Spend a vision with me: June 2024

Sunday 30 June 2024

(A)ML: is it worth it?

I worked in banks for a while, as an employee and as a consultant, and one thing the banks make sure you are aware of is Money Laundering. Money Laundering is something all banking employees are tested and reminded of.

But for what?

A little piece of interesting news, most of the people involved in the multi-million money laundering case in Singapore surrendered 95.5% of their assets and got sentences of under 2 years in Singapore jails (1), no financial penalty (assuming assets were ‘illegally obtained’), short jail term. So, it doesn’t seem it’s a big deal, right?

What actually is the problem with money laundering?

First, let’s take a step back. This blogpost was motivated by the recent multi billion money laundering case in Singapore.

A recent article entitled “the banks that hold most money in Singapore’s largest Money Laundering Scandal“ (2) shows the extent that banks in Singapore, not only the big 3 local banks (UOB, DBS, OCBC) manage bank accounts of the people found guilty of money laundering (49.6M, 29M, 22.4M), but also large international banks such as Credit Suisse, CitiGroup, (79.6M, 79.3M).

Credit Suisse is not a stranger to money laundering (3), the case of Bulgarian cocaine with the judge commenting that “the company could have prevented the infringement if it had fulfilled its organizational obligations” and yes, Credit Suisse is now owned by UBS, but UBS is not that vigilant regarding money laundering either (4). As for CitiGroup, this again would not be the first time (5).

The local banks were involved in the 1MDB and wirecard scandals (6)(7).

So, banks have been involved in Money Laundering, again and again.

Millions are spent by banks yearly to buy, maintain, upgrade their Anti Money Laundering (AML) systems. It is a very very lucrative market to be in. Free Money once you get in, since in most cases, banks are forced to show their AML capabilities to regulators, and having a shiny AML system is something most regulators would not question.

The Singapore case

The first thing that came to my mind when I read about the case was, how on earth did the great AML systems not pick these as possible money laundering cases. Do you see a pattern among the cases? And more importantly, even before knowing some of these people are involved in “interesting” activities, don’t you find it a bit weird and worth a second look? One early article focused on this aspect “”(8)

“Ten people of Cypriot, Turkish, Chinese, Cambodian and Ni-Vanuatu nationalities were charged on Wednesday (Aug 16) night after police conducted simultaneous raids across Singapore as part of a probe into money laundering and forgery offences.”

And to add to this, another piece of news from Singapore about someone also belonging to the same very specific demographic group, this time about someone who created malware that infected many computers and caused large losses (9)

“The DOJ said that Wang, who also holds a St Kitts and Nevis citizenship, allegedly received US$99 million from cyber criminals who tapped his network from 2018 to July 2022.”

Now you can say that the world is now so open, having multiple nationalities, even for Chinese citizens is not a big deal, but is it?

China does not recognise dual nationality, according to the Nationality Law of the People’s Republic of China (10) which clearly states:

Article 3: The People’s Republic of China does not recognize dual nationality for any Chinese national

Everyone in Singapore knows of rich Chinese nationals who took up Singaporean nationality such as the bosses of Hai Di Lao (11), TsingShan Holdings (12), SEA holdings (Shopee is a subsidiary) (13) and their families. However, with all due respect, having Singapore as Nationality and say Vanuatu (14) are 2 very different things.

Why don’t sophisticated AML models used by these large banks fail to flag rich Chinese nationals having multi million dollars in assets but with ‘exotic’ passports.

Even if this may be a relatively recent phenomenon, and AML models, being trained on past data may take a while to pick up this characteristic (ahum…), you would have thought humans would take a deeper look into the sources of income of these people during the Know Your Customer (KYC) that is compulsory when accepting new customers, and their transactions. But, in the case of the Singapore based money launderers, they were allowed to purchase many properties easily, avoiding all AML models and human oversight (if any).

AML Models as a shield

And that’s the second thing, do banks use AML models as a shield? so they only get into minor trouble when money laundering is discovered? “Hey, check out my shiny AML model Regulator, it cost me millions, I am doing what I can in terms of AML”. After all, these money launderers must have paid hefty fees to banks while moving their millions, and buying their properties.

As far as I have seen, the only person who got into trouble related to transactions of the Money Launderers are the property agents, with one fined $4000 (15) which is likely a minor portion of what that agent earned on these cases. But there is noise about the rot going further into private banking sector, although no action has been taken yet (16). The only agent who faced the law seriously, was found to have behaved above board in the real estate transaction although her issues were unrelated (17).

To reiterate, getting involved in Money Laundering is no biggie, jail terms and financial wise

So, not only do the perpetrators of money laundering get minor jail sentences, for reference, 4 Vietnamese nationals who shoplifted items of 60,000 times less value, including a pregnant woman, were jailed more than 20 months each (more than the longest jail term for the money laundering) (18), and I am pretty sure the clothes shoplifted were restituted since these foreigners were caught while still in Singapore.

Should you be surprised?

No. Actually I didn’t think about it before, but money laundering is not something that serious, as the sentences showed.

I will go further… My brother told me “you think like a criminal” when I told him this, but, it is a risk worth taking. Imagine, even 1pct of SGD3b is still SGD30m... if I have this stashed somewhere, I will go there and enjoy cold sakes in summer and warm sakes in winter until my sunset.

