Singapore wealth management players unfazed by money laundering probe

Sep 22, 2023

WEALTH management industry players said the recent probe into a money laundering ring should be viewed in a positive light, and should enhance Singapore’s position as a hub for the region’s richest.

Authorities in August conducted several simultaneous raids and seized the assets of 10 individuals, who have been charged for alleged forgery, money laundering and/or resisting lawful apprehension.

The value of the assets seized has since grown to S$2.4 billion, making this the largest anti-money laundering operation in Singapore’s history.

For those whose wealth comes from legitimate sources, industry players said the probe should have little impact.

“Sincere investors will appreciate Singapore’s stance, seeing it as an added layer of assurance,” said Manish Tibrewal, co-founder of multi-family office Farro Capital.

He said his clients see the probe as a positive step towards enhancing Singapore’s long-term legitimacy as a family office hub, as integrity and transparency are important to maintain global competitiveness.

While the case may lead to increased scrutiny of sources of wealth, it should not undermine Singapore’s position, added Lee Yishan, managing director of regulatory compliance in Singapore at the consultancy Lymon, which is a part of IQ-EQ, an investor services provider.

The Republic’s position as a leading wealth management hub is built on its strong regulatory framework, political stability and business-friendly environment, she added.

“A key part of stopping money laundering is an effective policing response. There is no point in having strong anti-money laundering laws, but no enforcement action,” Lee said.

Thangaraja Nadaraja, a PwC Singapore partner specialising in risk, regulatory and compliance for financial services, said the high-profile case could cause some initial concern among investors.

Nevertheless, the robustness of a financial system is tested not by the absence of issues, but by how swiftly and effectively they are addressed, he said.

Paul Pak, asset and wealth management leader at PwC Singapore, said the case is a good reminder for all financial institutions to promptly file suspicious-transaction reports, to exercise rigour and vigilance through the due diligence process, and to have in place red-flag indicators.

Still, some players flagged a risk that the crackdown would spur the implementation of measures that are even more stringent.

Such moves could put off clients who prioritise both security and efficiency in transactions, said Shirley Crystal Chua, founder and group chief executive of multi-family office Golden Equator Wealth.

Overly stringent measures may slow down the opening of accounts and result in additional barriers to overseas funds, she added.

In its aspirations as a global wealth management hub, Singapore also has to contend with competition. In Asia, for instance, Hong Kong remains a major competitor for funds.

“While we are a reputable hub in this part of the world, we’re less known for the benefits we bring to the wealth management industry on the global stage,” Chua said.

She said tighter anti-money laundering controls are necessary to enhance the security and integrity of the financial industry, but policies should also strike a balance: “It’s essential to create policies that prevent illicit activities without stifling legitimate business endeavours through an overabundance of red tape.”

Of course, Singapore boasts several other benefits for investors.

PwC’s Pak noted that Singapore offers political stability, a thriving fintech ecosystem and proximity to the dynamic South-east Asia region.

Manu Bhaskaran, chief executive of Centennial Asia Advisors, also said Singapore’s fundamental attractiveness as a wealth management hub has not changed: “(There is) rule of law, stability, good regulations that are impartially enforced, availability of talent… So, why would less money come in?”