Unlicensed moneylending is a serious issue and it has long existed in Malaysia. In Malaysia, moneylending is governed under the Moneylenders Act 1951 (as updated in 1st May 2015). There are huge numbers of moneylenders in Malaysia including Sarawak. As such, it is not a surprise that there are thousands of ways or methods used by those unlicensed moneylenders to advertise their businesses in Sarawak. Commonly, unlicensed moneylenders advertise their businesses by giving name cards and leaflets with some attractive rate of interest and even cashback voucher to increase their business profits. Some even put their advertisement in public places especially in market places and shop lots. So are they allowed to charge interest for money lending or loans to their family members or friends? The law has strictly prohibited unlicensed moneylender to charge even a cent from our friends and family. Even though the public know it is illegal to get loans from them, they would still take the risk because of taking into account factors such as the urgency of situations and the process to get loans or money is easier than licensed moneylender or banks.
Pursuant to Section 2 of Moneylenders Act 1951 (as updated in 1st May 2015), money lending is defined as ‘lending money with interest, with or without security, by a licensed moneylender to a borrower’. It is quite common that people often confused loan sharking with moneylending. Loan sharking is ‘an illegal activity of offering money in exchange for its repayment at an interest rate that exceeds the percentage approved by the law or government and the use of intimidation threats of force in order to obtain repayment’ (Free Dictionary).
Money lending without license is against the law and it deserves a very heavy penalty where the aim of punishment is deterrence. According to Section 5(2) of the 1951 Act, it is clearly stated that any person who carries on or advertises or announces himself or holds himself out in any way as carrying on the business of moneylending without a valid licence, or who continues to carry on such business after his licence has expired or been suspended or revoked shall be guilty of an offence under this Act and shall be liable to a fine of not less than two hundred and fifty thousand ringgit (RM 250,000) but not more than one million ringgit (RM 10,000,000) or to imprisonment for a term not exceeding five years (5 years) or to both, and in the case of a second or subsequent offence shall also be liable to whipping in addition to such punishment.
In a most recent case, an ex-pilot was charged under Section 5(2) of the Moneylenders Act 1951 and was found guilty under the Session Court of Kuala Lumpur. He was jailed for 2 years and fined RM300,000.
Thus, it is very important to increase public awareness in regards to lending money from unlicensed company. Finally yet importantly, if the rate of unlicensed money leading keeps increasing without any control by the government, it will seriously affect our country economics. Therefore, Public is not encourage to get involved in lending money from any unauthorised or unlicensed corporation or company because it is a violation to the law of Malaysia.