At least five family offices in Singapore linked to 10 accused in S$2.8B money laundering case

The scrutiny on Single-family offices (SFOs) in Singapore has intensified after an investigation revealed possible connections between one or more of the accused in a significant S$2.8 billion money laundering case and the establishment of an office that received tax incentives, as revealed by Minister of State for Trade and Industry Alvin Tan in Parliament earlier on 3 October.

A recent in-depth report from Bloomberg unveiled that among the 10 accused individuals, there are at least five family offices linked to them. However, it remains unclear whether all five entities benefited from tax breaks.

Singapore has long been focused on attracting the ultra-wealthy, resulting in a thriving finance industry that has positioned the country among the world’s wealthiest.

Nevertheless, the crackdown on 15 August sent shockwaves throughout the nation, triggering a reassessment of these practices amidst concerns that illicit funds are infiltrating legitimate businesses in Singapore, with these funds ultimately reaching global financial institutions such as Credit Suisse and Citigroup Inc.

The number of family offices in Singapore grew substantially, with more than 1,100 established worldwide by the end of 2022, marking nearly a threefold increase from 2020.

Many of the accused individuals not only invested in existing companies but also created their own ventures, thus establishing various connections within the country.

These developments have led Singaporeans to ponder significant questions, particularly regarding the ease with which these accused individuals managed to register a shell company in Singapore, seeking a perceived “safer haven” within the country’s boundaries.

Accused wanted in China finds refuge in ‘safer’ Singapore

One of the accused individuals, Wang Dehai (王德海), sought refuge in Singapore after discovering that he was wanted by Chinese authorities in October 2016.

Acting on advice from his brother-in-law, Su Yongcan, Wang relocated to Singapore, deeming it a “safer” haven from potential legal repercussions in China.

The Chinese authorities had issued a bounty for information about Wang’s involvement in an alleged illegal gambling ring.

Upon settling in Singapore, Wang and his spouse established a family office, and he acquired an employment pass, securing his residency in the city-state.

They conducted their banking affairs through Credit Suisse and obtained passports from the tax haven of Cyprus.

Wang, aged 34, invested lavishly in a S$23 million ($17.2 million) condominium situated in the prestigious Orchard area, while also holding approximately $2.8 million in cryptocurrency.

However, Wang’s seemingly ideal life took a drastic turn in August when he was among ten Chinese individuals arrested and charged in the nation’s largest money-laundering case.

Authorities have seized assets exceeding S$2.8 billion, including gold bars, jewelry, 62 cars, and 152 properties, with the potential for the total to escalate as many suspects remain at large.

Wang Dehai’s employment pass reportedly remains valid until June 2024. Records also indicate his investment in Delibowl Pte, a Chinese restaurant chain.

Notably, another accused, Zhang Ruijin (张瑞进), aged 44, a Chinese national, was a director and shareholder at Golden Eagle Assets, and director at Golden Eagle Family Office Pte Ltd., which was incorporated on 03 Oct 2019 according to an online source.

Lin Baoying, 43 years old, Chinese nationality and also Zhang’s wife, was a manager at Ban Tian Yao Catering and a shareholder at Eagle77.

Zhang Ruijin and Lin Baoying have each been charged with one count of forgery.

MAS finds no red flags in accused individuals’ SFOs tax incentive application

The high-profile case prompted the Singapore government to address inquiries raised by Members of Parliament (MPs) from both the ruling party and alternative parties.

Minister of State (MOS) Alvin Tan confirmed during a Ministerial statement on 3 Oct that investigations revealed links between the accused individuals and SFOs benefiting from tax incentives.

Tan clarified that SFOs seeking tax incentives from the Monetary Authority of Singapore (MAS) must demonstrate proof of having opened accounts with local financial institutions.

“At the point of application, no adverse information of note related to the individuals and entities had surfaced,” Mr Tan said.

Due to ongoing investigations, Tan refrained from disclosing whether these SFOs still receive tax incentives when queried by MPs. He stressed MAS’s commitment to enhancing checks and terminating incentives, where necessary.

However, MOS Tan defended the significance of family offices in Singapore’s financial landscape, cautioning against generalizing all SFOs based on the actions of a few implicated ones.

“We have just completed the consultation, which will enable us to tighten some of these processes, but we remain open as the other Ministers and I have mentioned – to talent, to investments as well as to financial flows, including those in SFOs. ”

“Our regime is strict. Our regime is in line with international best practices, and so, these two prongs of making sure that we are dynamic and open, and that we also have strong robust controls, remain central to our functioning as a vibrant and trusted financial centre,” he told the Parliament on 3 Oct.

