Halfway through Singapore’s FATF Presidency – Is It Missing from the Grey List?

Singapore, which holds the OECD’s Financial Action Task Force (FATF) Presidency from 2022-24, is currently caught up in a nightmare $2BN+ money laundering scandal. Yet no-one at FATF – the global anti-illicit finance body – has seen fit to take action by putting Singapore on FATF’s Grey List. Why not?

Singapore’s $2BN+ money laundering scandal raises the following concerns:

1. Singapore’s reputation as a major financial hub has been hit.

2. Singapore’s Presidency amid money laundering scandal a major worry – but ignored.

3. Transparency International has for years cited Singapore as a “Little To No Enforcement” jurisdiction.

4. FATF’s last evaluation of Singapore was as long ago as 2019 – yet many issues are not being adequately addressed.

5. OCCRP’s investigation into Singapore’s $2BN+ money laundering scandal is damning.

6. FATF President Singapore Facilitating Trade with FATF Black Listed Myanmar/Burma and North Korea.

1. Singapore’s reputation as a major financial hub has been hit.

FATF has just completed its latest 2023 Plenary (October 25-27) where no mention was made of the $2BN+ scandal engulfing FATF President for 2022-24, Singapore. Given the FATF Plenary’s stated goals, this state of affairs is quite unacceptable for FATF, the global anti-illicit finance body. In terms of independent transparency aimed at resolving the huge illict finance issues facing the world, ignoring a money laundering scandal of this size amounts to little more than a whitewash.

Here are FATF’s objectives under Singapore’s FATF Presidency 2022-24:

FATF President T. Raja Kumar presented his objectives for the coming Plenary period (July 2022 – June 2024) to the June 2022 Plenary. In hindsight, given Singapore’s 2023 $2BN+ scandal – these look open to scrutiny.

During the Singapore Plenary years, the FATF will prioritise work in the following areas¹:

• Strengthening Asset Recovery

• Countering Illicit Finance of Cyber-Enabled Crime

• Increasing Effectiveness of Global AML Measures

• Reinforcing FATF Partnerships with FSRBs

Amid Singapore’s 2023 $2BN+ scandal, it can hardly be said that Singapore has been an overwhelming success as FATF President to date, with its own “Global AML Measures” clearly wholly ineffective, and “Asset Recovery” measures now in earnest after the criminal behaviour witnessed in this scandal. Its money laundering scandal is hardly doing much towards “Reinforcing FATF Partnerships with FSRBs” (FSRBs = Regional FATF-type partners).

The $62BN Singaporean bank, DBS, led by CEO Piyush Gupta, was banned by MAS from non-essential activities including M&A, after repeated serious failures in its digital banking services.² This occurred after Singapore’s Central Bank had already fined DBS, Citibank, OCBC and Swiss Life a total of $2.83M (a tiny fine in US terms) in June 2023 for breaching requirements on anti-money laundering and countering terrorism financing related to the ongoing Wirecard fraud fallout. Whilst this shows credibility for MAS and Singapore’s Central Bank in fining and banning a major bank, one could question the lack of severity of the initial fine as not providing a sufficient deterrent to DBS.

2. Singapore’s Presidency amid money laundering scandal a major worry – but ignored.

There is clearly a huge issue clouding the recent October FATF Plenary – with Singapore embroiled in a massive $2BN+ scandal – yet no mention of this at the Plenary’s Outcomes³ nor any sanction imposed on Singapore.

Curiously, at the Oct 25-27 2023 FATF Plenary, it was decided that Bulgaria should be added to FATF’s Grey List. A somewhat controversial decision, given that the new Bulgarian government from May 2023 has shown a far more EU-focused approach than its former pro-Russia predecessor. This has included trying to adopt energy taxes and prohibitive measures to prevent the use of Bulgaria’s energy pipeline access by pro-Russia jurisdictions such as Hungary. That said, FATF has a point – Bulgaria is widely known to be one of the most corrupt of the EU27, like Romania.⁴

