Why Singapore is facing more financial crime challenges

Written by Kapronasia || October 05 2023

As the massive money laundering case involving 10 people of Chinese descent continues to unfold in Singapore, we wonder if this might just be the third act in a multi-part perfect storm that also involve Three Arrows Capital and some other shady operations. In a nutshell, Singapore, with perhaps the exception of its relatively quiet capital markets, has come into its own as a financial hub in recent years, attracting unprecedented sums from venture capitalists, a huge amount of attention and investment from the crypto community, and a massive influx of Chinese capital that has translated into a broader family office and wealth management boom. With so much money moving into and through the city-state, financial crime risks multiply and authorities have to be more proactive than in the past.

The money laundering case involving the 10 people of Chinese ethnicity is reportedly Singapore’s largest to date, and authorities have thus far seized more than S$2.8 billion in assets. According to Singaporean media, They include 152 properties and 62 vehicles with an estimated value of more than S$1.24 billion, money in bank accounts amounting to more than S$1.45 billion, and cash of various currencies worth more than $76 million. Other items include thousands of bottles of liquor and wine, cryptocurrency worth more than S$38 million, 68 gold bars, 294 luxury bags, 164 branded watches and 546 pieces of jewelry.

On Tuesday, Singapore said that it would be reviewing its legal framework over financial crimes, and it is possible that some changes will be made given the scale of this case. However, we would bet that any revised or new legislation will place most of the responsibility for preventing this type of illicit activity upon financial institutions. After all, they are the first line of defense.

In parliament on Tuesday, Minister of State for Trade and Industry Alvin Tan said that the Monetary Authority of Singapore, expects bankers in the city-state to conduct "robust due diligence checks" on such entities before taking them on, adding that one or more of the suspects in the money laundering case may have been linked to single family offices to which the MAS provided tax incentives. The MAS recently told Voice of America that the number of private offices in Singapore managing wealth had risen to 1,100 at the end of 2022, compared with just 400 in 2020.

It is possible tighter supervision of family offices will be mandated. "Singapore's hard-earned reputation as a trusted and well-governed international financial and trade hub with a strong rule of law is at stake," Tan said. "Our dual objectives of building a dynamic, thriving, financial center on the one hand, and maintaining a clean system on the other hand, are mutually reinforcing -- we cannot and will not trade one against the other."