Cryptocurrency Involved in Singapore’s Largest Money Laundering Case

Singapore's Largest Money Laundering Case Involves Cryptocurrency

In recent months, the virtual asset circle has been plagued by major cases. On one hand, after the implementation of the new virtual asset licensing and regulatory system in Hong Kong, the first large-scale fraud case, the JPEX case, emerged. (Interested partners can refer to the article by Xiao Sa Team | HK Currency Circle Involved in First Criminal Case: The JPEX Criminals).

Today, the Sa Team uses the backdrop of Singapore’s largest money laundering case in history to analyze the new tactics and risks of virtual currency money laundering, in order to clarify the legal “red line” for the use of virtual currency.

01 The Beginning and End of Singapore’s Largest Money Laundering Case in History

On August 15, Singapore deployed more than 400 law enforcement personnel from the Commercial Affairs Department, the Criminal Investigation Department, and the Police Force to launch a nationwide operation in various locations. They arrested 10 suspects in villas and apartments in areas such as Bukit Timah and Orchard Road, and seized 94 properties, 50 cars, and thousands of bottles of liquor worth approximately 815 million Singapore dollars. They also froze and seized 35 bank accounts and 23 million Singapore dollars in cash, among other assets, belonging to the suspects, who were also found to be in possession of numerous ultra-luxury watches. The watches included the Patek Philippe 5002 platinum astronomical tourbillon wristwatch worth millions and the extremely rare Patek Philippe 6002 platinum astronomical tourbillon wristwatch, which filled an entire cabinet.

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So, who are these suspects with such immense wealth? And how did they obtain such enormous funds?

According to public sources such as Lianhe Zaobao, the 10 individuals arrested by the Singapore police include 3 Chinese citizens holding Chinese passports, while the other suspects are non-Singaporean nationals holding multiple nationalities or permanent residency permits (it is reported that all 10 individuals are from Fujian Province, China, and some of them are already on the list of wanted fugitives in China). Among the 10, Wang and Su are particularly noteworthy.

Wang made his fortune 10 years ago by opening a gambling website in the Philippines. He now owns several online gambling groups (platforms), with each individual group generating monthly revenue of up to 5 billion RMB. The total monthly salary of employees in Wang’s online gambling platforms reaches 100 million RMB.

Su, on the other hand, made his fortune by engaging in online fraud in the Philippines and has a more high-profile approach. According to “Singapore Eye” news, Su enjoys socializing. After becoming rich through fraud, he likes to organize and participate in various social activities in Singapore, using large amounts of “charitable” donations to increase his social prominence. In addition, it is worth noting that Su’s nationality is Cypriot, and he holds Chinese, Cambodian, Turkish, and other national passports, with inconsistent names on these passports, allowing him to “run away” at any time.

Due to space limitations, the backgrounds of the other team members will not be described in detail. Interested partners can learn more through official news from Singapore. As of now, Wang has hired a lawyer to defend himself, while Su has submitted a bail application (given the large amount of money involved in the case and the possibility of fleeing, the likelihood of bail is slim). Most of the defendants do not intend to plead guilty.

02 What money laundering methods did the suspects use?

As the largest money laundering case in history with an amount exceeding tens of billions, how did the suspects clean the huge amount of money obtained through gambling, fraud, and selling prohibited items?

(1) Exchange and Settlement Money Laundering

In this case, several money laundering groups under the suspects used the method of exchange and settlement to provide convenient and more attractive exchange and settlement channels for foreigners working in Singapore (especially Chinese working in Singapore), in order to launder their own black money.

Singapore, as one of the few developed countries in Asia, has a huge number of foreign workers. Due to exchange rates, foreign exchange controls, and cumbersome bank KYC processes, foreign workers face certain obstacles and difficulties in transferring their income through legal channels to their home countries. At this time, the suspects often hire local agents in Singapore to go to foreign workers’ dormitories and workplaces, offering attractive exchange rates, tempting foreign workers to exchange and settle through their private channels.

After the foreign workers hand over their salaries, their relatives in distant places directly receive remittances from the suspects’ local agents, which not only have friendly exchange rates and fast speed but also eliminate the various troubles of going to the bank. However, little did they know that the criminals were using this channel to transfer “black money” and quietly launder it.

(2) Cryptocurrency Money Laundering

In this case, the suspects also used cryptocurrencies to launder money, but the methods used by this group were not as sophisticated as those introduced by the Sa Sisters team before, but the amount involved was not small.

The suspects mainly used cryptocurrencies with high liquidity such as USDT to launder money. First, the suspects would exchange “black money” for cryptocurrencies (as long as the channels are underground banks, unregulated cryptocurrency exchanges, and the use of gambling users’ accounts to complete the exchange between fiat currency and cryptocurrencies); second, the suspects would cleanse the “black money” by exchanging cryptocurrencies on various C2C platforms.

In addition, as the global market gradually accepts virtual currencies such as BTC, ETH, and USDT, criminals no longer need to convert virtual currencies into the legal currency of a country in order to successfully purchase large assets. Therefore, virtual currencies are increasingly becoming a widely acclaimed money laundering tool.

In the entire money laundering process, the amount of “black money” laundered by the suspects in this case using virtual currencies is unknown, but the virtual assets frozen by the police have already reached 190 million yuan. It is extremely difficult to trace the flow of virtual assets and may take several years.

