Assessing the evolving money laundering saga in Singapore

Written by Kapronasia || November 14 2023

The plot continues to thicken in one of the largest money laundering cases in Singapore’s history. Complicating matters is the sensitivity of certain aspects of the case, given the large number of ethnic suspects with ties to China and the multiple banks both local and international ensnared in the ongoing investigations.

One of the more intriguing new developments in this case is the discovery of links to illegal online gambling sites based in the Philippines that cater to Chinese gamblers. Online gambling is illegal in both China and Singapore. While thus far this discovery seems to have had no overt effect on Singapore’s casinos, it will be interesting to see if anything changes in the future.

Separately, DBS said last week that it had exposure of S$100 million (US$74 million), mainly from financing properties of those arrested in one of the biggest such cases in the city-state.

In DBS's third quarter results, specific allowances for expected credit losses rose almost eightfold from a year ago to S$197 million, or 18 basis points of loans. They were “prudently taken” for exposures linked to a recent money laundering case in Singapore, DBS said.

Nevertheless, DBS CEO Piyush Gupta seemed unworried about possible knock-on effects on Singapore’s status as a financial hub from the money-laundering scandal in a press briefing held Nov. 6. He said he did not expect financial flows into Singapore “to suffer.” If anything, Gupta seemed more worried about the disruptions to its DBS services when it went offline on Oct. 14. DBS will “dedicate ourselves to executing the comprehensive set of measures we recently announced to address the series of digital disruptions, for which we are truly sorry,” he said.

Meanwhile, if Singapore wants to improve its ability to prevent money laundering, it has to more closely scrutinize financial flows pouring into the city, especially as there has been an outflow from Hong Kong due to changes to the Chinese Special Administrative Region’s laws and related political issues. To that end, it is encouraging to see that on, a series of measures have been proposed to strengthen Singapore's AML framework. These measures include the introduction of new legislation, the Corporate Service Providers Bill (the CSP Bill), revisions to the Accounting and Corporate Regulatory Authority (ACRA) Act of 2004 in Singapore (the ACRA Act), and proposed amendments to the Companies Act of 1967 in Singapore (the Companies Act).

Further, a new inter-ministerial committee will be formed to review Singapore’s AML regime to ensure that it remains current in combatting increasingly sophisticated financial crimes. 

While these measures intend to ensure Singapore’s status as a global financial center, it is important to maintain a balanced approach. That is, in addition to safeguarding against excessive compliance costs that might gum up the wheels of legitimate business operations and discourage foreign investment, these measures should provide a framework that encourages service providers, including CSPs, to diligently adhere to the AML processes.