New anti-money laundering laws in Singapore target kingpins’ profits from environmental crime

In a 2022 Interpol video, Mr Kittichai Runglaiboonwong from Thailand’s Department of National Parks walks around piles of illegally logged timber.

At US$290 (S$380) per kg, a 59kg bag of agarwood could easily fetch about US$14,500, he says.

The video did not mention whether the proceeds from this crime could have been laundered.

But if dirty money from such crimes were to pass through Singapore, the Republic will soon have powers to investigate it.

In August, Parliament passed a new Bill that allows the authorities to investigate illicit gains from a wider range of foreign serious environmental offences such as illegal logging, mining and waste trafficking.

This represents a significant expansion of powers.

Previously, the authorities could track tainted funds from foreign environmental crimes only if they were also serious offences under Singapore’s laws, such as wildlife trafficking.

Minister for Digital Development and Information Josephine Teo told Parliament in August that the authorities face limitations in investigating illegal logging, mining and waste trafficking as they are not applicable in Singapore’s context.

But as these crimes are some of the largest contributors to transnational organised criminal activities in the East Asia and Pacific region, there is a high likelihood of funds from such crimes flowing into Singapore, said Mrs Teo, who is also Second Minister for Home Affairs.

A 2021 report by the Financial Action Task Force (FATF), a global financial crime watchdog, said environmental offences generate up to $365 billion in criminal gains annually. Of this figure, 66 per cent comes from forestry crime, illegal mining and waste trafficking. 

When asked what prompted the new laws, the Ministry of Home Affairs (MHA) said: “As a responsible member of the international community, we need to do our part to help tackle this global problem. The legislative amendments will allow us to do so.”

Mr Thong Chee Kun, partner and co-head of fraud, asset recovery and investigations practice at law firm Rajah and Tann, said the expanded scope of the laws allows for greater cooperation with foreign counterparts, which could result in prosecutions both in Singapore and overseas.

Additionally, with wildlife trade offences listed as serious offences under the Organised Crime Act from Aug 30, offenders could receive enhanced penalties of up to 20 years’ jail and will have their ill-gotten gains confiscated.

MHA said while past cases did not show links to organised crime groups in Singapore, this change in laws would deter criminals from trading in wildlife here.

Environmental groups have stressed going after the money as a vital step in stemming environmental crimes.

Ms Katarzyna Henn, assistant director of illicit markets at Interpol, said addressing money laundering targets what environmental criminals care about most: their profits. “Money laundering is the lifeblood of environmental crime networks, as it allows them to integrate illicit earnings into the economy. Without access to sophisticated financial mechanisms, criminals’ ability to profit from such crimes is significantly hindered.”

Ms Kanitha Krishnasamy, director for wildlife trade watchdog Traffic in South-east Asia, said following the money trail is vital to estimate the amount of money generated by criminal activity as a basis for asset recovery.

In its 2021 report, FATF called upon countries to assess their money laundering risks related to environmental crime.

Singapore published its first-ever environmental crimes money laundering national risk assessment in May, which Ms Genevieve Pang, a lawyer from Shook Lin and Bok, said appeared to be undertaken for the country to align with FATF’s standards.

Mr Joseph Chun, her colleague, said: “Tackling the illegal asset and financial flows hurts the behind-the-scenes kingpins of the trade rather than only the runners who may end up in prison.”

When precious stones fund bombs

Most people might not know illegal gains from environmental crime are funding terrorists.

The World Atlas of Illicit Flows, published in 2018, found that the proceeds of environmental crime are the largest source of income for non-state armed groups and terrorist organisations. They account for 38 per cent of the financing of conflicts, even more than drugs, illegal taxation and extortion.

The FATF report found that insurgent and terrorist groups could use the gains from environmental crimes to pay for guns and drugs.

Illegal mining, for example, generates precious metals and stones. These groups could use these as payment instead of moving money through official financial sectors.

A BBC report in May said that in Mozambique, the al-Shabaab insurgent group, linked to ISIS, has been smuggling fauna and flora products and illegally logging the country’s forests. The report estimated that these crimes generate about US$2 million monthly for the insurgent group.

So, by disrupting money flows from environmental crime, Singapore could stop organised crime on a larger scale.

Chasing the money

But following the money is an uphill task. Although Singapore has investigated money laundering related to environmental crime, there have been no successful convictions so far.

Ms Henn said criminals often use shell companies, cryptocurrencies and offshore accounts in jurisdictions with weak regulations to obscure their transactions.

Senior investigation officer (IO) Mohamed Arshatharif Sultanul Arifeen from the Commercial Affairs Department’s asset confiscation branch said they seek help from foreign counterparts to chase the money.

But cross-border cooperation might not always be smooth.

He said: “Some operational challenges include working with certain jurisdictions, which may not be forthcoming or timely in providing assistance or responding to our information requests.”

Singapore remains vigilant against such threats. There were 49,846 suspicious transaction reports (STRs) in Singapore in 2022, 9 per cent more than the number of reports the year before.

IO Arshatharif said red flags for environmental crime include shipments of wildlife with incomplete certificates or transactions with high-risk countries for illegal wildlife trade.

Most of the STRs in 2022 came from the banking sector. Mr Daniel Ng, head of group compliance in UOB, said the bank once found questionable supporting trade documents linked to a customer who transacted with parties allegedly linked to illegal logging.

On another occasion, the bank reviewed the account of a customer who had been jailed and fined for illegal waste dumping, and found transactions inconsistent with its company profile.

In both cases, UOB reported the customers to the authorities and ended its relationship with them.

Mr Thong said: “It is always important to disincentivise crime. Depriving criminals of the fruits of their labour is part of a holistic strategy to prevent, deter and punish criminal activity.”

Past cases of wildlife trafficking

Pangolin scales: The Singapore authorities seized 12.9 tonnes of pangolin scales packed among frozen beef in a container at Pasir Panjang in April 2019. It was going from Nigeria to Vietnam and was worth about $52.3 million.

Elephant ivory: In July 2019, 8.8 tonnes of ivory from the Republic of the Congo bound for Vietnam was intercepted in Singapore. The ivory came from an estimated 300 African elephants and was worth $17.6 million.

Rhino horns: Singapore saw its largest seizure of rhino horns in October 2022, when the authorities seized nearly 35kg of horns worth $1.2 million at Changi Airport. A South African man had tried to smuggle them to Laos.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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