1. What is Singapore’s money-laundering case about? 

On Aug. 15, more than 400 police officers conducted raids at dawn across the island and rounded up 10 suspects, all originally from China but carrying multiple passports. They were charged with forging documents and laundering profits from scams and illegal online gambling in Singapore. As of Oct. 5, none had been granted bail after prosecutors cited flight risks. At least one — Vang Shuiming, who had passports from Cambodia, Turkey, China and Vanuatu — has requested a trial. The police banned more than 150 properties connected to them from being sold. Additionally, 62 vehicles, some S$38 million in cryptocurrencies, 68 gold bars and thousands of bottles of liquor were confiscated. Few institutions were unscathed. Some of the accused were also members of prestigious golf clubs, while local media reported that a number were also donors to Singapore charities. While there have been other scandals involving banks in Singapore over the years, including Malaysia’s 1MDB saga in 2016 and the meltdown of German payments company Wirecard AG in 2022, this case is different in that the people allegedly involved chose to reside and set up new businesses in Singapore. 

2. Does the money laundering case have any connections to China?

Some of the 10 arrested are wanted in China for crimes including scams and offshore online gambling operations that cater illegally to people in mainland China, according to prosecutors. Since gambling is illegal in mainland China, online businesses have proliferated in some neighboring jurisdictions that do allow it, including Macau, Singapore, Cambodia and the Philippines, to reach that audience. The raids in Singapore came shortly after a two-day visit by Chinese Foreign Minister Wang Yi. But Home Affairs Minister K. Shanmugam called it “absurd” to suggest there was any pressure from Beijing to arrest the people. Investigations of the money-laundering ring date back to 2021 after banks and companies filed suspicious transaction reports, according to another minister Josephine Teo. She said that probes of such scale and complexity take years and discretion, and “once we confirmed our suspicions, we acted.” At least 240 individuals were convicted of money laundering offenses from 2020 to 2022 with the police seizing more than S$1.2 billion worth of assets, she told Parliament. 

3. Which banks are involved in the Singapore money laundering case?

The suspects have banking relationships with more than 10 financial institutions in Singapore, which hold either their personal or business accounts. About S$1.4 billion of the seized assets as of early October were in bank accounts. Credit Suisse Group AG held S$92 million for Vang in Singapore. Other banks that have been embroiled are local units of Citigroup Inc. and Bank Julius Baer, as well as Singapore’s largest lenders DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. After the raids, Singapore banks were said to be tightening their scrutiny process for clients, Bloomberg News reported. Some of the international banks also closed accounts of Chinese clients carrying passports from other countries; China doesn’t allow for dual citizenship. Earlier in the year, four financial institutions including DBS and an insurer were fined S$3.8 million in total in relation to the Wirecard scandal. Authorities concluded they had failed to vet their clients and adequately establish sources of wealth for high-risk ones.

3. What are family offices and what role did they play?

Family offices are secretive, loosely regulated, privately owned companies that manage vast amounts of money for wealthy clans. They’ve been expanding dramatically, with Singapore as a major center. Authorities found that one or more of the accused in the money laundering case may have been linked to single family offices that were awarded tax incentives, according to Minister of State Alvin Tan. He said the Monetary Authority of Singapore is reviewing its internal processes for awarding these tax breaks, and will tighten them where necessary.

4. What has all this done to Singapore’s image as a clean city? 

Singapore has long capitalized on its reputation for clean governance and zero tolerance for crime to attract foreign investments and the well-to-do. Wealth inflows into Singapore totaled $1.5 trillion last year, according to an estimate by Boston Consulting Group. This makes the country the world’s third most popular destination, after Switzerland and Hong Kong, for the global rich to park their assets. The money-laundering case is shining a light on fund flows from abroad and whether the $2 trillion financial sector driving the city-state’s economy has done enough to block dubious transactions. It has sparked questions in Parliament about tightening money-laundering rules and immigration checks. And it also risks complicating a drive by the government to allay concerns about rising living costs, expensive home prices and perceived inequality in the city-state. The People’s Action Party, which has ruled Singapore for nearly six decades since independence, had already been buffeted this year by a spate of political scandals: A graft probe involving the transport minister, the resignation of the parliament speaker following an extra-marital affair, and the spectacle of two senior ministers being grilled in Parliament about their renting of state-owned mansions. 

5. How is the Singapore government trying to repair the damage?

In addition to weighing more rules for family offices, the city-state is setting up an inter-ministerial committee to review the existing system to prevent money laundering and look for ways to improve it. The committee will focus on how to prevent corporate structures from being used by criminals and how financial firms can enhance their controls and work more effectively with the authorities. It will also look into professions such as realestate agents, precious-metals dealers and corporate service providers to set up guardrails against money laundering. Minister Teo told parliament that the police investigation “has strengthened our reputation as a serious, high quality financial center, and for law and order.” At the same time, Singapore is seeking to show it’s still open to legitimate business. “If we make the rules too tight, then it is the vast majority of innocent applicants who will be unnecessarily penalized,” she said. To address residents’ concerns about housing costs, the government has tried multiple curbs on the market, including the doubling of taxes on property purchases by foreign buyers in April to 60% — the highest among major markets. 

–With assistance from Philip J. Heijmans.

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