Furthermore, the FATF Oct 25-27 2023 Plenary decided to accord Indonesia membership of FATF. Despite years of corruption and notorious regimes under Suharto and others – with Indonesia (and Malaysia) one of many moving parts in Singapore’s current $2BN+ scandal. Not to mention the revelations relating to Malaysia, Singapore and Asian neighbours over the 1MDB scandal.⁵

FATF welcomes a jurisdiction like Indonesia – yet puts EU Member State and NATO Member Bulgaria on its Grey List – whose new government is specifically targeting pro-Russian energy partners? This does not make much sense. Worryingly, one wonders whether the actions of the FATF Oct 25-27 2023 Plenary like the omission of Singapore’s money laundering scandal are related to Singapore’s 2022-24 FATF Presidency.

3. Transparency International has for years cited Singapore as a “Little Or No Enforcement” jurisdiction.

Singapore is cited as a “Little Or No Enforcement” jurisdiction for “Exporting Corruption” for offence types under the OECD Anti-Bribery Convention – which Singapore has continuously failed to sign up to – let alone comply with. Despite appearing at the top of Transparency International’s (TI) Corruption Perceptions Index (CPI), it cannot be assumed that this means that Singapore is a “clean” jurisdiction. It should be noted that Transparency International does not even include money laundering in its CPI Index.

Singapore, Denmark and Sweden tend to be amongst the top 5 best performers in TI’s CPI. Sadly, this does not reflect in real-life realities, with Denmark, Finland and Singapore among the worst performers under Transparency International’s rating for “Little Or No Enforcement” when it comes to “Exporting Corruption”.

Which is why Denmark’s Danske Bank 2022 US money laundering $2BN fine slipped under the radar for EUR 200BN of dirty money from high level Russian clients and others flowing through the Baltics and Danske Bank Estonia. Not to mention Swedish banks Swedbank’s $400M fine and SEB’s $107M fine – both by the US – for similar money laundering offences in the Baltics. Major US fines for Baltics money laundering were predicted as far back as October 2019 in “Cross-Border Sanctions & AML” (SquareGlobe Publishing, Oct 2019) – despite protestations from many in Scandinavia and the Nordics that the US “had no jurisdiction” over Nordic banks.

This was the case even after the 2014 BNP Paribas $8.9BN record US sanctions fine⁶ – when BNP Paribas came to Washington with the defence that “they had broken no EU nor French law” in facilitating transactions for US sanctioned Sudan, Iran and Cuba.

Critically, OCCRP named Danske Bank its 2018 “Corrupt Actor of The Year” at the end of 2018 for its involvement in the Baltics money laundering scandal – a full 4 years before Danske Bank was hit by a huge US fine of $2BN for money laundering in the Baltics. As is often the case, OCCRP is a very good predictor of future fines and penalties in its foresighted investigations. Which should be of great concern for Singapore in its current $2BN+ scandal. With Citibank Singapore embroiled in this, there may well be further penalties from the US down the line. With the massive US-led FCPA (US Foreign & Corrupt Practises Act) $422M fine on Singapore’s Keppel in 2017⁷ ($105.5M awarded to the US – the rest to Brazil and Singapore) – Singapore has been here before.

In an OCCRP (Organized Crime and Corruption Report) investigation in 2022⁸, confidential banking documents obtained by OCCRP show how Norway’s DNB and Finland’s Nordea, ignoring money laundering risks and red flags for years, banked shady clients at their Baltic branches as they shifted billions in suspicious transactions after auditors concluded probes into high risk clients at Laminar – formed by a merger of the Baltic branches of DNB and Nordea. There is no doubt that DNB and Nordea will be subject to further scrutiny and, very likely, penalties by the US in due course.

Singapore’s current $2BN+ scandal is yet another example of supposedly “clean” jurisdictions struggling to handle illicit foreign flows. This has been flagged by Transparency International for some years now – yet seemingly has not been recognised by FATF itself.

