One of my neighbours borrowed money from unlicensed moneylenders and defaulted on repayments.
Some time after the Chinese New Year, a loan-shark runner splashed paint onto three units of my HDB block, vandalising the doors and iron gates. I was one of the victims.
Such appalling tactics of loan sharks are common these days. To nip the problem in the bud, the authorities should make it illegal for anyone to borrow money from unlicensed moneylenders.
Growing demand from borrowers continues to fuel the growth and proliferation of unlicensed moneylenders. If the demand is significantly curtailed, then the number of loan sharks will be reduced considerably.
In this way, there will be fewer incidents of loan-shark intimidation.
The question of whether borrowing from unlicensed moneylenders should be criminalised is not a new one, and has been debated before.
Argument for: deterrence and nuisance to neighbours. The argument for the criminalisation of borrowing from unlicensed moneylenders mainly to "nip the problem in the bud" and also the nuisance that is caused to neighbours by harassment, as was argued in the letter above. Senior Minister of State Mr Heng Chee How has also raised this in Parliament in 2011:
I fear that if the trend towards the use of "normal people" as runners and harassers is not stopped, the threat to public perception of security would be even more serious. This is because the cancer can then be said to have spread to any part of the body and no longer limited to a particular organ. The public will then feel more and more insecure because regardless of whether they are borrowers or innocent neighbours, their homes can be vandalised by people fitting a broad profile.
For this reason, I continue to urge the Ministry to make borrowing from loansharks a crime. I know that with enhanced legislation, borrowing with a false address is already a crime. But that is not good enough, especially in the light of the behaviour of loansharks to target neighbours and innocent buyers of flats previously owned by borrowers. We have to deter the source. [Emphasis added]
Argument against: genuine needs and risk of driving the problem underground. On the other hand, the argument against criminalisation lies in the fact that there may be certain genuine needs driving such borrowing, as well as risks of driving the problem underground. Then-Senior Minister of State for Law and Home Affairs Associate Professor Ho Peng Kee said in 2010:
Whilst focusing primarily on the supply side, we are also aware of key issues on the demand side. Top of this is whether we should make borrowing from loansharks an offence. Since I first shared that [the Ministry of Home Affairs] was looking at this issue 2 years ago, we have received quite a lot of feedback on it. The views are mixed. Some argue that whilst many borrowers turn to loansharks because of gambling debts, there are also those who do so because of a genuine financial need such as a sudden unexpected bill to pay. Others point out that criminalising borrowing may drive the loansharking problem deeper underground, deterring borrowers from reporting instances of harassment to Police and worse, from coming forward to seek help. This, in turn, may embolden loansharks to employ even more dangerous tactics against the borrowers... [Emphasis added]
On the balance, the Government has chosen not to criminalise borrowing from unlicensed moneylenders. In 2011, in response to Mr Heng, Associate Professor Ho Peng Kee stated that:
Our approach is to closely monitor the overall effectiveness of all our enhanced measures before deciding if there is a need to go further by criminalizing borrowing. Some have argued that criminalizing borrowing may not necessarily solve the problem but instead make it worse. Sir, let us continue to monitor the situation and assess the need for doing so.
On the whole, this is probably the better approach (see also "Lightening sentences for those who call the "X Ah Long" hotline").
This is evident when one contrasts the approach to drug abuse. Under the Misuse of Drugs Act (Cap. 185, 2008 Rev. Ed. Sing.), trafficking, manufacture, import and export of controlled drugs are criminalised. In addition, possession and consumption of these drugs, even consumption extra-territorially, are crimes. On this view, one who consumes drugs is not simply an innocent victim, but is morally culpable for engaging in a self-destructive act.
By contrast, it is not immediately clear that borrowing from an unlicensed moneylender is per se intrinsically wrong. Morally problematic aspects of unlicensed moneylending lie in the usurious interest rates and the harassment activities of the loansharks, which affect not just the borrower, but one's family and neighbours. However, the act of borrowing itself is comparatively remote from the harm caused by unlicensed moneylending. It is the loansharks who charge the usurious rates, not the borrower; and it is the loansharks who harass, not the borrower. Perhaps the only culpable aspect of the borrower's conduct might be that he has inadvertently funded these moneylenders, but this may still be somewhat remote.
Though somewhat unstated, this is implied in Associate Professor Ho's argument that there are those borrow from unlicensed moneylenders because of "a genuine financial need such as a sudden unexpected bill to pay".
Conclusion
Arguments for the criminalisation of borrowing from unlicensed moneylenders are based on deterrence and nuisance caused to neighbours by loanshark harassment. Arguments aganist criminalisation turn on the fact that such borrowing may be driven by genuine needs and criminalisation may risk driving the problem further underground.
On the balance, it is probably better that borrowing is not criminalised, but instead addressed through education.
It has been argued that, ethically, the most important factor lies in the fact that it is not intrinsically wrong to borrow from an unlicensed moneylender. While loansharks should be brought to justice, the act of borrowing itself is comparatively "remote" from the harm caused by unlicensed moneylending.