A Singaporean man, Zheng Jia, has been ordered to pay a fine of S$8,500 for his role as the nominee director of two companies involved in a complex money laundering scam that involved multiple companies and large sums of money. Zheng, a director of over 380 companies in Singapore, pleaded guilty to failing to exercise due diligence in his directorial duties and abetting another individual, Er Beng Hwa, in similar offenses.
Er, then a jobless Singaporean, was paid to be a nominee director for 186 companies, some of which facilitated the laundering of funds obtained through scams. In a separate case last year, Er received a fine of S$4,000. Zheng, originally from China and a Singapore permanent resident, provided accounting and corporate secretarial services through three companies: Atoms Global, Zhuoxin Global, and Panasia Secretarial Services.
Zheng expanded his incorporation services into the Chinese market by establishing a branch in Shenzhen. Prospective clients would approach Panasia Secretarial Services to incorporate a Singaporean company. To fulfill the requirement of a local resident director, Zheng would register himself as the director and corporate secretary of these companies. However, he claimed no involvement in the companies’ business activities and required clients to sign engagement letters stating that they would not engage in illegal activities. Despite this, Panasia Secretarial Services played a crucial role in facilitating the money laundering scam.
Despite taking these measures, Zheng failed to conduct thorough checks to ensure the companies were not involved in illegal activities. Between 2019 and 2020, Zheng charged Chinese clients between S$1,000 and S$1,400 yearly for each company registered while earning a monthly salary of S$10,000 to S$15,000.
In collaboration with Zheng, Panasia Secretarial Services, he incorporated Ocean Wave Shela in May 2020. Initially involved in manufacturing clothes and household appliances, the company transitioned to wholesale clothing and footwear. Ocean Wave Shela opened a bank account with United Overseas Bank (UOB) in Singapore, with another director named Zhong Haibo as the authorized signatory. However, Zheng provided his identification document when opening the account.
The illegal activities came to light when an American company transferred US$64,630 to Ocean Wave Shela’s UOB account in October 2020, falling victim to a business impersonation scam. The funds were subsequently transferred to a bank account in China. Zheng ceased acting as a director of Ocean Wave Shela when police investigations began.
Investigations revealed that Zheng held directorship appointments in 384 companies, while Er was registered as a director for 186 companies. Prosecutors sought a jail term of four to six weeks for Zheng, highlighting the need to deter business models that undermine regulatory frameworks in Singapore.
During the trial, Zheng’s defense counsel argued that he had not completely disassociated himself from Ocean Wave Shela’s affairs, as he had requested financial documents from the Chinese director. The defense sought a fine of S$5,000 to S$8,000 or a jail term of one to two weeks.
Ultimately, Zheng was fined S$8,500 for failing to exercise due diligence as a director. This hefty fine, coupled with the damage to his reputation and potential loss of business, is a strong reminder of the importance of upholding regulatory standards and preventing illicit financial activities within companies.