4. FATF’s last Mutual Evaluation of Singapore was as long ago as 2019 – yet the following issues are not being addressed by FATF:

• Singapore’s Temasek Sovereign Wealth Fund was, from Jan 1st 2004 to 2021, run by none other than the Prime Minister’s wife – Ho Ching – it could be argued, in a blatant conflict of interest issue. There have been claims of suspiciously meagre returns from Temasek to the Singaporean people for a nation as affluent as Singapore.⁹ This is surely something that FATF should have been wary of before awarding Singapore FATF Presidency, particularly as it is not unreasonable to assume that Ho Ching still wields plenty of influence at Temasek.

• 1MDB Malaysia fallout – so courageously and brilliantly exposed by Clare Rewcastle Brown¹⁰ – is all over Singapore and Asia – yet this is not being scrutinised effectively by FATF or Singapore.

• Corruption and bribery from China, Indonesia, Malaysia is rife. Money flows from arms sales to Myanmar/Burma (FATF Black List country) and links to North Korea (FATF Black List country) are evident in Singapore from the current $2BN+ scandal and recent 1MDB Malaysia and other revelations, like the 2023 BAT US $629M fine, with Singapore a key facilitator to North Korea trade. A May 2023 report from none other than the UN Special Rapporteur on the situation in Myanmar identifies 138 unique suppliers in Singapore doing $247 million of trade with the Myanmar military.¹¹

• Public official corruption such as that cited in Temasek’s clear conflict of interests in Singapore is widespread – yet there is little scope for independent scrutiny relative to developed country market environments elsewhere around the world. There is clear evidence that the affluent Singapore economy is, seemingly, from a cashflow perspective, not spending any money on Central Provident Fund (CPF), Housing (HDB) and Healthcare (except during COVID), with inflows exceeding outflows annually. Take, for example, Housing (HDB), which ran a then-record deficit of $4.4BN in FY2021 and, in the most recent HDB Annual Report for 2022/23, showed a new record deficit of $5.38BN. The real explanation for this is that Singaporeans are being charged an inflated valuation for the land cost by the Singaporean State without this being reflected in HDB’s cashflow. This is an example of public sector corruption and graft in Singapore – yet another key element overlooked by FATF. As Reuters reported in July 2023, when a Singapore Transport Minister S. Iswaran, and property tycoon, CEO of Hotel Properties Ong Beng Seng were arrested in a rare graft probe, “Singapore Cabinet Ministers are paid handsomely to discourage graft, with some ministers’ annual salaries exceeding S$1million ($758,000)”.¹²

• Censorship laws in Singapore are very strict – and public officials are easily protected and little scrutinised as local academics and journalists are prevented from independent, critical analysis. Criticism of Singapore by journalists and academics is swiftly expunged and/or replaced by apologetic retractions.¹³

5. OCCRP’s investigation into Singapore’s $2BN+ Money Laundering scandal is damning – OCCRP investigations are often a precursor to major reputational fallouts.

OCCRP’s investigation¹⁴ revealed the following major concerns:

• The suspected money launderers from China arrested in Singapore purchased prestige properties in London in 2021 worth almost $60M, according to company and land records reviewed by OCCRP and Radio Free Asia.

• The criminal syndicate laundered proceeds of illicit scams and online gambling.

• In mid-August, Singapore police seized at least $SG1.8BN ($1.32BN) in cash, cryptocurrencies and other assets such as luxury goods items.

• Police confiscated 50 vehicles and 94 properties in Singapore, worth almost $600M. Reporters have now discovered 3 London properties owned by 2 of the suspects purchased in December 2021 for $56M. The biggest transaction involved the simultaneous purchase of 2 adjoining properties in Oxford Circus, the city’s top shopping district. Acquired jointly by a Jersey-based entity called New Yihao Limited that listed Su Haijin as its only “individual beneficial owner”.

• Su was arrested in Singapore with at least $117M of assets linked to him and his wife, including 13 properties, 5 luxury vehicles and cash accounts.

• About a week before the Oxford Circus sale was settled, Lin Baoying, another suspect arrested in Singapore, bought a Canary Wharf, London penthouse for £1.8M ($2.2M).

• The London properties look to have been cash sales, as no mortgages were registered.

• Lin and her partner Zhang Ruijin were arrested in Singapore, with authorities confiscating $100M+ in assets and cash.

