Chinese Family Offices in Singapore Fall Sharply in Wake of Scandal

Multibillion dollar money laundering arrests believed to stiffen scrutiny by authorities

By: Toh Han Shih

Stricter scrutiny by the authorities of Singapore and China has slowed and reduced the substantial inflow of family offices into the Lion City, particularly Chinese ones, as wealthy families have sought to get their money out of China and place it overseas. A multibillion-dollar money laundering scandal in Singapore by China-born suspects is part of the reason for the authorities’ tighter checks on such offices, analysts said.

There are fewer Chinese family offices – privately held companies set up to handle investment and wealth management for wealthy families – in Singapore in the past few months due to stricter regulations, and the approval period is now taking at least 18 months, a Singaporean property agent told Asia Sentinel, slowing a flood that according to the Monetary Authority of Singapore, had grown to more than 1,500 by 2022, with 200 more awaiting approval to open up in 2023.

“I believe this is across the board, not just for Chinese family offices. The reason for this is because some of the family offices were involved in the biggest money laundering case in Singapore,” said the property agent, who declined to be named.

In August 2023, Singapore police arrested 10 China-born suspects over a multibillion-dollar money-laundering scandal, Asia Sentinel reported on August 18, 2023. The amount of assets seized is now estimated at over US$2 billion.

“Most of the Chinese Family offices established in Singapore do operate well within the Singapore government’s regulations,” said Steve Vickers, the chief executive officer of Steve Vickers Associates, a regional political and corporate risk consultancy. “The issue, as it relates to these ventures, is that there is currently a major push in mainland China to prevent capital outflows from the mainland.” A combination of the current “poor economic situation in mainland China, enhanced capital controls there, and recent high-profile arrests in Singapore will have impacted the opening of new family offices in Singapore.”

On April 4, a court sentenced one of the suspects, Su Haijin, to 14 months in prison on one count of resisting arrest and two counts of money laundering, Singapore police announced on the same day. The Singapore State Court ordered the forfeiture of S$166 million (US$123 million) of the assets that were seized from him, his wife, and his companies, the police disclosed.

The charges against Su mainly concern his Singapore company Yihao Cyber Technologies Pte Ltd. Between January and October 2021, Yihao Cyber Technologies had received payments from an overseas company involved in remote gambling operations targeting foreign nationals, police said. Revenue from these overseas gambling operations were deposited in Singapore banks, Singapore police added.

In August 2023, when police surrounded his luxury villa in Singapore, called a “Good Class Bungalow,” Su jumped from a second-floor balcony in an attempt to flee and injured himself.

On April 2, Su Wenqiang was the first person to be convicted and sentenced in this, Singapore police announced on the same day. The China-born man was sentenced to 13 months’ imprisonment for two counts of money laundering, said Singapore police.

The Singapore police’s investigations found Su, a Cambodian national, was involved in an unlawful remote gambling business based in the Philippines, which offered its remote gambling services to persons overseas. During his arrest on August 15, 2023, the accused was found in possession of cash and assets which were benefits from his criminal conduct, Singapore police said. The accused had also made purchases in Singapore, including the purchase of a Mercedes Benz AMG, using proceeds from his criminal conduct, the police added.

Su was also found to be in possession of a forged marriage certificate, and he had made a false declaration in respect of his own employment pass application as well as arranging for his wife to obtain an employment pass when she did not have any intention to work, Singapore police disclosed.

According to a charge against Su, under his instructions, a person named “Wen Wen” applied for an employment pass on behalf of Su’s wife Su Yanping, and declared she would be employed as a director of a family office even when Su Wenqiang had no plans for his wife to work there, according to local media reports.

Another China-born suspect, Wang Deihai, and his wife set up a family office in Singapore and banked with Credit Suisse, according to media reports. The 10 China-born suspects in the money laundering case are associated with at least five family offices in Singapore, reported Bloomberg last December.

“I have been told that there are fewer family offices from China because the regulators have become very strict following the case of the money laundering,” a Singapore businesswoman who declined to be named told Asia Sentinel. “My own experience is that some Chinese family offices were trying to poach employees of my family office and many other local family offices. Hence new jobs are not created but instead, people are poached, resulting in higher salaries and contributing to salary inflation.” 

Most of the workforce in family offices in Singapore are local, deputy prime minister and finance minister Lawrence Wong told Parliament on March 6. Wong, who is also MAS chairman, said around 1,400 Single Family Offices had been awarded tax incentives as of December 31, 2023. In comparison, there were 1,100 Single Family Offices in Singapore at the end of 2022 and 700 at the end of 2021, according to the MAS. This means the number grew by 27 percent in 2023, slower than the 57 percent growth in 2022.

Tighter measures

In recent weeks, Singaporean authorities have been working with Chinese authorities in addressing suspected money laundering by Chinese nationals. On March 27, the MAS issued a notice to extend until September 30 the suspension of the use of certain financial channels by remittance companies when transmitting money to China. The six-month freeze followed an earlier three-month freeze that directed remittance companies from January 1 to March 31 to suspend the use of non-bank and non-card channels when transmitting money to China. MAS’s move followed reports of remittances to China by individuals (mostly Chinese nationals) being frozen in bank accounts in China. In recent months, for “a very small proportion” of such remittances, the monies received in bank accounts have been frozen by the Chinese law enforcement agencies, MAS said.

On April 1, the MAS launched COSMIC, Singapore’s first centralized digital platform to facilitate sharing of customer information among financial institutions to combat money laundering, terrorism financing, and proliferation financing, Singapore’s banking regulator cum central bank announced on the same day. Six major banks in Singapore - DBS, OCBC, UOB, Citibank, HSBC and Standard Chartered Bank - will participate in COSMIC during its initial phase. 

A Singaporean, T. Raja Kumar, is currently president of the Financial Action Task Force (FATF), an international organization which leads global action to tackle money laundering. Thus, Singapore must be seen to take a leadership role in fighting money laundering.

Toh Han Shih is chief analyst of Headland Intelligence, a Hong Kong risk consultancy