SINGAPORE: A Singaporean man who ran a business offering corporate services to clients mostly from China became the director of 980 companies.
On Dec 18, Xie Yong, 37, was sentenced to four weeks’ jail and fined $57,000 after he admitted to failing to exercise reasonable diligence in the proper discharge of his duties with two firms.
He pleaded guilty to a total of 18 charges under the Companies Act.
Deputy Public Prosecutor Janice See said Xie holds a master’s degree in professional accountancy from University College London in Singapore.
In 2013, he incorporated a company, Tox Technology, which he later renamed DD Corporate Services.
Xie was the director of the company. It started offering accounting and corporate services in 2019, including the incorporation of companies in Singapore.
“The accused was familiar with the duties of a director of a Singapore incorporated company, including the need to exercise reasonable diligence in the discharge of his duties as a director,” said DPP See.
Initially, DD’s clients were local companies, but Xie decided in 2020 to expand his reach to China and advertised his company’s corporate secretarial services on a Chinese online forum.
Following that, multiple Chinese agents contacted DD requesting the company’s services.
Xie charged his clients $700 for providing “nominee director” services, corporate secretarial services and a registered company address. If a bank account was required for the company, he would charge between $100 and $150 more.
From 2020 to 2021, for companies he incorporated for his clients from China, Xie would register himself as corporate secretary and director to fulfil the statutory requirement for a locally resident director.
The clients were registered as directors and shareholders, with their firms using DD’s business address.
Xie would get the clients to sign an indemnity agreement stating that they would not engage in illegal activities; that he would not be involved in the companies’ business; and that he would not be liable for anything to do with the companies since he was not involved in their business.
Apart from a simple online search to see if the clients were linked to criminal investigations, and checks on a Chinese website to see if their passports were valid, Xie took his agents’ words at face value.
He later admitted that he was not aware if his agents did any independent checks on the clients they referred.
“For his part, he also did not pose questions to the agents about their clients’ activities, as he knew that they would not be able to answer his questions,” said DPP See.
Some time in February 2020, Xiao Weian, a Chinese national, was referred to Xie as a client.
On Feb 25, 2020, Xie incorporated a company, Wei Hui, which was purportedly engaged in the retail of bags, luggage and travel accessories.
The directors of Wei Hui were Xie and Xiao.
Xie understood that Xiao wanted to incorporate a company to get a bank account to circumvent foreign currency restrictions in China. He agreed to assist in setting up the bank account for Wei Hui.
In October 2020, an American company, Armor Survival, fell prey to a business impersonation scam and was cheated into transferring a total of about US$1.5 million (S$2 million) to Wei Hui’s bank account.
The sums were later dissipated through outward transfers. Police reports were lodged in Singapore over this case.
Investigations revealed that Xiao had not entered Singapore and that Wei Hui’s bank account was opened through exploitation of local banks’ remote account opening processes.
These permitted Know-Your-Customer processes to be done via videoconferencing during the Covid-19 pandemic.
Some time before May 2020, Xie became aware that he had been blacklisted by local banks in Singapore when it came to opening bank accounts for his clients.
He noticed that if he was listed as a director of a company he incorporated, the banks would reject the application to open a bank account.
He did not know why he was blacklisted and did not find out, but instead decided to get other people to stand as director for the companies he had incorporated for his clients.
Xie got to know a 51-year-old Chinese national and Singapore permanent resident named Lan Fang, and asked her to act as a “nominee director” for companies DD had set up for its clients, offering her $50 per post.
A company called Aurora Free Trading set up with Lan as nominee director was used to launder money from a scam targeting an Australian company and a 48-year-old Singaporean woman.
Investigations revealed that, as at January 2021, Xie was a director of 980 companies in Singapore, of which 831 were active and current appointments.
Lan was registered as a director of about 100 companies.
Corporate service providers were in the spotlight recently owing to Singapore’s biggest money laundering case involving more than $2.8 billion in assets, including properties, luxury cars and cash.
The Straits Times reported in October that a number of Singaporeans who helped set up firms for individuals linked to the case have started removing their names from the companies, amid an investigation by the Accounting and Corporate Regulatory Authority. - The Straits Times/ANN
