SINGAPORE: Although a customer bought jewellery worth more than S$20,000 in a single cash transaction, prominent chain Poh Heng Jewellery did not report it to the suspicious transaction report officer as required by law.
The customer later turned out to be a key operative in a criminal syndicate that had defrauded SkillsFuture Singapore of S$39.9 million, and the jewellery was bought with criminal proceeds.
In the first prosecution of its kind, Poh Heng was fined S$9,000 on Tuesday (Aug 11) after its representative pleaded guilty to one count of failing to submit a cash transaction report for a single cash transaction exceeding the prescribed amount of S$20,000.
The court heard that Poh Heng, a dealer in precious stones and precious metals, was required to submit cash transaction reports within 15 days for single cash transactions exceeding S$20,000.
On Oct 7, 2017, a customer named Andy Quek went to Poh Heng's outlet at Northpoint shopping mall with his mother.
He bought two diamond bracelets, a necklace, a medallion, a chain, two pendants and an earring from Poh Heng for S$28,078.
Poh Heng issued eight separate receipts for the items, that formed a single cash transaction.
Quek paid for the items in cash that he retrieved from his bag and pockets. The amount exceeded S$20,000, but Poh Heng did not submit a cash transaction report as required under law.
MONEY USED TO PAY FOR JEWELLERY WAS FROM CRIMINAL PROCEEDS
Investigations later found that the sums received by Poh Heng were criminal proceeds derived from a S$39.9 million fraud perpetuated on SkillsFuture Singapore by a criminal syndicate, of which Quek was an important operative.
Deputy Public Prosecutor Tan Hsiao Tien asked for a fine of at least S$10,000, noting that this is the first prosecution for an offence under the relevant provision in the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act.
The cash transaction reporting regime is part of "Singapore's effort to strengthen our anti-money laundering framework", she said, and a key message should be sent that the courts will mete out a harsh punishment for non-compliance.
It will also send a strong signal to criminal syndicates against exploiting regulated dealers, said Ms Tan.
When such cash transactions are not reported, it is difficult for agencies to trace multiple transactions, she added. All the monies involved here were criminal proceeds, and Poh Heng's "failure to submit (the report) had essentially facilitated the laundering of the proceeds".
The proceeds were Government funds cheated from SkillsFuture, and this harm is "in fact the very evil that Parliament had intended to eradicate through the introduction of the cash reporting regime", she said.
Poh Heng never submitted the cash transaction report in this case, and it was not a case where it was filed late, she said.
OFFENCE OCCURRED DESPITE POH HENG'S "BEST EFFORTS": DEFENCE
Defence lawyer Terence Tan from Drew & Napier asked instead for a fine of S$4,000, saying that this was an offence "that occurred despite my client's best efforts".
He said Poh Heng had taken "great steps" to try and comply as best as it could after the introduction of the provision requiring such cash transaction reporting.
It sent out emails to its staff members informing them of the need to file such reports days after receiving word about the requirement.
Poh Heng has been in business for more than 70 years but this is its first offence.
"It is testament to their willingness and regard for the law that they are a first-time offender in 70 years of business," said Mr Tan, adding that his client was genuinely remorseful.
After discovering this particular failure to report, the company introduced "a more refined and detailed standard operating procedure, to ensure that in the future, there will be no further instances of failure to file cash transaction reports".
Further training of its employees was also conducted, in what the lawyer described as his client effectively "rehabilitating" itself.
Poh Heng also had "no knowledge of any underlying criminal purpose", and it would be "wrong for my client to be punished additionally for something it had no part in or had no knowledge of", said Mr Tan.
The prosecutor replied that "harm was still caused" despite Poh Heng's lack of knowledge that the money was from criminal proceeds.
The judge agreed with the prosecutor that general deterrence is required in this case, and that such offences are difficult to detect. While he acknowledged that Poh Heng has taken measures, the initial steps it took "weren't enough".
The company could have been fined up to S$20,000 for the offence.
Poh Heng's managing director Chng Hwee Siang told CNA in a statement after the hearing that Poh Heng has been running its business "with a strict code of conduct and ethics".
"While all employees were inducted with the company’s (standard operating procedure) SOP and policies, we believe that we are still responsible for the oversight in reporting the cash transaction in question," said Madam Chng.
"We regularly review our existing in-house regulatory measures, however since this incident we have become more vigilant and are underway in spearheading a series of best practices to ensure thorough review and audits of our SOPs and processes for all staff and branch managers so that this does not happen again."