Money laundering: Scammers set up companies and bank accounts in S’pore remotely during Covid-19
Scammers were able to set up firms in Singapore and move their ill-gotten gains to bank accounts here by exploiting relaxed rules, which allowed the registration processes to be conducted remotely during the Covid-19 pandemic.
In total, they moved US$3.4 million (S$4.65 million) in 2020 - money which they had stolen from companies based overseas.
On Monday, Chinese national Liang Jiansen, who helped the scammers register companies here, was fined $9,000 for offences under the Companies Act.
The 33-year-old permanent resident had pleaded guilty to two counts of failing to exercise reasonable diligence in his duty as a director, with one similar charge taken into consideration for sentencing. It was not stated in court documents if the scammers were caught.
Deputy Public Prosecutor (DPP) Vincent Ong said Liang, an accredited accountant who moved here in 2015, had opened a corporate secretarial firm in 2020 because he heard the business was profitable.
His firm Yuansen Business charged $800 for a package which included a nominee director, corporate secretarial services and a registered company address. Clients had to pay an extra $100 to $150 if a bank account was required for the company.
Most of the clients were from China, with Liang often registering himself as director. He did this to fulfil the statutory requirement for a locally resident director.
As at January 2021, he was a director of 135 companies in Singapore.
DPP Ong said Liang worked with agents who referred Chinese nationals to him. Sometime in August 2020, one of them referred a client, to set up a company in Singapore.
The agent provided identification documents and a passport purportedly belonging to the individual and Liang incorporated the firm Xin Yang Wu on Aug 9, with him as one of the directors and secretary.
Mail for the company was sent to Yuansen’s office. Another agent later contacted Liang and told him to open two bank accounts for Xin Yang Wu - one for American dollars (USD) and the other for Singapore dollars (SGD), with United Overseas Bank (UOB).
The bank later sent Liang a letter to open accounts for the company, which he signed and returned. Liang had taken similar steps to incorporate another firm Zheng Yan, and also opened a bank account for this firm at UOB that same month.
DPP Ong said large sums of money were transferred to the accounts soon after.
One of the victims was German company Gasfin Development GmbH. Between Oct 25 and Nov 9 that same year, the company received e-mails purportedly from a supplier asking for payment.
Gasfin transferred $44,055 to Xin Yang Wu’s SGD account, thinking they were made to the supplier. Of the sum, $43,028 was later transferred to Xin Yang Wu’s USD account, and then to a bank account in China.
On Oct 30 that year, American company Northern Trust Company Chicago fell for a similar scam and transferred USD 3 million from its client’s account to Xin Yang Wu’s USD account.
DPP Ong said the police here managed to seize the stolen sum in Xin Yang Wu’s USD account before it was routed away.
On Nov 2, American company Examinetics, Inc fell victim to a similar ruse and transferred almost US$350,000 to Zheng Yan’s USD account. Police in Singapore was able to seize US$ 250,403.01 in Zheng Yan’s USD account.
DPP Ong said the purported Chinese nationals who set up Zheng Yan and Xin Yang Wu were not in Singapore when they exploited the Know-Your-Customer (KYC) processes, which were conducted remotely during the pandemic.
The KYC steps were introduced to combat the threat of money laundering and fraud. They require financial institutions and corporate service providers, among other entities, to verify the identity of customers and staff.
The prosecutor said that in the cases of Xin Yang Wu and Zheng Yan, Liang never met his clients and did not know anything about the companies’ business activities, beyond that they were involved in “wholesale trade”.
He added that Liang’s background checks on clients were limited to doing simple online searches to see if they were linked to criminal investigations.
As a result, he had failed to exercise supervision over the companies’ affairs and check the companies’ transactions, review bank statements and enquire what the bank accounts were to be used for.
However, the prosecutor said Liang was negligent, instead of reckless, as it was not shown that he knew in advance about the companies’ involvement in fraudulent transactions.
The starting point for purely negligent breaches of duty is a fine, without a jail term, said the prosecutor.
“It is almost impossible to exhibit greater negligence as a director than the accused was in this case, having absolutely washed his hands clean of the affairs of the company.
“The accused knew nothing, and did nothing, and was content to remain in his ignorance,” said DPP Ong.