The ease of company setup exploited by the accused

While the Singaporean government staunchly defends its commitment and zero-tolerance stance against money laundering, the Bloomberg report has illuminated a significant loophole exploited by numerous accused individuals in establishing their businesses.

Foreign individuals intending to set up a company in Singapore are mandated to enlist a registered filing agent, such as a corporate service provider (CSP), and appoint at least one director residing in Singapore.

This director can be a citizen, permanent resident, entrepreneur pass holder, or employment pass holder.

Bloomberg highlighted the case of Wang Junjie, a Singaporean involved as a director, shareholder, or secretary in over 200 companies.

Previous media reports revealed that Wang, a Shanghai-born Singaporean resident, held positions in at least nine companies connected to three of the arrested individuals.

However, most of these roles were recently relinquished, as indicated by corporate filings.

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.

Furthermore, Zhang Ruijin employed two corporate secretaries from VentureHaven, a firm boasting rapid business registration within 24 hours on its website.

These secretaries, Koh Teng Teng and Safura Binte Sa’ad, each held more than 3,500 positions in various firms.

Notably, none of these company officials, including Wang Junjie, have faced accusations of wrongdoing, as reported by Bloomberg.

Lawyers representing Zhang stated their inability to comment, while Wang Junjie declined to provide any statements. VentureHaven did not respond to requests for comment regarding its two employees.

Another Serangoon resident Amy Chin has reportedly assisted in registering firms for at least three associates of the arrestees. Business records revealed her involvement as a shareholder or director in over 200 companies.

These associates include Wu Qin, whose husband, Su Haijin, faces charges of money laundering and resisting arrest in Singapore, allegedly possessing funds believed to be proceeds from unlawful remote gambling activities.

Ms Chin was previously listed as a director in Culbert Management, which was set up by Ms Wu.

Mr Jackson Lim, a Corporate service provider Grof, and another Singaporean – identified as J.J. in a previous report – were also listed as company secretaries.

Ms Chin, a Singaporean herself, is associated with companies set up by Ms Su Caihuang, the wife of accused Wang Dehai, and Wang Qiujiao, whose registered address is a condo unit at New Futura, the same unit acquired by Chen Qingyuan in 2018.

Wang was among the ten individuals arrested in the S$2.8 billion case, and Wang Qiujiao was named in MinLaw’s list.

Banking titans entangled in high-profile money laundering case raise questions on anti-illicit practices

The S$2.8 billion high-profile case not only brought the accused under scrutiny but also spotlighted the involvement of various banks with these individuals.

At least 10 local and international banks in Singapore are embroiled in the high-profile scandal that put the spotlight on their effectiveness in countering ill-gotten gains in the system.

For instance, Vang Shuiming, one of those arrested, had assets totalling S$92 million held by Credit Suisse, while Julius Baer Group Ltd. in Switzerland managed an additional S$33 million for him.

Christopher Leahy, the Singapore-based managing director of Blackpeak (Holdings) Ltd, highlighted the competitive nature among banks for large deposits.

“If these guys turned up with a million dollars, they’d have probably been shown the door, but they turned up with a billion dollars and they rolled out the red carpet,” he told Bloomberg.

The MAS acknowledged its ongoing engagement with banks, lauding unidentified lenders for flagging suspicious activities that aided law enforcement.

In response, some banks have already begun tightening their internal controls in anticipation of forthcoming on-site inspections by the central bank.

These inspections aim to scrutinize the institutions’ exposure to the suspects and assess their overall client vetting procedures.

According to a report by Singapore’s state media, The Straits Times, the Accounting and Corporate Regulatory Authority (ACRA) is currently reaching out to various corporate service providers (CSPs) as part of an ongoing investigation linked to the money laundering case.

During ACRA’s investigation, several Singaporeans, previously listed as directors, secretaries, or shareholders in companies established by some of the accused individuals, have reportedly begun removing their names from these companies.

These Singaporeans were also involved in firms incorporated by associates of the arrested individuals, including the spouses of some of the accused parties.

Open-source data from the Department of Statistics’ website in 2022 shows that the number of business formations in Singapore remained relatively stable from 2015 to 2022, fluctuating between 61,000 and 65,000 annually. The count for 2022 was 64,305.

In light of the revelations stemming from the money laundering case, it raises questions about the extent to which other entities, both current and past, might have functioned as shell companies similar to those linked with the ten accused individuals and their associated family offices.