It should come as no surprise that Singapore was used to launder money from Malaysia in the corruption scandal that has engulfed 1 Malaysia Development Berhad (1MDB).
This is because Mr Lee Hsien Loong, then finance minister, rewrote our finance laws in 2001 which resulted in Singapore being turned into a banking secrecy hub.
Since then, there have been warnings about illicit money coming into Singapore. In 2006, Merrill Lynch (now bankrupt) and Capgemini reported that the number of 'super-rich' Indonesians living in Singapore stood at an astounding 18,000. Their collective wealth amounted to approximately US$87 billion. The Indonesian government complained that much of the money came from illegal activities in Indonesia.
Financial analyst and Morgan Stanley former chief economist Mr Andy Xie had warned that Singapore's financial success “came mostly from being the money laundering center for corrupt Indonesian businessmen and government officials.” He added that Singapore's casinos will “attract corruption money from China”.
The SDP had also been warning the PAP government – since 2008 – that turning Singapore into a tax haven will open our country up as a money laundering centre. Dr Chee had cautioned: “Not only have tax evaders found a haven in Singapore, money-launderers are also flocking to the city-state.”
The US State Department also pointed out that the change in the financial system in Singapore “provided opportunities for money launderers to conduct a wide range of illicit transactions.”
Despite all these warnings, then law minister Mr K Shanmugam declared in 2009 that “We do not see ourselves as a haven for laundered money. We play an active role in the global fight against financial crimes.”
The Monetary Authority of Singapore (MAS) even boasted: "To protect the integrity of our financial system, our laws are rigorously enforced."
But after the funds alleged to have been misappropriated from 1MDB were found to have been laundered in Singapore, MAS now has to eat humble pie and admit that money-laundering is a problem in Singapore.
Its Managing Director Mr Ravi Menon said that the revelation of 1MDB's illegal activity in Singapore has tarred our reputation as a clean financial centre. “MAS is disappointed with the lapses in AML/CFT (anti-money laundering/countering financing of terrorism) controls and breaches...” Mr Menon said, “What happened is simply unacceptable."
He also announced that regulators will step up checks on financial institutions and tougher actions will be taken when firms breach anti-money laundering rules.
It is hard to believe that, with our casinos and secrecy banking laws, money-laundering is not - and has not been - a serious problem in Singapore. Yet, the MAS is only now admitting to the problem and saying that it will step up checks.
Clearly, the authorities have dropped the ball as far as ensuring that dirty money does not enter this country. This is a grave matter as such money may be used for funding terrorism.
While the PAP talks a good talk regarding preventing terrorism in Singapore, it has, yet again, shown that when it comes to concrete action, its competence is found wanting.
The Minister for Finance must explain to Singaporeans why, despite being repeatedly warned of the problem, money-laundering remains a problem in Singapore.
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