A Singaporean court has started giving out sentences in a major case, involving 10 Chinese nationals accused of laundering $2.2bn (£1.8bn) earned from criminal activities abroad.
The scandal dragged in several banks, property agents, precious metal traders, and even a prestigious golf club. This led to extensive raids in some of the wealthiest neighborhoods, where police seized billions in cash and assets. The sensational details have captivated Singaporeans – among the seized assets were 152 properties, 62 vehicles, shelves of luxury bags and watches, hundreds of pieces of jewelry, and thousands of bottles of alcohol.
Earlier this month, Su Wenqiang and Su Haijin were the first to be jailed in the case. Su Haijin, according to police, tried to escape arrest by jumping off a second-floor balcony. Both men will serve a little over a year in prison, after which they will be deported and banned from returning to Singapore. Eight others are still awaiting the court’s decision.
Even as the case nears its end, questions arise. Prosecutors claim that the money funding their lavish lifestyles in Singapore came from illegal sources overseas, such as scams and online gambling.
How did these men, some with multiple passports from Cambodia, Vanuatu, Cyprus, and Dominica, live and bank in Singapore for years without attracting attention? It has prompted a review of policies, with banks tightening rules, especially for clients with multiple passports.
Most importantly, the case has highlighted Singapore’s challenge of attracting the super-wealthy without becoming a haven for ill-gotten gains.
Show me the money
Singapore, often dubbed the Switzerland of Asia, began attracting banks and wealth managers in the 1990s. With economic growth in China and India, and stability in Indonesia, Singapore became a haven for foreign businesses, offering investor-friendly laws, tax exemptions, and other incentives.
Today, the ultra-rich can fly into Singapore’s private jet terminal, live luxuriously in quayside neighborhoods, and speculate on the world’s first diamond trading exchange. Just outside the airport is a maximum-security vault called Le Freeport, providing tax-free storage for fine art, jewels, wine, and other valuables. The $100m facility is often referred to as Asia’s Fort Knox.
Singapore’s asset managers drew S$435bn from abroad in 2022, nearly double the figure in 2017. More than half of Asia’s family offices are now in Singapore.
Authorities suggest that some accused in the money laundering case may be linked to family offices benefiting from tax incentives.
“There is an inherent contradiction for a place like Singapore, which prides itself on clean and good governance but also wants to accommodate the management of massive wealth by offering advantages such as low taxes and banking secrecy,” says Chong Ja-Ian, a non-resident scholar at Carnegie China.
“The risk of also becoming a banker for individuals who earned their money through nefarious or illicit means grows.”
For rich Chinese, Singapore is a top choice due to its governance, stability, and cultural links to China. One of the suspects in this case wanted in China since 2017 for alleged involvement in illegal online gambling, settled in Singapore “to hide from the Chinese authorities.”
Hiding in plain sight
This isn’t the first time Singapore-based banks have been implicated in financial crime. They were involved in cross-border laundering in the 1MDB scandal, where billions were misappropriated from Malaysia’s state investment fund. Singapore also had links to Dan Tan, described as “the leader of the world’s most notorious match-fixing syndicate,” arrested in 2013.
The country has strict rules targeting white-collar crimes and is an active member of the Financial Action Task Force. Banks have invested heavily in compliance to screen prospective customers and report suspicious transactions. But none of this is foolproof.
Singapore’s buoyant property market is popular for “cleaning” dirty money. And there are casinos, nightclubs, and luxury stores.
“Massive amounts of money pass through Singapore’s banking system every day. Criminals can exploit this feature and disguise their money laundering activities among legitimate ones,” says Kelvin Law, an accounting professor at Nanyang Technological University.
Singapore also does not limit cash carried in and out of the country, requiring only a declaration for sums exceeding S$20,000.
Christopher Leahy, founder of investigative research firm Blackpeak, sees Singapore as an ideal place to hide money in plain sight.
“If you want to move lots of money, you hide it in plain sight, and Singapore is a great place for that,” he said.
When asked about analysts’ comments, authorities referred to a local newspaper interview with law and home affairs minister K Shanmugam.
“We can’t close the window, because if we did that, then legitimate funds will also not be able to come,” he said.
“When you are successful, you are a major financial center, a lot of money comes in, some ‘flies’ will also come in,” he added.
Singapore must decide how far it will go in accepting “money with varying shades of grey,” says Dr. Chong of Carnegie China. Some analysts believe this may be the cost of retaining Singapore’s status as a financial hub.
“The vast majority
of the funds are legitimate, after all,” says Mr. Leahy. “But there is an inevitable cost to being a major financial center.”
