Singapore money laundering case exposes gaps in defenses
A Singapore money laundering probe involving more than S$1 billion ($740 million) is shining a light on fund flows from abroad and raising questions about loopholes that enabled an alleged crime syndicate to accumulate luxury property, Bentley cars and cryptocurrency.
The investigation erupted into public view in mid-August after police arrested 10 foreigners — most originating from China — and accused them of laundering criminal proceeds. It's prompted questions about whether the banking giants that drive the economy have done enough to block dubious transactions.
Singapore's success at positioning itself as a safe place to park family fortunes has spurred an influx of the well-to-do from across Asia, compounded by a surge in affluent Chinese fleeing crackdowns and pandemic restrictions. The sheer scale of inflows has boosted prices for real estate, cars and private schools. It's also lured some bad actors, according to the police.
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"The risks of money laundering have been evident for a long time," said Anton Moiseienko, a law lecturer in Canberra at the Australian National University who studies transnational and economic crime. "Now is really a time of reckoning or a wake-up call where we see a spectacular example of those risks materializing."
The police last month disclosed that they seized or froze the assets held by the foreigners, and accused them of seeking to launder gains from organized crime in other countries. In China, police notices show at least five are wanted for a range of offenses including illegal online gambling and scams.
Among the defendants, Su Wenqiang denies any allegation that he conducted remote gambling in Singapore, his counsel Manoj Nandwani of Gabriel Law Corp. said in an email on Monday. Wang Baosen hasn't yet entered a plea, his counsel Adrian Wee of Lighthouse Law said on Monday, declining to comment further. Megan Chia, a partner at Tan Rajah & Cheah representing Wang Dehai, declined to comment. Vang Shuiming denied wrongdoing. Lawyers for the other six accused didn't respond to emailed requests for comment.
The case has embroiled some of the biggest local and global financial institutions. In charge sheets seen by Bloomberg News, some of the individuals held funds in United Overseas Bank Ltd. and the local units of Citigroup Inc. They also allegedly tried to cheat Oversea-Chinese Banking Corp. and Standard Chartered Plc using fake documents. DBS Group Holdings Ltd. was a creditor to an investment firm linked to one of the accused, while Deutsche Bank AG was also a creditor to parties related.
While all financial centers face the same risks of money laundering and few are immune, the arrests are the latest in a string of financial scandals in recent years in a country that boasts strict law enforcement. Those include breaches of money-laundering rules connected to Malaysia's state fund 1Malaysia Development Bhd., fraud at the German firm Wirecard AG and alleged cheating by the founder of commodities trader Hin Leong Trading Pte.
In May, lawmakers passed a bill that will allow banks to share information on those they consider to be risky clients. New rules in June mandated due diligence checks by property developers on potential buyers, and reports on any suspicious transactions. Singapore is tentatively due to have its anti-money laundering practices evaluated in 2025 by the Financial Action Task Force, part of a recurring practice. The country currently holds the presidency for the global financial crime watchdog.
The government has touted the arrests as evidence that there's zero tolerance for money laundering. "It's not easy to think of another center that has taken such action," Minister for Home Affairs and Law K Shanmugam said at a symposium on Aug. 28.
According to Moiseienko, there's another way of looking at it. If that amount of money flooded into the property sector "potentially from proceeds of crime overseas, then clearly there was a lapse in how that system operated" because authorities had a long time to realize something was wrong.
Reports of suspicious transactions by unidentified firms helped to detect illicit activities, the Monetary Authority of Singapore said on Aug 16. "Supervisory engagements" with institutions to assess whether they have taken all reasonable steps to mitigate risks are ongoing, and the authority will take action where controls have fallen short, an MAS spokesperson said on Monday.
DBS pledged on Aug. 30 "to make Singapore a place where criminals cannot find harbor," and Citi said it had been working with authorities to strengthen and protect the integrity of the financial system. UOB continually enhances capabilities and controls to fight money laundering, it said on Monday. Money launderers have sophisticated networks to facilitate illegal financial flows and OCBC devotes significant resources to continuously strengthen its controls and will work closely with regulators and peers, it said on Monday. Deutsche Bank has said it is cooperating with authorities. Standard Chartered didn't respond to a request for comment.
Shocking Extravagance
The network's alleged illegality went unstopped for a long period even as they splashed vast amounts of money on extravagant lifestyles, centered around multimillion-dollar homes, ultra-luxury cars and prized golf-club memberships.
It raises "questions as to whether this could have been detected earlier," said Victoria Ting, an associate director at Setia Law LLC and former deputy public prosecutor in Singapore for financial and technology crime.
Authorities froze 105 properties worth an estimated S$831 million in some of the most prestigious locations. Seized assets include Bentley and Rolls-Royce cars, aged Macallan whiskey collections, Hermès handbags and Patek Philippe watches. One syndicate member paid S$500,000 for a Mercedes-Benz AMG, allegedly using gains from an unlawful remote gambling business based in the Philippines for people in China, according to the police.
Another is charged with paying S$23 million in 2019 for a condominium unit overlooking the luxurious Orchard Road shopping belt, using similar illicit gains.
At least seven of the frozen landed properties are on Sentosa, an island south of Singapore's mainland spanning about 500 hectares (1,236 acres). The island's tourist attractions include an award-winning golf club, a casino, and an international marina with yachts from as far away as the Caribbean.
Within this sanctuary is a smaller retreat that exemplifies the appeal of the financial hub: Pearl Island, where two of the arrested, Zhang Ruijin and Lin Baoying stayed. Zhang acquired a detached house on the outcrop, spanning 880 square meters (9,472 square feet), more than two years ago, according to government records. The price was undisclosed.
Another accused, Su Haijin, bought two adjacent bungalows facing the seafront at Cove Drive for S$36.4 million in 2021, and combined them to overcome a restriction on foreigners owning more than one home on the island, according to the Business Times. Another, Su Baolin, owns a home on Ocean Drive, according to government land records seen by Bloomberg News.
Sentosa Cove, a gated community to the south of Sentosa, is popular among wealthy foreigners because it has an exemption from laws that largely restrict land ownership elsewhere in the country to citizens. The break was introduced in areas of Sentosa nearly two decades ago to lure investment.
Simplified procedures — applications are processed in as few as two days — combined with upscale tropical landscaping lured buyers from all over the globe to decompress among the manicured lawns, palm trees, sculptures and faux Victorian street lamps.
The other big attraction for the well-heeled is the prestigious Sentosa Golf Club, where membership for foreigners has now risen to nearly S$1 million. At least four of the alleged money launderers became members in 2021, according to the club magazines. At least two also had memberships at the Tanah Merah Country Club. Officials at the Sentosa and Tanah Merah clubs declined to give details or comment in view of the ongoing investigation.
In a country with a rich tapestry of ethnicity from across the Asian continent, and constantly on edge to maintain harmony among its groups, the alleged gang's brazen display of opulence and privilege risks stirring resentment and a social backlash.
"Incidents like this have the potential to inflame feelings among many," said Toh Han Shih, a Singaporean and chief analyst of Headland Intelligence, a Hong Kong-based risk consultancy.
Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.
