CAD reorganises and beefs up resources to combat new financial crime threats

[SINGAPORE] Singapore's white-collar-crime police - who now want to be known as the country's Financial Police - have gone through their biggest reorganisation effort in over a decade, and significantly beefed up their resources, to better position themselves to combat the new threats posed by financial crime both domestically and internationally.

The Commercial Affairs Department (CAD) of the Singapore Police Force (SPF), in their annual report out today and through an interview with The Business Times, laid out just why such fundamental changes to the department were necessary to meet the new challenges.

"As financial crime increases in scale and becomes more complex, we need to sub-specialise thematically, according to the crime concerns of the day," said CAD director Tan Boon Gin.

"The more focused we are, the more efficient we can become, not just in investigating crime, but also in crime prevention. I should add that our approach to crime prevention is much more than just public education to warn people not to become victims of crime. We want to create a hostile environment for the criminal and take away his tools."

In particular, he says, Singapore's openness as an international transport hub and financial centre exposes it to cross-border money laundering (ML) and terrorist financing (TF) risks.

"We are seeing a trend of overseas criminals seeking to launder money through Singapore bank accounts. We have tripled our financial investigation resources, with dedicated branches for international cooperation and TF, investigations into proceeds from both domestic and overseas criminal activity and serious tax crimes (such as serious fraudulent tax evasion)."

And, with financial intelligence being the first line of detection for ML and TF, the CAD has also expanded its Suspicious Transaction Reporting Office (STRO), to make it robust enough to handle the reports generated by the world's fourth largest financial centre. The STRO, which is Singapore's Financial Intelligence Unit - and the central agency here for receiving, analysing and disseminating suspicious transaction reports (STRs) - was expanded from a branch to a full-fledged division, made up of three analytical branches and one field research branch.

In addition to these cross-border risks, Mr Tan says the CAD has also geared up to combat fraud that takes place on a more domestic plane: investment and securities-related fraud - for example, insider trading and market manipulation.

"The enforcement scope of the regulated sector is set to increase with the proposal to criminalise the manipulation of financial benchmarks (proposed last year by Singapore's financial services regulator, the Monetary Authority of Singapore, following an investigation into traders involved in trying to rig benchmark interest rates). Recent events in the stock market (for example, last year's penny stock crash) also suggest an increase in the scale and complexity of market abuse.

"To gear up for these challenges, we have expanded the securities fraud branch to a full division comprising three branches, including a dedicated branch to investigate fraud where the victim is a public company," Mr Tan said.

The CAD is also staying on top of investment fraud that falls outside the reach of Singapore's financial regulators, such as pyramid schemes and commodities schemes in gold or wine which may look like financial instruments but are in fact not regulated by the authorities. A recent high-profile case involved Profitable Plots: two of its directors were jailed this month for conspiring to cheat investors in a bond scam that involved losses of some $3 million.

The complexity of such schemes - using increasingly innovative business models and multiple companies - was what prompted the CAD to create the Investment Fraud Division (which looks into the unregulated sector) during its reorganisation. The Investment Fraud Division and the Securities Fraud Division form the CAD's Enforcement Group I.

The CAD is also staying on top of issues involving the misappropriation of government funds and public donations to charities and non-profit organisations. "We have dedicated resources to combat investment fraud and public institutional fraud to improve the turnaround time for investigating these offences and speed up the recovery process for victims," Mr Tan said.

Its Enforcement Group II takes care of these cases. It is made up of three divisions: the Commercial Crime Division investigates complex and specialised commercial crime such as credit card and ATM skimming, counterfeit currency, etc; the Private Institutional Fraud Division looks into fraud involving private companies and businesses, as well as fraud committed by directors, lawyers and accountants acting in their official capacity; and the Public Institutional Fraud Division investigates fraud involving charities and public organisations.

Beefing up its resources meant a more than doubling in the number of its Commercial Affairs officers (CAOs). In the last two years or so, the CAD has hired 80 new CAOs who, together with the police officers in the department, make for a 250-strong CAD team now.

The new hires, Mr Tan says, have been deployed to the department's enforcement and intelligence divisions.

Asked what they looked for in these new hires, he said: "Sometimes, there is a misconception that the CAD recruits accountants only. While we do have a significant number of former accountants as well as accountancy graduates, we also have officers with degrees in business administration, law and economics. Our investigators do more than just crunch numbers. We also need to be comfortable with financial instruments, business models and securities regulation."

The changes throughout the department have yielded substantial results; the CAD annual report says the collective efforts have contributed to Singapore's highest ever level of money-laundering prosecutions and convictions, and the seizure of more than $115 million of suspected criminal proceeds in 2013.

As for its new moniker, Mr Tan explains: "Financial investigation and intelligence units around the world have different names and are situated in different enforcement agencies. We often have to explain to our foreign counterparts our exact function within and relationship to the SPF. Henceforth, we will introduce ourselves, succinctly and unambiguously, as the Financial Police."