Citizenship for sale: Singapore's US$1.3 billion money laundering probe exposes Chinese criminals' paid-for passports

Chinese criminals have a new must-have in their villains' tool kits to cross borders, evade jail and wash the billions of dollars sucked up from phone scams, online gambling and pyramid schemes across Asia: passports from Cambodia, Cyprus, and even the tiny South Pacific island of Vanuatu.

This "citizenship for sale" phenomenon has come under renewed scrutiny since Singapore's August 15 seizure of US$1.3 billion in assets - and arrest of 10 Chinese suspects holding a cornucopia of other nationalities - in a massive money-laundering probe.

The scandal has pulled in top banks, rattling regulators over the nature of the cash in Singapore's financial system, as details of nominee companies and alleged criminal affiliations are drip-fed to a public unused to the city state being cast as a criminal haven.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

It has also exposed how holding an overseas citizenship can help wanted criminals - many from China - vanish, rebrand and get back to their nefarious deeds under a new identity.

Seven of the group arrested in Singapore had foreign passports: two from Cyprus, three from Cambodia, one from Turkey and one from Vanuatu. Extra travel documents for the suspects were also found among the Rolex watches, jewellery and supercars seized by police, thought to have been issued by the likes of Dominica and Saint Kitts and Nevis.

"Easy access to citizenship and passports has allowed individuals to move and migrate, particularly in the Asean region," Jeremy Douglas, the United Nations Office on Drugs and Crime's (UNODC) regional representative for Southeast Asia and the Pacific told This Week in Asia.

"And it is noticeable many are using different names, some a different date of birth, which can help clear border checks where original names may be flagged ... and it helps with corporate registrations and obfuscating ownership."

Su Haijin, one of the key suspects in the case who is linked to scores of companies in multiple countries, may hold as many as five passports - from Cambodia, Turkey, Cyprus, St Lucia and China, Singapore prosecutors said this week.

He remains a flight risk, according to Deputy Public Prosecutor Eric Hu, who told a court on Wednesday that Su's Cambodian and Turkish passports had yet to be recovered.

"This case is one of the most serious, if not the worst, money-laundering case in Singapore," Hu was quoted as saying by The Straits Times newspaper, arguing for a denial of bail.

Investigators have seized nearly US$170 million in assets from Su and his wife so far, much of it believed to be the illegal proceeds of online gaming in the Philippines. Assets now under scrutiny include buildings on Oxford Street in central London worth nearly US$60 million.

In Cambodia, it costs around US$300,000 to become a citizen - a small sum for gangsters milking billions from online gaming platforms and the scam hubs that dot the country, Myanmar and the Philippines, into which the UN estimates hundreds of thousands of people may have been trafficked.

The money they pilfer is enough to buy multiple nationalities for criminals at the top of the trade, experts say.

Cyprus in 2020 stopped selling new citizenships in return for investments of US$2.5 million, after it was discovered that the gateway to EU citizenship was being used by criminals from across the world, including China.

But Vanuatu has picked up the slack at a fraction of the cost, offering citizenship and a passport carrying visa-free entry to 96 destinations - Britain, Singapore and Hong Kong among them - for investments starting at US$130,000. The Vanuatu government's website says it has revoked around 30 citizenships "due to illegal and unreasonable activities by individuals".

Multiple Chinese fugitives have been arrested across Southeast Asia carrying a veritable pick-and-mix of passports from the countries above.

"For these Chinese criminals, second passports from Cambodia or island nations are very easy to obtain," a senior Thai police officer involved in crackdowns on foreign criminals told This Week in Asia, requesting anonymity.

The new passports allow suspects to change their names and dates of birth, but also provide a potential way out even if they are apprehended under their new identities.

"Once we arrest these guys, we have to identify them with our Chinese counterparts ... it takes time, especially when they don't use Chinese nationality or names," the officer said.

"Even if they are identified as those on wanted lists, they hire lawyers to petition the court to be sent back to their new 'home country' as they claim they are no longer Chinese nationals," he added. China does not recognise dual nationality.

One recent high-profile case involved She Zhijiang, an alleged kingpin of the illegal online gaming world. He was chairman of the Hong Kong-registered Yatai International Holdings Group that has a multibillion development in Myanmar on its books, close to where alleged scam compounds operate with impunity.

She, who took Cambodian citizenship in 2019, was arrested last year on an Interpol 'red notice' in Thailand, where he is believed to still be in custody battling extradition to China. He denies all charges.

More recently, Bangkok police last month arrested a Taiwanese man wanted for allegedly laundering more than half a billion dollars from online gambling and scam gangs based in Cambodia.

The man was travelling on a Cambodian passport issued on June 13, 2022, under the name Pauly Kuo.

Security experts say Cambodia is now offering foreigners willing to pay millions of dollars an extra layer of citizenship through noble titles known as Oknha, including members of the rebel groups of Myanmar who preside over the vast scam compounds in their territory.

For Chinese citizens, moving money abroad has long been a problem. Current rules prohibit annual foreign currency transactions exceeding US$50,000 per person, with some exceptions. The restriction has fuelled a well-honed system of underground banking, complete with 'mule' accounts that help rich Chinese to get their money out and buy assets abroad.

But the volume of criminal cash from Asia's burgeoning scam hubs, online gaming dens and cryptocurrency pyramid investment schemes has changed the game.

Money launderers have fundamentally "evolved the regional underground financial architecture", said the UNODC's Douglas.

"They're running a system which allows for money to move quickly and unaccountably across the region, typically with online gambling and scams using and collecting crypto ... then moving it through layers of wallets, ultimately with the goal of swapping it into state-backed fiat currency or something like property or luxury goods."

Such was the sophistication and scale of the operation uncovered by Singapore, eliciting sharp warnings to other potential perpetrators from senior officials.

In a recent interview about the case with Singapore's Chinese-language Lianhe Zaobao newspaper, Law and Home Affairs Minister K. Shanmugam said the investigations leading to the arrest of the 10 suspects had taken "many, many months" and originated from suspicious transaction reports filed by financial institutions.

While the matter remains before the courts, Shanmugam said "the key point is that we identified and took action against a sizeable network and seized a very large amount of assets".

"It sends a clear message that we will act firmly against these kinds of illegal activities in Singapore," he said.

Asked by the newspaper about concerns that some of the city state's Chinese nationals could be "implicated" by the investigation, Shanmugam said: "If you, for example, try and launder money through shell companies, buying and selling luxury goods, illegal gambling, and if we find out, of course, action will be taken."

"But if you have a proper, legitimate business and you bring in legitimate money here and don't break our laws like forging documents - there is nothing to worry about," he added.

In the weeks since the Singapore scandal began to unfurl, its central bank has sent a note of compliance instructing all financial firms to examine suspicious transactions since 2020 linked to 34 people, including the 10 arrested, Bloomberg reported, pulling top banks DBS, UOB, Credit Suisse and Citigroup into the inquiry.

But detecting dirty money is notoriously difficult, made harder still by the increasingly sophisticated methods that criminals employ.

"Money laundering is an illegal creative art," said Soh Kee Hean, an associate professor at the Singapore University of Social Sciences and a former director of the city state's Corrupt Practices Investigation Bureau.

"Authorities and stakeholders have to play their roles to detect and prevent it. It is especially challenging for financial centres such as Singapore, Hong Kong, London, New York ... where there is a massive flow of funds in and out of the jurisdictions on a continuous basis."

While the Singapore bust had highlighted that its detection system "works", Soh said "the difficulties and challenges" were multiplied by the number of countries used by criminals to make illicit money and move it around.

"Every country has a responsibility to ensure the integrity of the international financial system," he added.

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.