$3b money laundering case exposed gaps in S’pore’s corporate gatekeeping systems: FATF

SINGAPORE – The largest money laundering case here demonstrated the strengths of Singapore’s asset recovery capabilities, but also exposed vulnerabilities in its corporate gatekeeping systems.

In its latest assessment report on Singapore released on May 6, the Financial Action Task Force (FATF) said the $3 billion case, one of the world’s largest crackdowns on money laundering in 2023, showed how attractive the Republic is to criminals.

The probe came in the wake of a surge in luxury property purchases in Singapore in 2021, with reports raising concerns about sources of wealth, including dubious support documentation.

Over a period of 18 months, a multi-agency task force coordinated intelligence and investigations, with the police sending 33 informal requests to 10 jurisdictions and Singapore’s financial intelligence unit engaging with the units of at least 10 other jurisdictions.

At the same time, the police received 63 requests from 18 jurisdictions.

On Aug 15, 2023, simultaneous raids were conducted across the island. It led to the arrest of 10 foreigners who were linked to organised crime, including scams and online gambling.

Some $3 billion in assets, including cash, properties, cars, liquor, jewellery, watches and luxury bags, were seized.

The 10 were later convicted and jailed, while 15 others who left Singapore earlier agreed to forfeit about $1.85 billion worth of assets in exchange for having the Interpol notices on them withdrawn.

According to the assessment report, the case highlighted the quality of Singapore’s law enforcement and its political commitment to preventing the misuse of its financial system.

It noted how the case had accounted for 47 per cent of the $6.3 billion in seizures from 2020 to 2024. This, it said, showed Singapore’s strength in asset recovery.

The report also highlighted how the police had been able to manage an unprecedented volume of luxury goods, including purses and cars, and had preserved both the integrity of the evidence and the value of the items.

FATF said the case showed that Singapore was able to effectively handle complex money laundering cases and dismantle sophisticated organised crime networks, but it also exposed weaknesses in corporate governance.

The police had investigated over 20 companies linked to the 10 foreigners, and conducted probes into six professional intermediaries, including bankers, corporate service providers and real estate agents.

The report noted that lawyers and law practice entities were implicated in 26 breaches linked to the case, and the Ministry of Law took four law firms and a lawyer to task for breaches over the purchase of properties linked to the case.

Two property agents were fined for their involvement, and a corporate service provider allegedly linked to the case is facing forgery charges.

The Monetary Authority of Singapore took action against nine financial institutions, handing them $27.45 million in composition penalties for flouting anti-money laundering controls. It also took action against 18 individuals who worked for the financial institutions at the time.

In addition, a total of six single-family office funds in Singapore that were given tax benefits were found to be linked to the case and had their tax benefits withdrawn.

In the light of the case, the Government set up an inter-ministerial committee to review and improve Singapore’s anti-money laundering controls.

This led to several changes to the laws and the introduction of new data-sharing mechanisms, which the FATF report said show Singapore’s commitment to tackling financial crime.

FATF, in its assessment report, noted that as a result of the $3 billion case, Singapore had exemplified “its high-level political commitment to preventing the misuse of its financial system” and set up an inter-ministerial committee to review and improve the country’s anti-money laundering, counter-terrorist financing and counter-proliferation financing system.

“This committee and the measures it has put in place, including innovative amendments to legislation and new information and data-sharing mechanisms, represent the clearest manifestation of Singapore’s ongoing and active implementation of incremental and unique measures to take on those attempting to misuse Singapore’s financial system,” the global financial watchdog added.

International standards

Formed in 1989, the 40-member FATF sets international standards to help the authorities target illegal funds linked to serious crimes.

Members undergo periodic peer reviews to assess their systems’ effectiveness across 11 key areas, known as immediate outcomes, and 40 technical compliance aspects.

Singapore, which joined the group in 1992, is among the first few countries to undergo the process. This is the fifth round of the FATF mutual evaluations for the Republic.