Singapore’s biggest money-laundering case has links to Chinese gamblers

When police showed up at Su Haijin’s lavish apartment in Singapore one early morning in August, he leapt from his second-floor balcony. The ethnic-Chinese businessman was found hiding in a drain with broken legs. The police meanwhile arrested nine other suspects in what Singapore has described as one of the world’s biggest money-laundering cases. It has since seized or frozen more than $2bn in luxury properties, cars, gold bars and cash.

The case is part of a broader campaign by Asian governments to counter a huge surge in money-laundering linked to organised crime. This criminal tsunami has roots in illicit online gambling by Chinese punters, much of it organised in South-East Asia by ethnic-Chinese gangs. In recent years the gangsters have also moved into other illegal activities, especially online scams. Police in Australia, Hong Kong, Malaysia, the Philippines and Thailand, as well as Singapore, have recently raided casinos and scam-shops to arrest and grab the assets of those responsible.

In October, Australian police arrested seven people on suspicion of laundering the proceeds of cyber-scams, smuggling and violent crime, and seized over $30m in assets. It was the third China-related money-laundering case they had made public this year. In June police in the Philippines raided a giant online gambling firm, rescuing 2,700 people who claimed to have been tricked into working in cybercrime. China’s summer blockbuster this year was not “Barbie” or “Oppenheimer” but “No More Bets”, a propaganda film warning of the risks of being trafficked to South-East Asia to work in cyber-scamming.

The crime surge can be traced back to a corruption crackdown launched by China’s leader, Xi Jinping, a decade ago. Gambling has long been illegal in China, except in Macau, whose casinos had hitherto been exploited by high-rollers not only for gambling, but also to evade the country’s strict capital controls. Individuals are permitted to move no more than $50,000 out of China each year. By arranging to gamble in Macau through middlemen, known as junkets, cash-rich Chinese (including corrupt officials looking to squirrel away stolen loot) could move money into international bank accounts. Mr Xi’s crackdown put an end to that. By 2015, Macau’s gaming revenues had slumped by 34%. This left Chinese gamblers and capital-control cheats looking for an alternative arrangement. They found it in online gambling.

It is also illegal in China, but permitted in several South-East Asian countries, whose online casinos tend to be accessible through Chinese social-media platforms. By 2017, some of the junkets that Mr Xi had driven from Macau had relocated to the Philippines, where they were licensed as Philippines offshore gaming operators (POGOs) to run online gambling firms serving clients located abroad, mostly in China. Around half a million mainland Chinese are now estimated to work in the Philippines’ online gambling industry. That is in part because popular online games such as blackjack and pai gow poker require the dealer to speak the same language as the player. The size of China’s online gambling market was $9.9bn in 2022, according to IMARC, a market research firm.

Under Rodrigo Duterte, president of the Philippines from 2016 to 2022, the country’s online casinos were encouraged. The industry generated some $350m in taxes between 2017 and 2019, says Alvin Camba of the University of Denver, who studies Chinese capital flows in South-East Asia. At its peak it comprised an estimated 250-300 online gaming firms, mostly linked to the Chinese online gambling industry and in many cases also conduits for money laundering, according to Dr Camba. Yet even many legal poGOs, providing tax revenues to the Duterte government, were being used as a cover for other crimes, especially online scams.

This is because some legal online gambling firms that target Chinese gamblers are run by criminal gangs. And as these gangs have developed their online operations they have often discovered new avenues for criminality. It is not uncommon, in Manila or Phnom Penh, to find a licensed online gambling firm on one floor of an office tower, and a sister operation running online scams on the floor below. In recent months authorities in the Philippines have raided several POGOs accused of using “casino infrastructure as a cover to launder, move and generate proceeds of crime,” says Jeremy Douglas, head of the United Nations Office on Drugs and Crime in South-East Asia. Such recent cases have suggested the region’s illegal online gambling industry is now much bigger than the licensed industry in terms of both platform numbers and revenues.

In the Philippines, the surge in illegal activity in and around licensed casinos turned opposition politicians and public sentiment against them. The number of POGOs in the Philippines began declining in 2020, says Dr Camba. Some crime gangs shifted to Cambodia and Myanmar, where they faced fewer strictures. Between 2014 and 2019, the number of casinos in Cambodia rose by nearly 160%, according to the Office of the United Nations High Commissioner for Human Rights (OHCHR) in South-East Asia. The gangs are alleged to have trafficked thousands of people to work in their casinos and “scam compounds” in those countries.

As in the Chinese blockbuster “No More Bets”, these victims are often lured by the promise of a lucrative job, only to find themselves trapped and forced to engage in cybercrimes such as investment and romance fraud. The scam centres they work in generate billions of dollars in annual revenues, according to the OHCHR in South-East Asia. The gangs launder their profits through their legal or illicit casinos—then typically invest the proceeds in property in cities such as Singapore.

Hongli International, a company implicated in the Singapore bust, illustrates how transnational gambling firms operate. According to Chinese court documents and Chinese-language news reports, it was founded as an online gambling firm by a Chinese-born individual, Wang Bingang, in 2012. Within a few years, it had become a lucrative gambling syndicate based in the Philippines, then Cambodia, targeting Chinese punters. In 2015 Mr Wang was arrested and repatriated to China, where he spent three years in prison for operating illegal gambling websites. After his release he moved to Singapore, where he continued to run Hongli, says Jason Tower of the United States Institute of Peace, a think-tank in Washington, who studies how Chinese gambling firms operate in South-East Asia. He estimates Hongli has generated billions of dollars in profits. One of Mr Wang’s relatives was arrested in Singapore’s dawn raid. According to the Straits Times, a Singapore daily, Mr Wang is listed as a “person of interest” in the case.

Governments have woken up to this nightmare of gambling, scams and money laundering. In September the UN, China and the Association of South-East Asian Nations teamed up to counter it. Italy and Spain recently announced crackdowns on Chinese money-laundering networks. They will all struggle. Only 2-5% of money-laundering flows are intercepted, says John Langdale of Macquarie University in Australia. However hard governments try to raise that figure, the crime gangs, incentivised by their enormous profits, are likely to find new means in the depths of the internet to stay a step ahead. ■