Gatekeepers or conduits? Fortifying Singapore’s incorruptibility

SINGAPORE remains one of the world’s least corrupt nations but was recently flagged for the facilitation of dirty money. Despite Singapore’s zero tolerance for corruption, the country was embroiled in a S$3 billion money laundering scandal and the Keppel Offshore & Marine (Keppel O&M) corruption scandal that shook the foundations of its financial reputation.

While Singapore remains a premier global corporate hub, its very strengths – stability, reputation for integrity and massive capital flows – are ironically what make it an attractive target for those seeking to launder illicit funds. 

At the heart of this tension lies a recurring feature in global money laundering cases: the role of professional intermediaries.

To understand their role, we first look at the three-stage process of money laundering. First, the placement of funds into the financial system. Second, layering complex transactions to mask its origins. Third, integrating the funds back as legitimate assets.

While corporate hubs such as Singapore offer stability, its sophisticated ecosystems are often exploited to provide a facade of legitimacy for these illicit funds.

Professional intermediaries are structural gatekeepers of the financial system. When they function effectively, they form a powerful frontline defence against financial crime.

When they fail, they become conduits that enable illicit networks to penetrate even the most sophisticated regulatory environments. The recent arrest of two fund management directors highlights how individuals tasked with safeguarding the system can become the instruments of compromise. 

The S$3 billion money laundering case, also known as the “Fujian Gang” case, highlights how professional intermediaries can facilitate massive money laundering through the negligence or failure to perform mandatory due diligence. 

Property agents, filing agents, law firms, lawyers, financial institutions (FIs) and employees of the FIs were penalised by the relevant governing bodies for breaches in performing relevant customer due diligences and anti-money laundering (AML) requirements and inconsistent implementation of policies and controls. 

The Keppel O&M bribery case also served as a stark reminder of the link between corruption and money laundering. 

The bribes were effected and concealed through outsized commissions to intermediaries under the guise of legitimate consulting agreements, who then made payments for the benefit of the Brazilian parties.

The funds were passed through a series of shell companies. A senior member of Keppel O&M’s legal department was charged in the US and pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act. 

Why professional intermediaries remain the weak link

These cases clearly demonstrate that even in a highly regulated financial hub such as Singapore, the efficacy of AML frameworks relies on the rigorous execution of due diligence by professional gatekeepers. 

Even with strong regulations, professional intermediaries remain attractive entry points for criminals because they occupy positions of trust in the financial system. Professional intermediaries possess the technical ability to create complex structures, move funds quickly and confer legitimacy on questionable transactions.

The vulnerability lies not in the lack of regulation, but in the human element – when sizeable commissions overshadow compliance obligations, inconsistent implementation or simple complacency. 

The evolving nature of money-laundering risks

Criminal networks increasingly use shell companies which may appear legitimate. The rise of digital payment platforms and fintech tools also facilitates swift and opaque transfers. 

The evolving nature and complexity of such transactions mean that even jurisdictions with strong reputations face heightened scrutiny, as their openness and efficiency can unintentionally make them attractive conduits.

Following the “Fujian Gang” case, the Inter-Ministerial Committee was established and utilised to address cross-agency issues, most notably focusing on AML and pro-enterprise regulatory reviews, and strengthening of monitoring and enforcement capabilities. 

Since then, Singapore has implemented several measures on professional intermediaries. For instance, the Corporate Service Providers Act was passed by the Parliament in July 2024. This came into effect on Jun 9, 2025. Business entities which carry on a business of providing corporate services and nominee directors would have to be registered. 

An approach to reduce the recurrence of such scandals is to impose mandatory reporting requirements.

Singapore-registered entities should report investigations or suspected corruption or money laundering activities occurring in their overseas subsidiaries to the local authorities such as the Corrupt Practices Investigation Bureau or the Commercial Affairs Department promptly. A positive duty should be imposed on Singapore entities to enhance transparency. 

Societal vigilance matters too. Employees or vigilant compliance officers who notice “red flags” should raise these at the earliest opportunity. FIs and professional intermediaries should implement clear escalation pathways for internal whistle-blowers to report suspicious activities and offer protection for whistle-blowers.

A culture where suspicious behaviour is promptly reported adds an important layer of supervision and deterrence. This can be cultivated by enacting in Singapore an overarching whistle-blowing legislation, which has been done in other countries such as the US and the UK. 

Mandating regular training on AML/countering the financing of terrorism obligations and corruption risks is also necessary. Professional bodies should lead this charge – for example, the Law Society of Hong Kong recently launched an automated screening tool for its members. The tool allows its members to screen client names and meet compliance obligations.

Proactive support by professional bodies fortifies the industry against financial crime. 

The “Fujian Gang” case reminds us that highly regulated financial hubs are vulnerable when professional gatekeepers falter. The expertise of professional intermediaries is not the problem – the challenges lie in ensuring that the expertise is exercised with disciplined scepticism and ethical vigilance, as well as keeping up with the evolving nature of financial crimes.

In the age of complex transnational financial crime, the future of AML depends on the integrity of those who stand at the system’s entry points. As stakeholders in Singapore’s financial future, we must remain vigilant, ensuring that the integrity of our professional intermediaries is upheld, and that only legitimate capital finds safe harbour.

Lee Jiaxin is a partner and Tan Chong Huat is the chairman and senior partner of RHTLaw Asia