Money Laundering Bust Puts Foreign Wealth in Singapore on Notice

By: Toh Han Shih

The massive crackdown on money laundering in Singapore that began on August 15 when the target of an arrest leaped from his second-floor window to hide in a storm drain raises deeply uncomfortable questions regarding the background of some of the ultra-high net worth foreign individuals living in the country, particularly Chinese, and may well have occurred at the behest of the Chinese government.

Although Singapore boasts a strong legal and institutional framework to fight money laundering and terrorist financing, and has long been known as “the Switzerland of the East” for its tight banking security laws, this episode shows the city-state is not immune to dirty foreign money.

Su Haijin, a 40-year-old Chinese citizen of Cyprus, was arrested at his residence at a Good Class Bungalow, the most expensive and prestigious category of landed housing, Singapore police announced. When police identified themselves outside his bedroom, the man allegedly jumped from the second-floor balcony and was found by the police to be hiding in a drain. He was taken to the hospital for treatment of the injuries arising from the jump, the police added.

Su, according to media reports, was said by police to hold passports issued by China and Cambodia. He is one of the shareholders of a Cambodian company, Su Zigen Chengmei Co., Ltd., according to opencorporates, a corporate database website. The raid on Su was part of a wider crackdown, with more than 400 officers from the Commercial Affairs Department (CAD), the Criminal Investigation Department, Special Operations Command, and the Police Intelligence Department conducting simultaneous raids at multiple locations island-wide, including expensive residences like GCBs and condominiums, leading to the arrest of nine men and one woman, Singapore police announced on August 16.

Freezing orders were issued against 94 properties and 50 vehicles, with an estimated value of more than S$815 million (US$599 million), as well as multiple ornaments and bottles of liquor and wine, Singapore police said. They seized more than 35 bank accounts holding more than S$110 million as well as cash of over S$23 million, more than 250 luxury bags and watches, over 120 electronic devices such as computers and mobile phones, more than 270 pieces of jewelry, two gold bars and 11 documents with information on virtual assets.

The 10 apprehended, charged on August 16, are all of mainland Chinese origin, with one woman and two men being Chinese citizens. The remaining seven included three Cambodians, two Cypriot nationals, a Turkish citizen, and a Ni-Vanuatu national, according to Singapore police.

“You can’t have S$1 billion attributed to money laundering be accumulated in assets such as property, luxury cars, and luxury goods in Singapore without significant collusion or willful blindness by various local agents in the finance and sales industries who would have acted as de facto fixers for these foreign nationals,” said an analyst who declined to be named.

Another 12 persons are assisting with investigations – a euphemism for being questioned – and eight more are wanted by the police, Singapore police announced. “Police investigations are ongoing. More assets may be seized, bank accounts frozen, or prohibition of disposal orders issued, in the course of investigation.”

One of the Chinese males was found in possession of a passport issued by St Kitts and Nevis, the other Chinese male citizen was found in possession of a Vanuatu passport and the Chinese female citizen was found with passports issued by the Dominican Republic and Turkey.

Many of these countries offer passports of convenience or golden passports to non-nationals for investment. Often their use is by those wishing to disguise wealth, in this case, alleged money launderers who are mainland Chinese, Steve Farrer, a UK-based human trafficking adviser, told Asia Sentinel. “Many financial institutions should take note of passport holders from such jurisdictions.”

“The police identified a group of foreign nationals suspected to be involved in laundering the proceeds of crime from their overseas organized crime activities including scams and online gambling,” Singapore police said.

Apparently, many Chinese from Cambodia are allowed into Singapore, some of whom had set up illegal casinos in Cambodia, a Singaporean businesswoman who declined to be named told Asia Sentinel.

“To launder the proceeds of scam centers in Cambodia, Singapore, and other financial hubs are being used for this process. As these profits continue to grow, Asia financial hubs should expect to see an increase in this crime,” an executive with a nongovernmental organization, who declined to be named, said.

Was China behind the Singapore crackdown?

The crackdown came after Chinese Foreign Minister Wang Yi visited Singapore only a week earlier, the analyst noted. “The possibility that this money-laundering sting against so many Chinese passport-holding individuals happened on the behest of the Chinese government cannot be discounted.”

An office dedicated to fighting money laundering will be set up in the Operations Office at the People’s Bank of China, China Daily reported on August 17. The office’s creation is part of Beijing’s efforts to establish a coordinated investigation system to combat money laundering, the Chinese state-owned newspaper explained.

Tougher scrutiny of Chinese wealth

The Monetary Authority of Singapore (MAS) said on August 16 that it had worked with CAD to facilitate the development of the case. Suspicious transaction reports (STRs) filed by financial institutions (FIs) in Singapore earlier alerted CAD to suspicious activities, MAS disclosed. “MAS will take firm action against FIs which are found to have breached MAS’s stringent requirements on anti-money laundering/countering the financing of terrorism, or to have inadequate controls against money laundering/terrorism financing (ML/TF) risks.” 

“All industries with high influx of foreign ultra-high net worth individuals will be put on high alert now to check their books for any potential facilitation of foreign money laundering in Singapore. Ignorance or accidental negligence will not be accepted as an excuse by the authorities,” the analyst predicted.

On July 31, MAS launched a public consultation on strengthening surveillance and defense against money laundering risks in family offices in the city-state, the regulator announced on the same day. The MAS’s toughening measure came amid a big increase of family offices, many of them Chinese, in the city. From 2020 to 2022, the Wealth Management Institute (WMI) enrolled more than 1,200 family office programs in Singapore, WMI said on September 26, 2022.

On the same day, WMI announced plans to ramp up the number of enrolments of family office participants to 5,000 by 2025. The WMI was founded by two Singapore sovereign wealth funds, Government of Singapore Investment Corporation (GIC) and Temasek, in 2003.

“Every large financial center will be a tempting place through which to launder funds,” said Stefanie Yuen-Thio, joint managing partner at TSMP Law Corporation, a Singaporean law firm, on her LinkedIn account. “A well-surveilled market where crime is uncovered is much more robust than one in which no wrongdoing is ever suspected.”

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