Last week the Singapore courts convicted the first defendant in the police case against ten foreign nationals arrested in August 2023 in the biggest case of money laundering in the city’s history. The case involves at least 3 billion Singapore dollars (US$2.2 billion) in criminal proceeds, which is only what has been detected and hence is likely to be larger.
The Singapore Police charged Su Wenqiang, a 32-year-old Cambodian national born in China, with eight counts of money laundering, one count of possession of forged document, and two counts of false declaration (relating to a forged marriage certificate and also his application for an employment certificate in Singapore). Su was sentenced to 13 months’ imprisonment. In Singapore remission after serving two thirds of the sentence is usually given for good behaviour, so Su could be released from prison after only 9 months.
The largest ever case of money laundering in Singapore relating to the epidemic of online and digital crime will hence be punishable by only 9 months imprisonment. Forfeiture of Su’s assets is not really a punishment as these were the proceeds of crime. This is hardly a strong deterrent. It is worth recapping the scale of the predicate offences relating to the money laundering to put this into perspective.
Money, Money Money
The police investigation has revealed that Su and his associates were involved in online illegal gambling based in the Philippines, which has grown in Asia to become the highest volume area of funding for transnational crime groups. One of Su’s Singapore registered companies, Yihao Cyber Technologies Pte Ltd, received payments relating to the illegal online gambling during 2021, which were transferred into bank accounts held with UOB (US$741,000) and DBS (US$325,000). Su was the director and sole shareholder of Yihao Cyber Technologies, and as he had no legitimate business operations in Singapore he was unable to account for the origin of the funds.
The assets seized extend to far more than only this cash. The Singapore Police have stated that they have seized around three million Singapore dollars’ worth of assets, including 55 properties, 15 vehicles, 189 luxury bags, 34 pieces of jewellery, five luxury watches and alcohol from Su Wenqiang, his wife and his companies, which the Court has ordered forfeit to the State. The seized assets are a wide variety of items, including cash, properties, vehicles, jewelleries, luxury items and alcohol. The assets included cryptocurrencies valued at over SG$38 million, illustrating the growing role of this sector in money laundering and moving funds across borders.
Su had also purchased physical assets in Singapore that clearly would have required payment via the banking system. The scale of the funds and assets laundered by the gang raises questions regarding the effectiveness of anti-money laundering (AML) compliance systems not only in Singapore, but globally. That a criminal gang can comfortably use the banking system and launder at least US$2 billion without challenge, and that this is only one gang that is prospering in the midst of a global cyber fraud epidemic, requires a review of the AML system itself.
Slipping Through My Fingers
Reports of the Singapore case allege that major banks involved in dealing with funds or assets from the gang include the Bank of China, Credit Suisse, DBS, Industrial & Commercial Bank of China, Julius Baer, RHB Bank Berhad, UBS, and United Overseas Bank. This has prompted the Monetary Authority of Singapore (MAS) to initiate special reviews of reviews of all of the banks involved.
Monitoring and understanding the spending habits of everyone, everywhere all at once is not something that banks can easily do, or should be expected to do. But the Singapore case suggests that established AML controls are not working.
Detection of genuine money laundering in the global banking system is not easy, and banks have been hindered as they are the victims of fraud as part of the money laundering activities. One of the accused, Vang Shuiming (aka Wang Shuiming), has been charged with and admitted submitting forged financial statements from two companies, Xiamen Yetian Trading and Xiamen Likanghang Trading, as supporting documentation to Bank Julius Baer & Co’s Singapore branch in 2022. Vang is also alleged to have submitted forged financial statements from three companies, Xiamen Mingxin Guarantee, Xiamen Yetian Trading and Xiamen Likanghang Trading, as supporting documentation to UOB bank in 2022, as well as submitted a forged bank statement to Citibank Singapore in March 2021. Vang is facing the most charges of any member of the syndicate, and also been charged with money laundering offences relating to US$1.75 million held in four bank accounts, which is alleged to be the proceeds from an unlicensed money lending business in China. A key part of the money laundering by the syndicate has been fraud (i.e. involving counterfeit documents), and the banks involved are the victims of that fraud.
The large volume of high-value assets purchased by Su and his syndicate for the purpose of ‘placement’, which criminals use to introduce funds into the financial system, raises the question of whether certain luxury items should be subject to AML related regulation, and the Singapore government has established an inter-ministerial panel to review AML measures and inspect financial institutions suspected of involvement. The Singapore government has quickly taken the lead and is tightening AML related regulation across a number of areas.
The Monetary Authority of Singapore (MAS) has introduced COSMIC, a digital platform that will facilitate the sharing of customer information among major banks, that include DBS, OCBC, UOB, Citibank, HSBC as well as Standard Chartered Bank, to help more effectively identify those involved in money laundering. Only customers identified with suspicious activities may be subject to the data sharing as a means of allowing banks to better detect ‘layering’, which criminals use to distance funds from the original source by moving them between banks.
The MAS has also announced the tightening of regulations relating to cryptocurrencies, by expanding the scope of the Digital Payments Act to cover digital payment token (DPT) service providers; facilitation of the transmission of DPTs between accounts and facilitation of the exchange of DPTs, even where the service provider does not come into possession of the moneys or DPTs; and facilitation of cross-border money transfer between different countries, even where the funds do not touch Singapore. Providers of these services must be licensed, and have 30 days to submit an application or they must cease their activities.
However, the Singapore case indicates that AML systems in major banks have not been able to detect ‘integration’, which criminals use to conduct large scale transactions with banks and distance proceeds of crime even further from the original crimes. This suggests that criminals are being nimbler and more creative than banks (and the authorities) in navigating the new era of digital payments. Transnational organised crime groups are engaging in highly profitable new digital business lines, such as online illegal gambling (and sports betting) and online cyber fraud, both of which have boomed in Asia to become increasingly global criminal enterprises. These groups are also quickly mastering new digital platforms, such as online employment portals, as well as new technologies, such as using cryptocurrencies.
Su Wenqiang, a 32 year old originating from China, is hardly likely to be the real ringleader of the massive criminal enterprise prosecuted in Singapore. The Singapore authorities have shown that the syndicate was involved in massive illegal online gambling as well as money lending, criminal business lines which are invariably focussed on customers (or victims) in China. Su and his colleagues seem to have been operating as the money laundering hub for a huge criminal enterprise, indicating that the real beneficial owners of the business have not been stopped. Su will serve around 9 months in a Singapore prison for laundering at least US$2.2 billion, and then be free to return to work. The far larger proceeds of transnational organised crime will continue to slip through the fingers of the authorities unless radical changes are made to the approach to the detection and prevention of money laundering and other financial crime.