Scammers exploit remote company registration during pandemic, funnel US$3.4 million into Singapore bank accounts

SINGAPORE: Scammers exploited the relaxed regulations that permitted remote company registration during the COVID-19 pandemic to establish their operations in Singapore and illicitly channel their ill-gotten gains into local bank accounts.

In 2020, a staggering total of US$3.4 million (S$4.65 million) was surreptitiously funneled into Singapore, funds initially pilfered from foreign companies.

On Monday (25 Sep), Chinese national Liang Jiansen, a 33-year-old permanent resident, faced a S$9,000 fine for his involvement in facilitating the registration of these companies, in violation of the Companies Act.

Liang admitted culpability in two counts of neglecting to exercise the requisite diligence in his capacity as a director, with one analogous charge taken into account during his sentencing.

Court records do not specify whether the scammers he assisted have been apprehended.

During a court hearing, Deputy Public Prosecutor Vincent Ong unveiled Liang’s intriguing journey. This accredited accountant, who made Singapore his home in 2015, made a pivotal decision in 2020—to venture into the corporate world.

His rationale? The promising profitability of this new endeavour.

His company, Yuansen Business, offered a package priced at S$800, which included services like a nominee director, corporate secretarial services, and a registered company address.

Additional charges ranging from S$100 to S$150 are applied if clients require a company bank account.

Liang held directorship positions in 135 Singaporean companies

Liang’s corporate influence extended far and wide, as he held directorship positions in an astonishing 135 Singaporean companies.

Most of Liang’s clientele at Yuansen Business originated from China, and to fulfill the legal requirement of a locally resident director, he frequently designated himself as the director.

In August 2020, an agent introduced a client to Liang’s services, leading to the establishment of “Xin Yang Wu” on August 9th. Liang assumed the roles of director and secretary, with all official correspondence routed to his company Yuansen office.

Subsequently, another agent instructed Liang to open two bank accounts for Xin Yang Wu – one in American dollars (USD) and the other in Singapore dollars (SGD), both with UOB.

Upon receiving a bank’s request to establish accounts for the company, Liang signed and returned the documents.

A similar process was followed to create another entity, “Zheng Yan,” and open a UOB bank account for it during the same month.

Scammers’ covert money transfers through company bank accounts

The prosecutor noted that significant sums of money were quickly transferred to these accounts.

One victim was the German company Gasfin Development, which, between October 25 and November 9 of the same year, received emails purportedly from a supplier requesting payment.

Gasfin transferred S$44,055 to Xin Yang Wu’s SGD account, believing it was a payment to the supplier.

Subsequently, S$43,028 was moved to Xin Yang Wu’s USD account and then to a bank account in China.

On October 30 of that year, American firm Northern Trust Company in Chicago fell victim to a similar scheme, transferring US$3 million from a client’s account to Xin Yang Wu’s USD account.

DPP Ong reported that the police in Singapore were able to seize the stolen funds in Xin Yang Wu’s USD account before they could be redirected.

On November 2, American company Examinetics also fell victim to a similar ploy, transferring nearly US$350,000 to Zheng Yan’s USD account.

The Singaporean police managed to seize US$250,403.01 from Zheng Yan’s USD account.

Chinese nationals exploit remote KYC to avoid physical presence in Singapore

The prosecutor mentioned that the supposed Chinese nationals who established Zheng Yan and Xin Yang Wu were not physically present in Singapore when they exploited remote Know-Your-Customer (KYC) processes during the pandemic.

KYC procedures were introduced to combat money laundering and fraud, obliging financial institutions, corporate service providers, and others to verify customer and staff identities.

The prosecutor stated that in the cases of Xin Yang Wu and Zheng Yan, Liang never met his clients and possessed limited knowledge of the companies’ operations, beyond their involvement in “wholesale trade.”

He added that Liang’s client background checks consisted of basic online searches to ascertain potential ties to criminal investigations.

Consequently, he failed to provide oversight over the companies’ activities, review bank statements, or inquire about the intended use of the bank accounts.

However, the prosecutor clarified that Liang’s negligence, rather than recklessness, was at fault, as no evidence indicated that he had prior knowledge of the companies’ involvement in fraudulent transactions.

For purely negligent breaches of duty, the prosecutor recommended a fine without a prison sentence.

Previous case: Shanghai-Born Singaporean tied to 185 companies, 9 linked to S$2.4 Billion Fujian money laundering case

This is not the first reported case involving individuals associated with over a hundred companies as directors or secretaries.

In Singapore’s high-profile S$2.4 billion money-laundering case, startling revelations have emerged.

It has come to light that a Shanghai-born Singaporean resident, who manages a firm specializing in secretarial services, has a history of occupying roles as a director, secretary, or shareholder in a staggering 224 companies.

This concern is further heightened by the revelation that among these companies, a minimum of nine have direct ties to three of the ten individuals who were apprehended last month in connection with the high-profile money laundering case and subsequently charged.

These nine companies have Su Haijin, a 40-year-old Cypriot national; Su Baolin, a 41-year-old Cambodian national; and Vang Shuiming (万/王水明), a 42-year-old Turkish national, listed either as directors or shareholders.

The three individuals, originally from Fujian China, are facing various charges, including money laundering, forgery, and resisting arrest.

Furthermore, the 41-year-old Singaporean, who relocated to the city-state from Shanghai in his twenties, has reportedly been involved with approximately 400 companies since 2014.

Acra: “Not common for individuals to hold numerous directorships in Singapore”

According to Acra,  it is uncommon for individuals to manage numerous directorships in Singapore, although there are currently no specific limits in place.

A spokesperson stated that the business registry is actively working on proposed amendments to both the Companies Act and the Acra Act, with the aim of restricting the number of nominee directorships that a single individual can hold.

This proposed legislation, expected to be presented in Parliament in 2024, may also entail higher financial penalties for corporate service providers found in violation of money laundering and terrorism financing regulations.

Regarding these efforts, Acra emphasized that Singapore adopts a comprehensive, government-wide approach to combat illicit activities such as money laundering and terrorism financing.

“Various agencies playing distinct roles in ensuring Singapore’s status as a trusted financial and business centre”.

Acra also stated that it proactively identifies, monitors, and deregisters inactive companies.

The spokesperson mentioned that Acra employs data analytics tools to pinpoint individuals likely to serve as nominee directors for companies potentially involved in improper activities.

Extensive reviews and checks are conducted on individuals at higher risk.

“All directors, regardless of the number of directorships held, are required to discharge their duties responsibly, with honesty and reasonable diligence.”

“Those who fail to do so can face enforcement actions, including disqualification and debarment,” the spokesman said.