(III) Traditional money laundering methods

Due to the limited number of foreign workers and the increasingly strict regulation of virtual assets, criminals have also used some more traditional money laundering techniques, such as purchasing a large number of high-value artworks, real estate, luxury goods, etc. These assets not only have good preservation capabilities and huge appreciation potential, but also have very good liquidity. Taking luxury watches mentioned earlier as an example, criminals can easily take away these highly valuable assets with just a small suitcase when fleeing, and they can quickly convert them into US dollars or virtual currencies after leaving the country.

In addition, some suspects in this case have also laundered money through cross-border trade. These suspects use forged documents and false buying and selling contracts to confirm the source of funds to the banks and complete false cross-border transactions. The SAFU team has found that for regulatory agencies dealing with such false trade cases, it is very difficult to verify the authenticity of transaction information. The information obtained by regulatory agencies largely depends on active reporting and random inspections by both parties to the transaction. Furthermore, there are differences in the regulatory systems of different countries and the existence of information islands, which provide a good living space for forged transaction information.

03 Will the suspects be extradited to China for conviction and punishment?

In this case, the suspects have committed various crimes, including opening online casinos, telecommunications fraud, selling prohibited items, smuggling, and money laundering. Most of these crimes directly target ordinary citizens in China. For example, there are currently a large number of victims of online gambling and telecommunications fraud in China. So, does the criminal law of China have jurisdiction over the above-mentioned suspects? Can they be extradited to China for conviction and punishment?

Let’s start with the answer. The criminal law of China has jurisdiction over the above-mentioned suspects, but it is almost impossible to extradite them to China for trial and conviction.

As for the issue of jurisdiction, China’s Criminal Law stipulates the principles of territorial jurisdiction, personal jurisdiction, protective jurisdiction, and universal jurisdiction:

1. Territorial Jurisdiction

As the name suggests, territorial jurisdiction is based on geographical boundaries. Any crime committed within the territory of a country, regardless of whether the suspect is a national or a foreigner, is subject to the criminal law of that country. Article 6 of China’s Criminal Law states: “Anyone who commits a crime within the territory of the People’s Republic of China shall be subject to this Law, except as otherwise stipulated by law. Anyone who commits a crime on board a Chinese vessel or aircraft shall also be subject to this Law. If the act or result of a crime occurs within the territory of the People’s Republic of China, it shall be deemed as a crime committed within the territory of the People’s Republic of China.” Based on respect for the sovereignty of each country and the effectiveness of verification and disposal of criminal acts, territorial jurisdiction is widely recognized and accepted by the modern international community.

2. Personal Jurisdiction, Protective Jurisdiction, and Universal Jurisdiction

Personal jurisdiction refers to the nationality of the suspect as the basis. Any crime committed by a national, whether within the territory of the country or in a foreign territory, is subject to the criminal law of that country. Article 7 of China’s Criminal Law states: “If a Chinese citizen commits a crime outside the territory of the People’s Republic of China as stipulated in this Law, this Law shall be applicable. However, if the maximum punishment prescribed in this Law is imprisonment for a term of not more than three years, the offender may not be prosecuted.”

Protective jurisdiction is based on the protection of the interests of the country. Any crime that infringes upon the interests of the country or its citizens is subject to the criminal law of that country. Article 8 of China’s Criminal Law states: “If a foreigner commits a crime against the People’s Republic of China or its citizens outside the territory of the People’s Republic of China, and the minimum punishment prescribed in this Law is imprisonment for a term of not less than three years, this Law may be applicable, except where the crime is not subject to punishment under the law of the place where it is committed.”

Universal jurisdiction is based on the protection of the common interests of all countries. Any crime that violates the common interests of countries as stipulated in international treaties, regardless of whether the perpetrator is a national or a foreigner, and regardless of whether the crime is committed within the territory or outside the territory of the country, is subject to the criminal law of that country. Article 9 of China’s Criminal Law states: “If the People’s Republic of China exercises criminal jurisdiction within the scope of its treaty obligations concluded or participated in by the People’s Republic of China, it shall apply this Law.”

In this case, on the one hand, some of the suspects have Chinese nationality; on the other hand, they have committed a large number of criminal acts against Chinese citizens. Therefore, the Chinese judicial authorities can, in principle, convict and sentence the above-mentioned suspects based on the principles of personal jurisdiction and protective jurisdiction.

However, as the suspect has been captured by the local judicial authorities in Singapore, our country’s judicial authorities can only dispose of him by applying for extradition to bring the aforementioned suspect back to China. The Sa Team reminds that there is currently no bilateral extradition treaty between China and Singapore for criminal offenses. Although the two countries signed the “China-Singapore Treaty on Judicial Assistance in Civil and Commercial Matters” on April 28, 1997, the establishment of a criminal judicial assistance system has not yet been promoted. Therefore, even if our country applies for the extradition of the suspect from Singapore, the possibility of Singapore’s agreement is extremely low due to the significant impact of this case on Singapore.

04 Final Thoughts

After this case occurred, Singapore’s regulatory attitude towards virtual assets is undergoing subtle changes, and even the long-standing tax exemption policies of 13O and 13U will be further tightened as a result. As an open financial center and virtual asset-friendly region, Singapore is taking a series of regulatory measures to prevent such crimes. With the release of stablecoin regulatory rules, we can clearly see that Singapore’s efforts to govern virtual assets are increasing. Partners, please do not engage in illegal activities with a lucky mentality, so as not to touch the “red line”.

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