Singapore, December 2023 – Two Singaporean men have been sentenced to jail after acting as nominee directors for more than 100 shell companies, whose bank accounts were used to receive nearly S$20 million in scam proceeds.
Case Overview
Bernard Chng Kok Leng and Tay Chee Seng, both aged 49, pleaded guilty to failing to discharge their duties as company directors.
On November 30, 2023, the court sentenced Chng to six weeks’ imprisonment and Tay to four weeks’ imprisonment.
Both were also disqualified from serving as company directors for a period of five years.
According to case facts, in mid-2020, both men responded to advertisements for nominee directors and contacted a corporate service provider, Interconnect Consultancy. They later visited the company’s office for an interview.
Subsequently, Chng became a nominee director for 52 companies, and Tay for 57 companies.
Investigations revealed that aside from providing their personal particulars, the two had little knowledge of the companies’ operations or financial activities.
The companies under their names were later used to receive and transfer scam proceeds totaling close to S$20 million.
The court emphasized that both men failed in their fundamental responsibilities as directors, resulting in their companies being used as vehicles for money laundering.
The Need for Strengthened Compliance in Nominee Director and Client Management
This case highlights the critical importance for Corporate Service Providers (CSPs) to not only manage nominee directors responsibly but also to conduct stringent Anti-Money Laundering (AML) due diligence on clients.
Key compliance practices CSPs must adopt include:
- For Nominee Directors:
- Conduct comprehensive background checks and provide clear risk education.
- Continuously monitor the business activities of companies linked to nominee directors.
- For Clients (Beneficial Owners):
- Carry out full Customer Due Diligence (CDD) and, where necessary, Enhanced Due Diligence (EDD) on ultimate beneficial owners (UBOs).
- Stay vigilant towards high-risk clients and suspicious transactions, refusing services if red flags emerge.
- Maintain ongoing monitoring to ensure client companies are engaged in legitimate activities.
Using a certified compliance platform like AlgoCandy’s Singapore AML/CFT & KYC Compliance Platform greatly enhances CSPs’ ability to meet regulatory obligations by offering:
- In-depth client and UBO background screening
- Real-time suspicious transaction monitoring
- Sanctions list and PEP screening
- Dynamic risk assessments and auditable compliance reports
In today’s increasingly stringent regulatory environment, superficial compliance is no longer acceptable.
CSPs must adopt robust, substantive due diligence practices to protect nominee directors, safeguard their businesses, and uphold Singapore’s financial integrity.
