Straits Times: 'Robust' regime here again dirty money

By Yasmine Yahya

SINGAPORE- A study has found that Singapore has a robust regime to combat money laundering and terrorist financing. But it warns that controls over such risks involving pawnbrokers, money changers and remittance agents need beefing up.

The two-year national risk assessment led by the Ministry of Home Affairs, Ministry of Finance and Monetary Authority of Singapore (MAS) also highlighted new areas such as virtual currencies for further study.

Overall, Singapore was found to have "strong laws, tough enforcement and efficient prosecution", the study noted. Banks and casinos were deemed to be at high risk from such criminal activity, but the study also found them to have the most developed controls.

However, the study found scope for improvement in banking - for example, in the area of trade finance, where monitoring and policies could be stepped up.

DBS Bank's head of consumer banking and wealth management, Ms Tan Su Shan, noted that as a financial centre, Singapore has to abide by international standards and even lead the way in setting some of its own. "This puts the city in good stead to continue to grow as a robust, sustainable financial hub," she said.

Controls at remittance agents and money changers were less robust, the study found. "Large amounts of physical cash, high numbers of walk-in, one-off and overseas customers, as well as voluminous transactions contribute to higher inherent money laundering and terrorist financing risks."

Pawnbrokers are another risk area, as transactions are cash-based and there are no explicit controls against money laundering or terrorist financing, the study found.

The Insolvency and Public Trustee's Office is considering introducing such measures into the Pawnbrokers Act this year.

Mr Kwok Wui San, the financial services regulations leader of PwC Singapore, said it is important to hit the right balance when regulating small firms like money changers and pawnbrokers. "Regulation is good as it raises standards and is a first-level check that only good people of integrity are in the business," he said.

Corporate service providers, which include law and accounting firms, were also seen as a potential problem area. While they generally do not handle large amounts of cash, the firms they help to incorporate may be abused by criminals to set up opaque structures for illicit purposes.

The Accounting and Corporate Regulatory Authority has proposed legislation to regulate the sector this year.

The increased use of online payments has made Internet-based transaction and fund deposit companies such as PayPal and Alipay a potentially high-risk area.

Global standards are still being developed for such firms, but MAS said it will continue to monitor new and emerging firms in this space and spot risks.

The Government has also identified areas for further study, including virtual currencies, dealers of precious stones and metals and the Singapore Freeport.

KPMG Singapore partner Lem Chin Kok noted that global regulators have not yet developed a consistent approach to virtual currencies like the bitcoin. "With (this) industry expected to continue to grow, guidance from supra-national bodies like the Financial Action Taskforce to help shape the regulatory landscape in a more consistent way is necessary."
Past cases of money laundering

CASE 1: ILLEGAL PROCEEDS

FROM US POKER FIRMS

In 2011, the United States authorities investigated the country's three largest Internet poker companies for bank fraud, illegal gambling offences and the laundering of billions in illegal gambling proceeds.

The companies - which operated online gambling sites PokerStars, Full Tilt Poker and Absolute Poker - were suspected of circumventing US laws on gambling-related payments by deceiving American banks into facilitating illegal transactions worth billions of dollars out of the country.

Singapore helped by producing bank records, which eventually led to a successful resolution: A US$731 million (S$929 million) settlement with PokerStars and a US$50 million settlement with its head Mark Scheinberg.

CASE 2: MONEY MULE

In April 2012, odd-job worker Ngiam Kok Min was approached by book-keeper Chua Gek Choo to open bank accounts in Singapore to receive funds from overseas for a 3 per cent commission.

The accounts opened by Ngiam received more than $1.2 million in all from eight overseas remitters. He passed $850,000 to Chua, and collected $10,451 for his work.

Separately, there were two transactions involving Chua's own accounts.

Investigations found that the overseas banks had been deceived into remitting payments from their customers' accounts into those of Chua and Ngiam after having received e-mail instructions, purportedly from their customers.

Ngiam was sentenced to 54 months in jail, and Chua, 36 months.