OCBC, UOB shut accounts linked to alleged US$1.4 billion nickel fraudster long before his arrest

Singapore

THE trader charged with orchestrating what police describe as one of Singapore's biggest suspected investment frauds began setting off alarm bells at banks more than a year before his arrest in February, said people familiar with the matter.

Ng Yu Zhi's unusually large cash transfers from his trading company to his personal account prompted OCBC to file suspicious transaction reports to police as far back as 2019, the sources said, asking not to be identified discussing private information. The bank shut his personal account in August 2020.

Ng's corporate account at UOB was closed more than a year before the 34-year-old was arrested, one of the sources said.

The previously unreported timeline raises fresh questions about how Ng could have maintained an alleged US$1.46 billion fraud for so long.

Even as OCBC and UOB cut ties with the trader, other banks including DBS and CIMB still had relationships with him at the time he was charged, people familiar with the matter said.

Ng continued accepting money from wealthy Singaporeans until his arrest, enticing them with purported investment gains that averaged 15 per cent a quarter.

Prosecutors and court-appointed judicial managers of Ng's companies allege that he was in fact fabricating trades and misappropriating client money to finance a US$2-million-a-month spending habit that included private-jet travel, a personal butler and nightclub outings.

All told, Ng funnelled about US$475 million from his companies - Envy Asset Management and Envy Global Trading - into his personal accounts, said an interim report from the judicial managers.

Ng's case has riveted Singapore's moneyed elite and cast a spotlight on the challenges of developing effective early warning systems for fraud even in the most advanced financial centres.

Assets under management in Singapore swelled by 17 per cent last year to a record US$3.5 trillion.

Ng, who has been out on bail, has yet to enter a plea and his lawyer did not respond to an e-mail seeking comment. "It is inappropriate to comment on ongoing police investigations," a spokesperson for Singapore's police department said.

Spokespersons at CIMB and OCBC declined to comment on Ng's accounts. Loretta Yuen, OCBC's group head of legal and regulatory compliance, said transactions that are found to be suspicious or unusual are reported to the authorities.

A DBS spokesperson said the bank maintains "robust systems" and controls to identify and report suspicious transactions. "We cooperate fully with law enforcement efforts, and this includes account freezing and property seizures," he said. "As a matter of policy, we do not comment on cases under investigation."

DBS filed suspicious transaction reports (STRs) to Singapore police on Ng's corporate accounts and was in the process of closing them before he was arrested, a person familiar with the matter said. Ng allegedly misappropriated at least US$201 million from Envy Global Trading's account at DBS, stated charge sheets seen by Bloomberg.

HSBC, where Ng had a personal account, also filed STRs between 2019 and 2020, a source said. The police later froze Ng's personal account at HSBC, people familiar with the matter said, without specifying when that happened.

A HSBC spokesperson declined to comment on Ng's accounts but said the bank has measures in place to spot suspicious transactions. A UOB representative declined to comment.

A spokesperson for Malayan Banking, which is listed in the judicial managers' report among banks that dealt with Ng's companies, also declined to comment.

The report showed no money in the Maybank account, suggesting it had been closed, although the timing was not clear.

The judicial managers have described the pattern of transactions in Ng's accounts as "highly unusual". Between July 2020 and February 2021, there were about 150 transfers a month, on average, from Envy corporate accounts to Ng's personal ones, said an interim report by the judicial managers in May.

Global banks are required by most major financial centres, including Singapore, to alert authorities to suspect activity via STRs.

These reports can help expose possible fraud but are not always easy to analyse quickly given the high volume of reports, said Oonagh van den Berg, managing director of Virtual Risk Solutions in Hong Kong, a consultancy firm that offers advisory and training services on compliance.

In Singapore alone, about 33,571 STRs were filed on average each year from 2016 and 2019, showed data from the Commercial Affairs Department, the white-collar unit of the Singapore Police Force

"Generally banks are risk-averse, and would err on the side of caution" when it comes to filing a STR, said Chenthil Kumarasingam, a partner at law firm Withers KhattarWong. "This is understandable given the rigorous regulatory oversight in Singapore."

Ng had appeared on the authorities' radar for a different reason as early as March 2020. That is when the Monetary Authority of Singapore (MAS) put Envy Asset Management on its Investor Alert List (IAL), which highlights companies that have been wrongly perceived as being licensed by the regulator.

The alert did little to deter some investors, however - in part because Ng distributed a letter from a top Singapore law firm, Allen & Gledhill LLP, expressing its opinion that Envy Asset did not need to be licensed by MAS because it was not providing a fund-management service as defined by the regulator, said a person familiar with the matter.

Ng was also honouring withdrawal requests, giving clients little reason to suspect wrongdoing, another person said. As for banks, they are not required to stop dealing with entities on the IAL.

MAS said in a response to questions from Bloomberg this month that it received "additional information" on Ng's companies between May and September 2020 and subsequently sent its findings to the police.

Allen & Gledhill said in an e-mailed reply that the firm's advice was addressed only to Envy Asset and Envy Global, and not to be relied upon by anyone else.

"We did not advise on Envy's credit standing or the suitability of its products for investors," the firm said. "We are not able to comment further due to client confidentiality."

Ng's companies had six bank accounts holding about US$7.9 million as of April 30, said the judicial managers' report.

About 86 per cent of that was in four accounts at DBS, with the remainder at CIMB. At least US$282.2 million of cash that investors gave to Ng's companies remains unaccounted for, the prosecutors have said in affidavits. BLOOMBERG