SINGAPORE - Pawnshops will soon come under stricter regulations, after Parliament passed the Pawnbrokers Bill on Monday.
Under the new regulations, they will need to put up a security deposit of $100,000 for each branch, up from $20,000.
They will also need to maintain a minimum paid-up capital of $2 million for the first branch, and $1 million for each subsequent branch.
Besides that, pawnshops will have to take steps to prevent money laundering, such as conducting stricter checks on their customers and reporting suspicious transactions to the police.
The proposed changes come against a backdrop of growth in the pawnbroking sector here. The number of pawnbrokers has risen from 57 in 1993 to 204 as of last year. Last year, they lent about $5.5 billion, up from $856 million in 1993.
Under the Bill, pawnshops will also be allowed to sell unredeemed pledges through means other than auctions. Currently, they can only auction off these items, but this incurs high costs.
Senior Minister of State for Law Indranee Rajah said abolishing the auction system could help lower costs for pawnshops, which will then be passed on to consumers.
She added that only about 5 per cent of pledges are unredeemed each year. And up to 90 per cent of the unredeemed items put up for auctions are not contested.