Financial Crime World

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Financial Crime Vulnerabilities in Singapore

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Singapore’s economy is thriving, but beneath its surface lies a complex web of financial crime vulnerabilities. This factsheet highlights various risks associated with the country, from tax abuse and gold smuggling to organized crime groups and secrecy offerings.

Crime and Financial Secrecy

Singapore’s reputation as a financial hub has led to concerns about its role in global tax havenry.

  • Tax Abuse: Singapore is responsible for approximately 3.9% of global tax havenry, resulting in an estimated annual loss of USD 4.2 billion due to tax abuse.
  • Secrecy Offerings: The country provides secrecy offerings such as Private Trust Companies and Le Freeport, allowing high-net-worth individuals to store valuables exempt from duties and taxes.
  • Tax Treaties Exploited: Singapore’s tax treaties with other countries have been exploited through arbitrage practices like ‘round tripping’.

Gold Smuggling and Trade-Based Money Laundering

Gold is frequently used in trade-based money laundering schemes, and Singapore is a major transshipment hub.

  • Trade-Based Money Laundering: Gold is often used to settle accounts in underground financial systems.
  • Free Trade Zones: The country hosts ten free trade zones recognized as vulnerable to trade fraud and trade-based money laundering.

Organised Crime Groups

Singapore has seen an increase in gang-related activities, particularly from Chinese Triads.

  • Gang-Related Activities: Funds derived from extortion, prostitution, and bolstered by violence.
  • Onshore Shell Companies: Organized crime groups are using onshore shell companies to evade detection, as banks have closed the accounts of several onshore shell companies in 2021.

Key Financial Crime Vulnerabilities

The Port of Singapore is a transshipment hub for trade and financial flows between Asian markets and the Middle East, exposing it to regulatory risks.

  • Regulatory Risks: The country’s relative ease of establishing companies renders it vulnerable to threats from organized crime groups.
  • Trade and Finance Flows: The Port of Singapore is a major transshipment hub for trade and financial flows between Asian markets and the Middle East.

Notable Case: Nickel Trading Fraud

A Singaporean businessman was handed 18 new charges in court related to allegations of involvement with the country’s biggest investment fraud schemes pertaining to nickel trading.

Corruption, Trafficking in Persons, and Terrorism Indexes

Singapore’s performance on various indexes is noteworthy:

  • Corruption Perception Index (CPI): 83/100
  • Trafficking in Persons (TIP) Index: Tier 1
  • Global Terrorism Index (GTI): 0/10