• Like the other arrested suspects, Su hails from China’s Fujian province, famous for its criminal underworld. He has held a Chinese passport, and has passports from Cambodia and EU Cyprus.

• China company registry data shows that Su and his wife, Wu Qin, also a citizen of EU Cyprus, control a handful of technology and investment companies which lack tangible operations or websites. They run several Hong Kong companies, however mostly registered with HK$1 ($0.13) in capital. Su is listed as chairman of a company in Cambodia.

• Illegal online gambling and scam operations have expanded rapidly across Southeast Asia in recent years. Many operate illegally in poorly-regulated special economic zones and target bettors in mainland China, where gambling is banned. Has FATF checked Indonesia’s role in this?
  

• Jersey company records show financial service provider Fiduchi Group helped set up New Yihao’s structure two months before the real estate purchases. Jersey registry data also shows one of Fiduchi’s clients is a luxury yacht brokering firm, Imperial Yachts. Imperial Yachts and owner, Evgeniy Kochman, were sanctioned by the US in 2022 for helping Russia’s oligarchs conceal their assets.

Major International Banks Dragged into Singapore’s $2BN+ Money Laundering Chaos

The Singapore $2BN+ scandal has dragged in major international banks, with one suspect, Vang Shuiming, had some S$92M at Credit Suisse, the biggest known account so far in the case – with probes into Credit Suisse and UBS ongoing in Singapore. Vang had accounts at Bank Julius Baer (S$33M) as well as Singapore’s United Overseas Bank and Malaysia’s RHB Bank Berhad. Suspect Vang’s other charges include forgery of a bank document to trick USA’s Citibank Singapore.

Such revelations indicate that the ongoing investigation into Singapore’s AML scandal shows that, as a jurisdiction, it is struggling to contend with local Asian crime and corruption. Clearly, its own and Asian banks have a lot to answer for when it comes to due diligence, KYC and enforcement of standard banking practices. International banks need to be wary about operating in Singapore – long lauded for its excellence as an Asian financial hub. That reputation is clearly tarnished now.

6. FATF President Singapore Facilitating Trade with FATF Black Listed Myanmar/Burma and North Korea.

FATF Has Lost Credibility With Singapore’s FATF Presidency 2022-24

The global financial system deserves to be backed up by credible financial hubs. Not those descending into $2BN+ money laundering chaos like Singapore, seemingly unable to control foreign illicit financial flows with any level of assurance.

Wang Dehai, a suspect caught up in Singapore’s $2BN+ scandal, also wanted in China for illegal online gambling activities, kept HK$53M ($6.8M) and $500,000 with UBS, Industrial & Commercial Bank of China Ltd and Bank of China in Hong Kong, according to a court document Bloomberg News saw after a bail hearing for Wang. According to Bloomberg, over 10 domestic and international banks may well have been dragged into this scandal.¹⁵

However, it has to be noted that Singapore is in the process of taking major remedial action – the worry is that this action is necessary at all when the controls on the ground in Singapore preventing illicit finance activities should have been sufficient to prevent such widespread money laundering in the first place. The very controls that FATF is supposed to be tracking with its regular Mutual Evaluations of Member States. With Singapore as its current President 2022-24 – FATF has a lot to answer for.

FATF President 2022-24 Singapore – Responsible for $247M Arms Trade With FATF Black Listed Myanmar/Burma

In FATF terms, as a final sting to the tail for Singapore, Justice for Myanmar is literally up in arms (…) with Singapore, demanding that it do the following – given the scandalous level of arms trade with Myanmar’s military. Myanmar is on FATF’s Black List – yet Singapore is responsible for some $247M of trade with Myanmar’s military. Justice for Myanmar demands:

With its “Dirty Over 30” project, the independent activist group Justice for Myanmar calls on Singapore to:¹⁶

• Introduce sanctions to stop the direct and indirect transfer of arms, dual-use goods and technology to the Myanmar military.

• Block the junta’s access to Singapore’s financial system through targeted sanctions, including on junta banks.

• Expedite and make public ongoing investigations into Singaporean companies that have supplied arms, dual-use goods and technology to the Myanmar military.

