Singapore Banks Eye Chinese Clients as Money Laundering Investigation Grows

Posted on: September 22, 2023, 06:49h. 

Last updated on: September 22, 2023, 11:00h.

In August, authorities in Singapore began dismantling a money laundering ring with ties to illegal gambling. As the case unfolded, they seized SGD1 billion (US$740.4 million). But each day uncovers an even larger network, with more Chinese nationals coming under fire.

A view of the Singapore skyline from the water
A view of the Singapore skyline from the water. A massive money laundering scandal involving illegal gambling there is larger than previously thought. (Image: Private Banker International)

The authorities have now seized more than SGD2.4 billion (US$1.75 billion) in cash and assets. The investigation continues to find more criminal activity, expanding what was already considered the largest money laundering case in Singapore’s history.

Almost everywhere they look, investigators find another element to the criminal enterprise. They are discovering that those involved allegedly sought Singaporean citizenship as a means to perpetrate illegal gambling schemes.

Singapore Bank Accounts Under Watch

Banks in Singapore are playing an active role in trying to figure out how widespread the organization is. Instead of only focusing on Singapore nationals, they are now placing heightened focus on customers from China, many of whom opened accounts using passports from other countries.

The financial institutions are scrutinizing any customer who might have Chinese origins, according to local media reports. They’re also looking into more individuals from Vanuatu, the Dominican Republic, Cyprus, Cambodia, and Turkey.

These are all countries that had previously been highlighted by the authorities last month when they began making their arrests. So far, at least one Singapore bank has closed all accounts of any customer who holds a passport from one of those countries.

Those initial arrests, the result of raids involving over 400 police, included 10 people, all foreign nationals and several with Chinese passports. Since then, the investigation has led to more arrests, and the banks’ cooperation will likely lead to even more.

Singapore’s government and financial institutions must have been overjoyed as foreigners began to dump huge amounts of money into the banks over the past few years. In 2021, according to Reuters, assets under management in the country increased 16% from the previous year, reaching SGD5.4 trillion (US$3.95 trillion).

This beat the global average increase of 12%. In light of the ongoing money laundering scandal, Singaporean banks may now witness a halt, and possibly a significant drop, in interest from foreigners looking for somewhere to park their money.

More Fallout Coming

The scandal will result in greater restrictions in a number of commercial segments in Singapore. The banks are scrutinizing their customers already. But given the circumstances, a massive and sweeping audit may soon be required.

The real estate sector is also participating, and the Council for Estate Agencies (CEA), a regulatory watchdog overseeing the industry, already announced that it is providing assistance. With real estate purchases being a prime target for money launderers, the sector can now expect much greater oversight.

Singapore introduced new regulations regarding CEA-led due diligence requirements for property developers this past June. These mandate that developers are responsible for reviewing more closely potential buyers and reporting any red flags they come across, such as handing over a suitcase containing $1 million in cash.

A new digital information-sharing platform, COSMIC (Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TF) Information & Cases), will play a role as well. A product of the Monetary Authority of Singapore, it allows banks to more easily share information about any client whose account registers questionable transactions.