SINGAPORE - In exchange for cash, two brothers agreed to become directors of companies involved in possible money-laundering activities.

Singaporeans Heng Boon Liang and Heng Joo Keng were also told to falsely present themselves as the ultimate beneficial owners of the firms.

The two brothers pleaded guilty on Monday (July 4) to multiple counts of cheating as well as offences under the Companies Act.

Heng Boon Liang, 54, was sentenced to 18 days' jail and a fine of $18,600. He will have to spend an additional 57 days behind bars if he is unable to pay the amount.

Heng Joo Keng, 46, was jailed for 10 days and fined $4,500.

Deputy Public Prosecutors Magdalene Huang and Tan Zhi Hao stated in court documents that investigations into the possible money-laundering offences are still ongoing.

Defence lawyer Diana Ngiam, who represented the siblings, told the court that her clients "had no knowledge of anything illicit happening".

On Monday, the prosecutors said that two Russian men were allegedly linked to the case.

One of them, Anton Kritskiy, 37, was the ultimate beneficial owner of the seven firms, the court heard. He has since absconded from Singapore and a warrant of arrest has been issued against him.

The other Russian, Singapore permanent resident Maxim Glazov, 57, incorporated five of the companies. He is expected to admit to his charges on July 28.

Ms Ngiam said Heng Boon Liang got to know him from friends and they have known each other for some 30 years.

The court heard that Glazov incorporated five companies here between Sept 7, 1994 and Nov 26, 2012. He was also the firms' director during this period.

The firms are: ASK Trading, JGHT Trading, MGHQ Import & Export, AMA Consultants and TB Logistics.

On or before June 26, 2014, Glazov approached Heng Boon Liang and asked him to be the firms' director.

DPP Huang said: "Maxim explained to (him) that he required a local resident director in name only, to fulfil the requirements imposed by the Accounting and Corporate Regulatory Authority.

"(Heng Boon Liang) would assist Maxim in the operations of TB, and would have no involvement in the daily operations of the remaining four companies."

The Singaporean agreed to take on the role in return for a monthly salary of $3,000 and an additional sum of $2,000 per company per year.

Glazov then resigned as the director of the five firms and appointed the elder Heng in his place.

Despite these, the ultimate beneficial interest in the five firms continued to reside with Glazov and he also maintained control of their bank accounts.

On or before March 1, 2017, Glazov agreed to sell the five firms to Kritskiy, who became their ultimate beneficial owner around September that year.

Through Glazov, the elder Heng was introduced to Kritskiy, who permitted the Singaporean to remain as the firms' nominee director and sole shareholder.

In April 2017, Glazov told the elder Heng that banks were intending to close the firms' accounts because of "US sanctions imposed on Russian entities and Russian nationals and the political issues and sanctions between the two countries".

Glazov asked him to either open bank accounts or take over as the account holder for the firms' bank accounts in order to circumvent controls imposed by the banks.

He also instructed Heng Boon Liang to falsely present himself as the ultimate beneficial owner of the companies to the banks, the court heard.

Both Glazov and Heng Boon Liang realised by May 2017 that they were facing increasing difficulties in opening bank accounts for the five companies.

Later that month, Kritskiy needed a Singaporean to act as the local nominee director for two other firms called Gemini International Markets and Capricorn Global Trading.

He also needed a local to open bank accounts for these two firms on his behalf.

Glazov then agreed to help him in recruiting a new nominee director and instructed Heng Boon Liang to find another Singaporean to take up the position.

Heng Boon Liang then decided to rope in his brother Heng Joo Keng.

DPP Huang said: "(He told his sibling) that he was 'blacklisted by the government authorities' and that Maxim and Anton could not use their names either 'due to the US sanctions imposed on Russian entities'."

Heng Joo Keng agreed to assist his brother and the two Russians to circumvent controls imposed by the banks, by falsely presenting himself as the ultimate beneficial owner of Gemini or Capricorn.

Heng Joo Keng knew that Kritskiy was the ultimate beneficial owner of the two companies.

On his brother's instructions, Heng Joo Keng incorporated Gemini and Capricorn on May 25 and May 29, 2017 respectively.

He also listed himself as the sole director and shareholder of each firm. For his help, he was paid a commission of $2,000 per company per year.

Large sums of cash were transacted in the bank accounts in 2017.

On one such occasion, more than US$81 million (about S$113 million) and over 39 million euros (about S$56 million) were transacted in Gemini's account.

The prosecution said that in May 2017, the Commercial Affairs Department received information that there was a money-laundering network in Singapore operated by the two Russians through ASK Trading, JGHT Trading, MGHQ Import & Export, AMA Consultants and TB Logistics.

Investigations then revealed that Gemini and Capricorn were also involved.

DPP Huang told the court: "The investigations...revealed that there were inflows and outflows of large amounts of funds in the (seven) companies, which were of a flow-through nature, and did not commensurate with their turnover, paid-up capital, assets or age...The companies also purchased similar goods from the same suppliers using multiple repeat orders."

She added that the companies were allegedly used as an intermediary for transactions involving "counterparties" in China, Russia and Eastern Europe, with none of the purported goods actually delivered to Singapore.

The CAD therefore had reasons to suspect that most, if not all, of the purchases by the firms were fraudulent or fictitious.

For each cheating charge, an offender can be jailed for up to three years and fined.