“Chasing Dirty Money: The Fight Against Money Laundering.”

Singapore Pledges Jail, New Tactics for Financial Criminals
By Andrea Tan


(Updates to add punishments in 15th paragraph, comment from lawyer in 19th paragraph.)

Oct. 3 (Bloomberg) -- Singapore, where assets under management have risen fivefold to $1.2 trillion since 2001, will seek tougher penalties for white-collar criminals and co-operate more with global agencies to deter money laundering and tax evasion, Attorney General Sundaresh Menon said.

Prosecutors are also considering the use of deferred prosecution, Menon, 49, said in an interview, a year after taking office. He was referring to a commonly used method in the U.S. under which defendants who agree to cooperate with investigators, pay fines or implement corporate reforms have charges against them dismissed if they fully comply.

The Asian city state, which has the highest proportion of millionaires of any place in the world and with economic growth of 14.5 percent last year boosted by two new casinos, was criticized in a March U.S. State Department report as being vulnerable to money launderers.

“We’ve gone out of our way to make sure that we’ve got as strong and robust a framework as possible,” Menon said. “This has contained the incidence of illicit dealings that might have happened” because of the increased amount of wealth in Singapore, he said.

He dismissed suggestions from the U.S. March report that Singapore’s bank secrecy laws attract tax evaders and money launderers.

Tax-Exempt Gains

Singapore, where bank deposits for foreigners aren’t taxed and gains from investments including equities are tax-exempt, has pledged to comply with international tax standards and was dropped from the Organization of Economic Co-operation and Development’s so-called gray list in 2009.

“We’ve one of the best money-laundering legislations in the world,” said Andy Yeo, principal partner of Allen & Gledhill LLP’s white collar crime practice and former prosecutor. “But is the stick being effectively wielded, given the amount of the world’s money flowing here?”

Money-laundering convictions in Singapore have climbed to an average of 21 a year from 2008 to 2010 compared with four between 2000 to 2007, according to the Financial Action Task Force, a Paris-based watchdog. Hong Kong had 360 money- laundering convictions in 2010, compared with 179 in 2007.

A relatively low prosecution rate shows that Singapore’s regulatory system is working, said Menon, the former managing partner at Singapore’s Rajah & Tann LLP and previously the head of the Asian disputes practice of Cleveland-based law firm Jones Day.

‘Throw the Book’

“To some extent, it’s inevitable that people are going to try in spite of the robust framework we have and the seriousness with which we take this,” Menon said. “But when it does happen, I will throw the book at them.”

Singapore has to continue tightening its rules if it wants to be among one of the world’s major financial centers, said Edwin Truman, author of “Chasing Dirty Money: The Fight Against Money Laundering.”

“It has to if it doesn’t want any questions asked about the underlying legality of transactions there,” said Truman, a former U.S. Treasury official.

Aedit Abdullah, a former judge and central bank lawyer hired by Menon, said that jail terms now handed down for private sector corruption will be sought for other white collar crimes, including securities offenses.

“A crime is a crime,” Menon said. “A corporate criminal should at times be punished even more rigorously because he’s breaking the law in order to profit.”

Tools in the Armory

Singapore, which is known for imposing high fines for minor infractions such as littering, uses caning as a punishment for certain offences. The city-state also enforces the death penalty for serious crimes such as drug smuggling.

Singapore, which set up a special police unit and Casino Regulatory Authority has as “many tools in our armory as possible,” he said.

The Asian city may overtake Las Vegas in gaming revenue this year, according to the American Gaming Association.

The money flows in the casinos do pose “a threat” of money laundering and that’s recognized, Menon said.

“As a sign that Singapore is serious about enforcing its laws on money laundering, the authorities have also taken steps to prosecute for the failing to report suspicious transactions,” said Eric Chan, a regulatory lawyer at Drew & Napier LLC.

Cross-Border Crime

Fighting increasingly sophisticated cross-border crime requires better co-operation amongst agencies, he said, noting that his examination of the potential use of deferred prosecution agreements came out of meetings this year with U.S. prosecutors including the Federal Bureau of Investigation.

The U.S. Justice Department and Singapore have cooperated on many cases and the use of wire taps against insider trading “was very interesting,” Menon said.

Raj Rajaratnam, the co-founder of Galleon Group LLC, was convicted in May in the largest hedge-fund insider trading case in U.S. history after prosecutors presented evidence using secret government wire taps.

In March, Peter Madhavan became the first independent director to be sentenced to jail for breaking Singapore’s securities laws.

The following month, Singapore’s highest court upheld a nine-month jail term for Jeanette Ang, 52, for her part in an “audacious banking scam,” which involved fraudulent bank transfers to the island from the U.S.

FBI Special Agent Michael Nail, the lead investigator in a probe concerning several money transfers from the U.S. to bank accounts in Singapore, testified at the trial, according to the ruling by Appeal Judge V. K. Rajah.

Former New York prosecutor Sandy Baggett, a Singapore permanent resident, joins the Economic Crimes and Governance Division of Menon’s chambers today, the first Singapore public prosecutor with a U.S. passport.

Apart from cooperating with the U.S., Singapore prosecutors will also be sent to work temporarily in other international financial centers, Menon said.

“White collar crime will attract some of the smartest people on the criminal side,” he said. “We will constantly have to up our game and enhance our skills and resources.”

--Editors: Douglas Wong, Joe Schneider, Lars Klemming.