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Director of 186 companies gets fined after scammers used one firm to launder $3.2m

SINGAPORE - A jobless Singaporean who became nominee director of 186 companies here was on Wednesday (Sept 27) fined for failing to exercise reasonable diligence in his duty as director, the second person in three days to be taken to task for the offence.

Singaporean Er Beng Hwa got to know a Chinese national in 2020 during the Covid-19 pandemic, who offered him $50 a year for each firm incorporated here in which he was named as nominee director.

The 49-year-old was promised another $50 each time he opened a bank account for the firms, and if he had to turn up to sign papers.

One of the firms was later used by scammers to launder a total of US$2.36 million (S$3.23 million) from victims overseas.

Er, also known as Adrian, was fined $4,000 after he pleaded guilty to one charge of failing to exercise reasonable diligence in his duty as a director. He was also disqualified from being a company director for three years.

Another similar charge involving a separate company was taken into consideration during sentencing.

On Monday, Chinese national and permanent resident Liang Jiansen was fined $9,000 under the same Companies Act and disqualified from being a company director for four years.

The 33-year-old, who ran a corporate secretarial firm, was director of 135 firms.

In an earlier press release, the police said 12 individuals in all had inadvertently helped scammers launder more than US$36 million through Singapore bank accounts.

The losses were from local and overseas victims of business e-mail compromise scams, investment scams and love scams.

Between July 2020 and February 2021, foreign agents incorporated 35 local companies and opened Singapore bank accounts to launder these criminal proceeds. The 12 individuals had acted as resident directors of these companies, or abetted the directors' offences.

Deputy Public Prosecutor (DPP) Vincent Ong said Er, who has a business degree, was jobless between April and June 2020 when his landlord introduced him to Chinese national Zheng Jia.

Zheng, a chartered accountant, owned several corporate secretarial companies including Atoms Global, a firm in Singapore that helps clients incorporate companies here.

The prosecutor said Zheng told Er he could earn money as a local director of companies, with Atoms Global doing the necessary checks on the clients and handling the paperwork.

Apart from signing documents to register the company and open bank accounts, Er did not have to do anything else.

Despite not knowing the work Atoms Global was involved in, Er did not ask any questions and agreed to the arrangement, said DPP Ong.

He was then registered as local director and secretary of Singapore company Rui Qi Trading, which was incorporated on Aug 3, 2020.

The company had listed a Chinese national, whom Er never met, as a foreign director. Police investigations showed there was no record of the foreign director entering Singapore.

Rui Qi Trading opened two bank accounts with UOB - one for American dollars (USD) and the other for Singapore dollars (SGD).

The company was purportedly involved in the wholesale trade of industrial and construction machinery and equipment. In reality, it was a front for scammers.

DPP Ong said large sums of money were transferred to the two bank accounts, and transferred out shortly after.

One of the victims was German company Gasfin Development, which between Oct 25 and Nov 9, 2020, transferred money after receiving e-mails purportedly from one of its supplier.

Gasfin, which also fell victim to a ruse that was linked to Liang, transferred US$176,418 to a bank account in Singapore. On the same day, S$237,120 was transferred from that account to Rui Qi's SGD account.

Some of that money was then transferred to Rui Qi's USD account, and later to bank accounts in China and Hong Kong over multiple transactions.

The other victims were Texas Capital Bank, which transferred US$1.2 million, and Abu Dhabi Ports, which transferred US$979,086.

The monies were quickly moved to bank accounts in several jurisdictions, including China, Hong Kong, India and Indonesia.

The scammers had exploited local banks' remote account opening processes, which allowed know-your-customer (KYC) processes to be done remotely during the pandemic.

KYC steps were introduced to combat the threat of money laundering and fraud. They require financial institutions and corporate service providers, among other entities, to verify the identity of customers and staff.

DPP Ong, who said Er had completely and utterly neglected his duties as director, did not call for a jail term.

He said it was not shown that he knew in advance about the company's involvement in fraudulent transactions.

Er's lawyer, Mr Che Wei Chin of Fervent Chambers, said his client had relied mainly on Zheng's directions and added that his duties were limited to him signing documents.

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