Singaporean jailed as US$5 million laundered through two firms among his 980 companies

SINGAPORE: A 37-year-old Singaporean operated a business facilitating the establishment of companies in Singapore for Chinese clients, assuming directorship roles in approximately 980 companies by January 2021.

However, among the companies he incorporated, at least two were discovered to have been used for money laundering activities, funnelling more than US$5 million through them.

On Monday (18 Dec), Xie Yong, also known as Alex, was sentenced to four weeks’ imprisonment and fined S$57,000 by the court. He faced multiple charges for neglecting his duties as a director, as stipulated under the Companies Act.

While he paid the fine in full, he was banned from being a director for five years, as reported by Singapore state media CNA.

During the proceedings, it was revealed that Xie, who holds a master’s degree in professional accountancy, founded Tox Technology in 2013. Renamed DD Corporate Services in 2019, it extended accounting and corporate aid.

Xie’s client base shifted to China post his 2020 outreach on a Chinese online forum. Partnering with agents, including Lou Yong (Leo), he provided comprehensive service packages at S$700, inclusive of nominee directorship, corporate secretarial duties, and a registered company address.

Additional fees of S$100 to S$150 applied for bank account setups.

Between 2020 and 2021, Xie fulfilled Singapore’s residency directorial obligation by registering himself as director and corporate secretary, with his clients serving as directors and shareholders.

Xie also registered himself as the corporate secretary of those companies, while placing his clients as the directors and shareholders.

Xie recognized the importance of verifying his clients’ companies but only conducted basic online checks for criminal ties and passport validity.

Relying on agents’ assurances, he had clients sign an indemnity agreement, absolving himself from involvement and liability in illegal activities within the businesses.

Xie aimed to gather business details by year-end for annual returns, considering dissolution for any detected illegalities.

Chinese nationals exploit remote KYC to avoid physical presence in Singapore

In October 2020, Armor Survival, an American company, was tricked into transferring US$1.5 million to Wen Hui, a Singapore-based entity. The money was later transferred out of Singapore.

On paper, Wei Hui dealt with the “retail of bags, luggage and travel accessories”. Xiao Weian, along with Xie, a Chinese national, was listed as a director of the company.

Singaporean police received reports and discovered Xiao hadn’t entered the country. Wei Hui’s registration and bank account opening exploited local banks’ remote processes, according to prosecutors.

Due to COVID-19, video-conferencing was permitted for Know-Your-Customer verifications.

Before this, Xie grasped Xiao’s aim to establish a company for securing a bank account, circumventing Chinese currency limitations.

Knowing the challenges for a Chinese firm to open a Singaporean account, Xie facilitated a multi-currency account with DBS Bank for Wei Hui, designating Xiao as the authorized signatory.

Another company Xie incorporated linked to over US$3.8 million scam 

In May 2020, China agent Leo asked Xie to assume directorship and company secretary roles for a dormant Singapore-incorporated company, Joy Trader, belonging to one of Leo’s clients.

Allegedly, Xie’s role was solely to manage the annual returns, as informed by Leo, with two foreign directors, Wang Huquan and Fan Jing, already in place. Xie received S$460 for this task.

From June to August 2020, an email scam targeted the American company, the Jewish Federation of Greater Washington.

Fraudulent emails requested fund transfers to Hong Kong accounts, resulting in a US$7.5 million loss. Among this, US$.3.1 million was moved to Joy Trader’s OCBC account, dissipating later.

Subsequently, in July 2020, a Hong Kong company, The International Medical Co, fell victim to a similar scam, sending approximately US$731,000 to an account also linked to Joy Trader.

Offered S$50 for a company’s nominee director post

Before May 2020, Xie discovered he was blacklisted by local banks, seeking alternate directors for his client’s companies due to this.

He connected with Lan Fang, a 51-year-old Chinese national and Singapore permanent resident, whose daughter was his employee.

Xie proposed she act as nominee director for DD’s client companies, compensating her S$50 per post.

Subsequently, Lan Fang became the nominee director for Aurora Free Trading, implicated in laundering funds from a scam on Australian company Tempo.

Under her agreement with DD, Lan Fang served as director for approximately 100 companies.

Previous instances of individuals holding multiple directorships

The scenario involving Xie Yong is not an isolated instance of individuals holding multiple roles across over a hundred companies.

An earlier report indicated that a Shanghai-born Singaporean, J.J a Bedok resident was listed as director, secretary and shareholder in 185 companies, including nine linked to three of the Fujian-origin suspects in the city-state landmark S$2.8 billion money laundering scandal.

As per the Straits Times report, a Serangoon resident Amy Chin has reportedly assisted in registering firms for at least three associates of the ten 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 stated she had never met any of the individuals behind the companies and that most discussions were conducted over WhatsApp. She admitted to not conducting due diligence and that she was involved only nominally, having no part in the operational aspects.

She stated that she has no memory of how she became connected with the companies and admitted to not conducting any checks on them. “I earned around S$50 for each firm I helped set up. To me, it was good money,” she said.

Questions arise over easy access to register a shell company in Singapore

In another September case, Singaporean authorities uncovered exploitation of relaxed regulations amidst the COVID-19 pandemic.

Scammers took advantage of the eased restrictions on remote company registration, establishing illicit operations in Singapore and channelling ill-gotten gains into local bank accounts.

During 2020, an alarming sum of US$3.4 million was clandestinely funnelled into Singapore, originally siphoned from foreign companies.

A 33-year-old Chinese national, also a permanent resident, operated a company offering an S$800 package to incorporate client companies.

Despite holding directorship in a staggering 135 Singaporean firms, he had never met his clients who were involved in unlawful activities. His understanding of the companies’ operations remained limited, vaguely associated with “wholesale trade.”

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, to restrict 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.

The recent revelation raised concerns about how easily foreign entities, including ten accused in the S$2.8 billion case, could register shell companies in Singapore as a “safer haven.”

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 findings in the money laundering case, one might wonder how many entities, both existing and previous, have been operating as shell companies.