Singapore Tries to Plug Money-Laundering Loopholes

Singapore’s money laundering case surpasses US$2 billion

By: Toh Han Shih

Singapore authorities are trying to strengthen vulnerabilities in the Asian financial hub’s anti-money laundering (AML) system as the value of assets seized or frozen in one of the biggest money laundering cases in the city’s history nearly tripled to over S$2.8 billion (US$2 billion) from less than two months ago.

“This case is one of the largest anti money laundering operations not just in Singapore but the world,” Second Home Affairs Minister Josephine Teo said in parliament on October 3.

The value of assets seized and frozen has increased to S$2.8 billion (US$2 billion), including 152 properties and 62 vehicles with a total value of more than S$1.24 billion and bank accounts containing more than S$1.45 billion, Teo revealed. “There may be more arrests and assets seized,” she warned.

In comparison, when Singapore police first announced their crackdown on August 16, the value of assets seized and frozen was S$1 billion including over S$110 million in bank accounts. On August 15, police arrested nine men and one woman, all originating from Fujian province in China, according to the police announcement.

“We must and we will do more. The fact that more than S$1.45 billion in financial assets have so far been seized in relation to this case is concerning,” said Minister of State for Trade and Industry Alvin Tan told parliament.

The Monetary Authority of Singapore (MAS) is conducting detailed reviews and inspections of the financial institutions (FIs) with a major nexus to this case, Tan said. “MAS will also take a critical look at how the suspects were able to access financial services in Singapore. Some of them have been charged for presenting forged documents to FIs,” said Tan, who is a board member of MAS. 

MAS will assess whether FIs had upheld robust anti-money laundering/counter terrorist financing (AML/CFT) practices, including performing adequate checks on their customers’ sources of wealth and funds, monitoring customer transactions to pick out suspicious ones, he added. The agency is reviewing its processes on single family offices (SFOs) and will tighten them where necessary, Tan disclosed. “Ongoing investigations and supervisory engagements suggest that one or more of the accused persons in this case may have been linked to SFOs that were awarded tax incentives.”

An inter-ministerial committee, led by Second Minister of Finance Indranee Rajah, will be formed to consider further measures, Teo said. “We will consider further measures to strengthen our regime.”

“Where gaps are identified, we will tighten our regulations and enforcement to prevent exploitation by criminals,” said Rajah in parliament on October 3. The committee will focus on four main areas, Rajah explained.

The first focus is on how Singapore can better prevent corporate structures from being abused by money launderers, the second is on how financial institutions can enhance their controls and collaborate more effectively with each other, while the third is how corporate service providers, real estate agents and jewellery dealers can better guard against money laundering risks, Rajah said. “Fourth, how we can centralise and strengthen monitoring and sense-making capabilities across government agencies to better detect suspicious activities.”

According to the Financial Action Task Force (FATF), the global anti-money laundering organization, Singapore is partly compliant on customer due diligence on Designated Non-Financial Businesses and Professions (DNFBPs), which include jewellery retailers, company service providers and property agents.

“We will examine if Singapore needs to extend anti-money laundering regulations to new classes of assets beyond what FATF has recommended,” said Teo, noting luxury cars are currently not regulated under Singapore’s anti-money laundering regime.

China’s role

“There has been speculation circulating in news outlets internationally and domestically that this operation was carried out at the behest of China. This is completely untrue,” said Teo. “Singapore does not need another country to tell us what to do to enforce our laws.”

She revealed out that police began investigating this case two years ago in 2021.

In parliament on October 3, Sylvia Lim, chairman of the opposition Workers’ Party, noted some of the suspects were reportedly wanted by Chinese police for alleged involvement in organized crime. Lim asked whether Chinese authorities were assisting in the Singapore investigation.

Teo replied that she was not at liberty to disclose the foreign law enforcement agencies cooperating with Singapore. “Suffice to say that there would be a variety because the proceeds that potentially have been laundered through the Singapore system involve activities that were carried outside of Singapore. They could involve more than one jurisdiction. As we cast our net wide, it would not be unusual or unthinkable for us to be cooperating with other law enforcement agencies, not confined to one country China.” 

Foreign cooperation

Teo cited two cases which involved the Singapore authorities working with foreign authorities to trace and interdict illicit proceeds in Singapore.  In February 2021, she said,  police received information from international partners and commenced investigations into embezzlement of Angolan state funds that were alleged to have been laundered in foreign banks in Singapore. In the course of the investigations, she said, police seized over S$750 million of several bank accounts in Singapore.

In another example, she said,  authorities have rendered assistance to UK law enforcement agencies for a case involving former Formula One boss Bernie Ecclestone, with authorities proactively sharing information with UK counterparts which helped them develop their case on Ecclestone.  Ecclestone played a key role in bringing the Formula One race to Singapore. He is due to appear in a UK court in November to face charges for not declaring more than £400 million held in a trust in Singapore to the British government. Another key figure involved with Formula One in Singapore is the country’s transport minister and minister-in-charge of trade relations, S Iswaran, who is under investigation for corruption. It is not known if Iswaran is connected to Ecclestone’s case.

“If we make the rules too tight, the vast majority of legitimate applicants will be penalized,” Teo said.

“Our key task is to minimize the risks and catch these persons without affecting the majority of proper legal transactions,” she added. “Instead, the aim is to reduce risk….and take prompt action when we discover such activities.”

Toh Han Shih is chief analyst of Headland Intelligence, a Hong Kong risk consultancy