Corporate service providers often appoint nominee directors. This case shows the risk when a nominee signs bank forms declaring himself the ultimate beneficial owner of the company.
The facts
The accused acted as nominee director for companies set up by a corporate secretarial business. For three companies he was sole shareholder and director, and he opened bank accounts for them, declaring himself the ultimate beneficial owner on the account-opening forms. The real owners were the business’s foreign clients, who were never disclosed (at [3]–[10]). He acted on instructions throughout and handed control of the accounts to the businessman once they were opened (at [11]). He was convicted at trial of three charges of abetment by conspiracy to cheat two banks, and sentenced to two weeks’ imprisonment.
The appeal
- Were the declarations false? Yes. He had no substantive ownership rights and could act only on instructions, so he was not the beneficial owner (at [16], [48]–[49]).
- Was harm likely? Section 415 of the Penal Code requires a likelihood of harm, not actual harm (at [29]). Banks must identify and verify beneficial owners under the Monetary Authority of Singapore’s rules, and a true declaration is the starting point for managing money-laundering risk. A false one increased the likelihood of reputational harm, even though no wrongdoing was later detected (at [18], [43]–[45]).
- Was a conspiracy proved? Yes, by indirect evidence: his consistent actions on instruction and the similar explanations the parties gave investigators (at [51]–[53]).
- Sentence. General deterrence was the main consideration (at [56]). Financial loss from the proceedings did not mitigate (at [59]).
The appeals against conviction and sentence were dismissed.
Why it matters
Nominee directors and corporate service providers should treat UBO declarations as statements of fact for which they are personally answerable. If the true owners cannot be disclosed, the account should not be opened on that basis. Anyone asked to explain such declarations to investigators should take advice first.
Common questions
Can a nominee director sign as the beneficial owner?
No, if they have no real ownership rights and act on someone else’s instructions. The bank is entitled to rely on the declaration, and a false one can amount to cheating.
Does the bank have to suffer a loss?
No. The offence requires that the deception be likely to cause harm. The court accepted that exposure to undisclosed owners created a likelihood of reputational harm to the banks.
Akesh Abhilash is a Singapore disputes lawyer with eleven years in practice, acting in commercial, cross-border and criminal matters before the Court of Appeal, the High Court, the State Courts and international tribunals. Read his profile.