. These are people who:

  • Belong to vulnerable groups of society
  • Have a bad credit score
  • Are low-income earners
  • Have bad financial habits like gambling
  • Are linked to illegal activities

People in such demographics rarely borrow need-based loans. Instead, they get loans to repay other loans, gambling, and drugs.

Illegal lenders also target borrowers who are oblivious to loan contract terms. They exploit such borrowers by changing the contract terms, and charging exorbitant rates and mark-ups.

Offering ‘Debt Forgiveness’

Loan sharks and illegal money lenders charge a 22% interest rate, five times higher than what is stated by law.

These lenders trap you in a debt cycle with such rates and hidden contract terms. When you cannot repay, they might try to offer “debt forgiveness”.

However, this “forgiveness” is not straightforward. They will request you to work for them. If you agree, you may become their runner, and have to harass other borrowers into repaying their loans. Or you may have to promote their loans to prospective borrowers.

On the extreme end, the lender may ask you to help it launder money using your bank account.

Only Work With A Licensed Money Lender 

Now that you know how to check money lender license, you can ensure that you don’t fall victim to illegal lenders.

That said, licensed lenders offer financial assistance when you’re in dire need or need a top-up for that planned vacation.

Remember that licensed lenders with a moneylending license must abide by the Moneylenders Act 2008 and Moneylenders Rules 2009.

If you need a personal, payable, vacation, renovation, or business loan, check out U Credit, a licensed money lender in Singapore.

U Credit offers low interest rates with flexible repayment terms in a safe and secure process.

Contact us now or apply for a loan with U Credit, a trusted money lender in Singapore.