MAS defends AML supervision in wake of billion-dollar scandal

Ten suspects have been charged in Singapore in a billion-dollar money laundering scandal that implicates some of the world’s largest banks.

The incident has prompted a review of money laundering controls by the Monetary Authority of Singapore, and comes as the financial centre holds the Financial Action Task Force presidency.

The proceeds of the large-scale laundering are believed to come from “overseas organised crime activities, including scams and online gambling”, police said.

On September 20, Singapore Police revealed that the amount seized has continued to climb. To date, the total value of assets seized or issued with ‘prohibition of disposal’ orders stood at S$2.4 billion (US$1.8 billion), up from S$815 million previously.

After co-ordinated arrests on August 15 by more than 400 law enforcement officers, “more assets may be seized, bank accounts frozen, or prohibition of disposal orders issued, in the course of investigation”, police said.

Eight other people are wanted and 12 are assisting with investigations into the international crime syndicate, police said on August 16. Meanwhile, journalists have surfaced evidence of more assets and companies linked to the group in Cambodia, China and the UK.

The day after the arrests, on August 16, the MAS issued a statement saying it “had worked closely with the Commercial Affairs Department to facilitate the development of the case” that led to the arrests. The MAS said financial institutions filed suspicious transaction reports, alerting the CAD to suspicious activity. Red flags included “suspicious fund flows, dubious documentation of source of wealth or funds, and inconsistencies or evasiveness in information provided”.

A spokesperson for the MAS defended the credibility of anti-money laundering (AML) oversight. They told Central Banking: “The Monetary Authority of Singapore regularly reaches out to financial institutions as part of ongoing supervisory engagements to ensure they take reasonable steps to mitigate against money laundering and terrorism financing risks.” This includes the filing of Suspicious Transactions Reports (STRs), they added.

The spokesperson declined to give further details of the STRs that triggered the investigation, stating: “As a matter of policy, we do not share our confidential, specific dealings with the financial institutions, as well as Suspicious Transactions Reports information.”

On August 18, 11 more properties and another 19 commercial or industrial spaces were issued with prohibition of disposal orders, the Straits Times reported.

Court documents from a hearing on September 5, seen by Bloomberg, show S$97 million was seized from Credit Suisse Singapore and S$33 million from wealth manager Julius Baer. Both declined to comment.

Some reports said individuals in the organised crime group held funds in Citigroup’s Singapore branches. A spokesperson told Central Banking they cannot comment on the case but added: “We are committed to the fight against money laundering and ensuring the highest standard of governance and controls. We are working with the authorities to strengthen and protect the integrity of the financial system.”

Deutsche Bank and Singapore’s largest lender, DBS, were named in the court documents as creditors to investment companies affiliated with the suspects. Deutsche Bank and DBS declined to comment.

Members of the syndicate reportedly also tried to use fraudulent documents at OCBC, in which Citi is the largest shareholder. OCBC declined to comment.

In all, around 10 banks have been implicated in the latest money laundering scandal, Bloomberg reported on September 8.

At the time of the initial arrests, police said they seized “more than 35 related bank accounts with a total estimated balance of more than S$110 million”, as well as S$23 million, including foreign currencies.

Prohibition of disposal orders – meaning the assets cannot be sold – were issued against 94 properties and 54 vehicles, with a total estimated value of S$815 million. Among wine, watches and handbags, the police also seized 11 documents with information on crypto assets.

The suspects all hold Chinese passports. Members of the group also possessed passports issued by Turkey, St Kitts and Nevis, Vanuatu, Dominica, Cyprus and Cambodia.

In an interview given to Lianhe Zaobao, Singapore’s largest Chinese-language newspaper, K Shanmugam, Singapore’s minister for home affairs and law, denied the arrests were conducted on China’s request.

The MAS sent a note on August 30 directing the compliance heads of all financial firms in the city-state to examine suspicious activity by the 10 suspects and 24 other individuals from the beginning of 2020, Bloomberg reported.

However, reporters at Bloomberg found that at least three of the suspects operated in Singapore before then. One was a director and shareholder of a technology firm as early as 2017, according to local business filings.

The Straits Times also reported at least three suspects created firms in the UK, now dissolved, whose appointed company secretary, another firm called Yunma Tianlong International Consulting, is linked to 9,000 companies worldwide. One of the businesses dates back to 2016.

Reporters at the Organized Crime and Corruption Reporting Project and Radio Free Asia found two members had bought properties worth $56 million in Oxford Circus and Canary Wharf in London, within a week of each other in 2021.

The Straits Times also reported nine of the 10 suspects have business ties in Cambodia and were granted Cambodian citizenship between 2018 and 2021. At least five of the suspects are wanted in China to assist in investigations into fraud and illegal gambling.

Asked about Singapore’s reputation as a global financial hub and seemingly a “hotspot” for money laundering, Shanmugam said: “I would be careful about these kinds of characterisations”. Singapore is the third-largest financial centre in the world after New York and London, he noted, and “MAS has put in controls against money laundering”.

He added: “Banks have to be the first line of checks.” Once the facts are known in this case, action will be taken.

MAS is currently developing a digital platform called Cosmic, or Collaborative Sharing of Money Laundering/Terrorism Financing Information & Cases, together with several Singapore-based banks. The platform will allow financial institutions to share information on AML red flags with each other.

Investigations into the complex criminal network continue.