Nominee director fined as firm’s bank account received S$620k in scam proceeds

Court documents revealed that in 2012, Zhang Tianxue established a connection with Wu Jinping, a director at JJCA Corporate Services, and they were friends and former colleagues.

Fast forward to 2020, Wu informed Zhang about Mr Li Yilun, a friend’s son interested in incorporating a Singaporean company.

Feeling reassured by the recommendation from a friend, Wu took on Mr Li as a client.

JJCA Corporate Services conducted thorough background checks, finding nothing suspicious, and subsequently established a company named Moon SNE for Mr Li.

Zhang was appointed as the nominee director of Moon SNE in May 2020, receiving S$1,000 as remuneration.

However, from that point until 9 March 2022, when she resigned from her directorship, Zhang neither engaged with Mr Li to understand his business nor conducted regular financial checks on the company.

On 11 March 2021, TMF Singapore H, a management consultancy, alerted the police about an impersonation scam affecting its related South African company, resulting in a loss of more than US$463,000.

The funds were transferred to Moon SNE’s bank account, prompting the Commercial Affairs Department (CAD) to seize the account one day after receiving the report.

Deputy Public Prosecutor Wong Shiau Yin urged the court to impose a S$4,000 fine and a three-year disqualification on Zhang, emphasizing that, aside from fulfilling the statutory requirement for a local director, she made no substantial contributions to Moon SNE.

In defence, Zhang’s lawyer, Ms Jacintha Gopal of R.S. Solomon, argued that Zhang had thoroughly reviewed Mr Li’s background checks and business invoices, believing his enterprise to be legitimate. The lawyer argued that UOB approved the bank account based on these documents.

Gopal contended that Zhang was not negligent in overlooking red flags in the company’s financial transactions.

Ms Gopal proposed a reduced fine of S$2,000 and a one-year disqualification, asserting that Zhang had no involvement in the impersonation scam or the funds deposited into Moon SNE’s account, and her actions were devoid of sinister intentions.

Wu has been charged with abetting Zhang’s offence, and her case is scheduled for a later date.

Scammers exploited pandemic-era company registration relaxations to funnel ill-gotten gains into local bank accounts

Zhang is part of a group of nominee directors recently brought to court due to their failure to fulfil their duties diligently.

In a similar case in September 2023, Singaporean Er Beng Hwa faced a $4,000 fine and a three-year disqualification from serving as a company director.

Er had held the position of nominee director for 186 companies, with one of these entities being exploited by scammers for laundering a substantial amount of S$3.23 million.

It was also earlier revealed that scammers exploited the relaxed regulations that permitted remote company registration during the COVID-19 pandemic to establish firms 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 funnelled into Singapore, funds initially pilfered from foreign companies.

A 33-year-old Chinese national and permanent resident was fined S$9,000 in September last year for his involvement in facilitating the registration of these companies, in violation of the Companies Act.

Before this, he held directorship positions in an astonishing 135 companies in Singapore.

In December 2023, a 37-year-old Singaporean was jailed for facing multiple charges including neglecting his duties as a director, as stipulated under the Companies Act.

He 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.