• Push for more sanctions from other ASEAN countries on the Myanmar military and entities that transact business with it.

FATF President 2022-24 Singapore – Facilitator for BAT’s US $629M 2023 Economic Sanctions Fine for Trading with FATF Black Listed North Korea

As if Singapore’s role in Myanmar’s military were not enough, its involvement in facilitating illicit trade for FATF Black List North Korea for British American Tobacco (BAT) led to BAT’s $629M US economic sanctions fine in April 2023. British American Tobacco and subsidiary, BAT Marketing Singapore (BATMS), among the world’s largest tobacco product suppliers, agreed to pay combined penalties of over $629M to resolve bank fraud and sanctions violations charges with the US. This related to a scheme to do business in North Korea via a third-party in Singapore, in violation of the bank fraud statute and International Emergency Powers Act (IEEPA). BAT pleaded guilty to the District of Columbia charging BAT and BATMS with conspiracy to commit bank fraud and conspiracy to violate the IEEPA. BAT entered into a deferred prosecution agreement (DPA) related to the same charges.¹⁷

CONCLUSION: Add Singapore to FATF’s Grey List as a “Jurisdiction Under Increased Monitoring” To Save FATF’s Credibility?

One would imagine FATF has little choice but to consider adding Singapore to FATF’s Grey List – regardless of Singapore’s FATF Presidency 2022-24 – if FATF is to retain any sense of credibility. Singapore is taking remedial efforts to rectify its $2BN+ money laundering issues, but clearly has a mountain to climb to get its own house in order. Singapore is clearly being used as a hub to facilitate trade for 2 out of FATF’s 3 Black List jurisdictions – Myanmar/Burma and North Korea, amid the 1MDB, Temasek, Keppel and current $2BN+ money laundering scandals.

Major International Financial Hubs Like Singapore Inevitably Attract Illicit Finance, but…

That said, it cannot be underestimated that a major financial hub like Singapore – at the crossroads of Asian trade – will capture a lot of illicit asset flows, as is the case for other major financial hubs around the world. But the international trade and financial community needs transparency and certainty to be able to operate effectively in this theatre. So, for Transparency International to designate a struggling jurisdiction like Singapore as a top performer in terms of perceived transparency and lack of corruption needs to be reflected in real-time – particularly where Transparency International does not even include anti-money laundering performance in its Corruptions Perceptions Index (CPI) review.

One would think that the well-publicised revelations surrounding Singapore should leave FATF with little choice but to take affirmative action. Singapore’s credibility as FATF President 2022-24 is certainly open to question now. It is now clear that urgent remedial action is essential for the sake of FATF’s and Singapore’s reputations. Never mind domestic censorship – Singapore is inevitably going to be the increasing focus of international scrutiny – whenever another illicit finance issue emerges in Singapore now – no-one will be surprised.

The modus operandi for predicting the Danske Bank 2022 $2BN US money laundering fine – apart from the numerous ongoing US investigations at the time – was the in-depth investigation by OCCRP and Michael Lund and others at one leading Danish newspaper, Berlingske Tidende. Denmark and Danish journalists like Lund and his colleagues should be congratulated for their candour and professionalism in unearthing the facts pertinent to the Danske Bank scandal – offering the essential journalistic transparency and freedom of speech so often lacking in heavily censored Singapore.

Singapore’s $2bn+ Money Laundering Shows That FATFs Evaluations Are Inadequate…

FATF should be mindful that, as global anti-illicit finance body, its supposed controls and Mutual Evaluations of Member States (if Singapore is anything to go by) are simply not working – and rather than publish endless reports and re-definitions of illicit finance “typologies” – it might best re-direct its efforts into more regular, up-to-date reviews of its Member States. Which would be helpful for the global finance community at large – which does not need further “surprises” like the latest $2BN+ scandal that Singapore is embroiled in – never mind recent scandals. International finance hubs like Singapore should surely be subjected to more rigorous and regular scrutiny than once in every 4 years or so (Singapore’s last FATF Mutual Evaluation was in… 2019).