Financial center becomes money laundering paradise, Singapore report: Domestic banking industry a major money laundering hotspot

In its latest report, the Singaporean government admitted that while the country is striving to develop into an international financial center, the banking sector is also facing very high risks of money laundering.

Singapore's largest money laundering suspect in recent years denies charges, foreign media: doubts about banks' ability to resist illegal funds

Singapore Banking Sector Faces Highest Money Laundering Risk

According to a report by Bloomberg, the Singapore government released a 126-page report on Thursday, stating that the banking sector in Singapore poses the "highest" money laundering risk in the country.

The authorities acknowledged significant challenges in attracting ultra-high net worth individuals and enhancing Singapore as an international financial center. Singapore is increasingly vulnerable to being used as a money laundering conduit, with funds stemming from financial fraud and other illicit activities overseas.

Banking Sector Exploited by Financial Criminals

Singapore authorities noted that criminals in the country employ various money laundering techniques involving bank accounts, payment accounts, shell companies, and more complex structures. Banks, in particular, are susceptible to being used for financial crimes and pose the biggest money laundering risk.

Singapore's banking system comprises over 150 banks, many of which offer online financial services to customers, making electronic fund transfers without the need for physical presence more convenient.

The extensive report comes after a scandal in Singapore involving over SGD 3 billion (USD 2.2 billion) in illicit assets.

The report revealed that the money laundering scandal led to the freezing of over SGD 1.5 billion from bank accounts, involving 10 Chinese nationals, some of whom have been convicted, while 17 suspects remain at large. Other seized assets include cash, cryptocurrencies, properties, jewelry, watches, and luxury handbags.

Real Estate, Jewelry, Casinos Also Used as Money Laundering Channels

The report also highlighted other sectors prone to money laundering, such as real estate, precious gemstones, and the casino industry. In recent cases, residential properties accounted for about 70% of the over 200 seized properties, deemed a major channel for money laundering.

Furthermore, a case study mentioned in the report involved a Singapore gas station employee allegedly using SGD 1.9 million in criminal proceeds to purchase casino chips, cash out the remaining chips after losing some, and use the funds to pay for cars, mortgages, and insurance, resulting in a money laundering indictment in 2019.

Bloomberg noted that in response to the money laundering risk, Singapore has mandated more information from family offices and hedge funds and increased scrutiny on shell companies.