To add to this, please note that at least 1 of the men sentenced went to Japan after release from jail in Singapore(19), it is highly unlikely they are wanted for anything in Japan.

Think about it.

Who were the victims of the money laundering?

- The previous owners of the properties/assets purchased got to keep their funds from laundered money

- Real estate and other agents who facilitated transactions usually got small fines (for reference a real estate agent may be charges 2% commission; for a SGD4,000 fine that would break even at a property worth SGD200,000.

- Banks get to sell the assets mortgaged and recoup their loans and do not have to return their transaction fees

- Bankers keep their bonuses

- Even the government made via duties, fees, and taxes (whether directly or indirectly)

I don’t see anyone in Singapore worse off.

So we are back full circle.

What is the problem with money laundering?

Referring to the Singapore multi billion dollar case, presumably, the issue is the source of the funds these people brought into Singapore. The people somehow made Singaporean entities believe (ahum…) these were from legitimate means, but they were not.

Money Laundering is a possible symptom of non legal activities having taken place. A possible tail-end part of a chain of transactions, one of which was possibly illegal.

The real problem is the presumably illegal transaction that generated the money to be laundered. Money laundering basically means taking money that is not registered in the legal economy and making it legally registered so that it can be used. The trick is that the amounts are huge; we could easily launder a few thousand dollars by living our normal life in a year, but if it was a million it would be harder, hence the need for large transactions, property, investments…

But the fact is, the laundering itself, doesn’t seem to harm many. It is the failure to detect and stop the illegal transaction themselves (that possibly cause harm such as adulterated drug dealing, scamming( Around 45,000 Singapore scam victims lost $600m last year(20)), gun and weapons dealing (ahum…interestingly Singapore has managed to cut trade of weapons to Myanmar (banned) by 90% recently (21))) that are the issue. The failure to stop these demonises money laundry, it is an easy way out.

What to do regarding money laundering then?

Radically, allow all transactions 😊, then there will be no need to launder, all transactions can be taxed appropriately (ahum… there really seems to be something lodged in my throat…) and nobody worse off. However, this is quite impractical.

The key is to first decide whether money laundering is really such a big deal.

From the example above, it seems that money laundering is not as bad as shoplifting. If that is the case, then there should be less focus in banks and financial institutions around money laundering, and money should be spent elsewhere. Since many banks getting involved in money laundering, and even more than once and/or over a period of time, and their business does not seem to suffer much, there is no incentive for them to do something about it, and spending on ‘state of the art’ AML systems is just a waste of money, especially when humans are kept out of the loop, whether willfully or not.

If money laundering is seen as worse than shoplifting, then the whole penalty set should be increased accordingly for people who actively launder money, and people and organisations that enable them such as real estate companies, private banks… A slap on the wrist of the people on the ground is obviously not sufficient.

A few days ago, the Monetary Authority of Singapore updated AML guidelines (22). Personally, sorry for being cynical, I do not think that this incentivises financial institutions to really do something, it is more of an advisory nature, neither carrot, and especially not a stick to change behaviour. At most there are more areas for AML software companies to sell their wares.

As a rough guide, in 12 months of 2022-23, Singapore financial institutions spent more than SGD7.5B 'to fight crime and meet regulatory obligations' (23)

Update:

The people found guilty of the SGD3B money laundering case used Family Offices (Offices that basically only manage a family's financial affairs, these do not fall under financial regulator (MAS) purview), and they even got tax breaks. (24) These tax breaks will not be clawed back.

Thursday 13 June 2024

Data Culture: why NCS servers being accessed by fired employee multiple times over 3 months is scary

If you had a place where you kept your barang-barang/bric-a-brac/bits-n-pieces, even detached, would you keep it unlocked/unlatched while latching and locking the rest of your home?

I was actually planning a blog on the multi-billion-dollar money laundering case in Singapore, when this piece of news came out in the open, the case of the disgruntled NCS employee. Laundry can wait.

Some facts as they have been released (1)

Background

1 NCS (2) is owned by Singtel group

2 NCS focuses on applications, cybersecurity, infrastructure and engineering

3 NCS serves corporates, Telco (since is owned by Singtel) and more pertinently Government. In fact, up to 66% of NCS $2.7B revenue was from government (3) and as recently as this year NCS was still focused on government (4)

4 Singtel is also a major player in GXS bank, together with Grab.

Mr Nagaraju

5 Mr Nagaraju was employed by NCS from November 2021

6 Mr Nagaraju was fired by NCS in October 2022, with an effective last day of Nov 16 2022.

7 Mr Nagaraju went back to India

8 Between Jan 6 2023 and Jan 17 2023, Mr Nagaraju accessed NCS servers using Administrator privileges 6 times.

9 Mr Nagaraju found a new job in Singapore in February 2023 and came back to Singapore, living with an ex NCS colleague

10 He used the “wifi” and accessed NCS systems again in February 2023

11 In March 2023, a full 3 months after he had been fired, Mr Nagaraju accessed the NCS systems 13 times and deleted some virtual servers.

12 Mr Nagaraju was arrested in April 2023

13 He was sentenced to 2 years and 8 months jail

14 NCS apparently made a loss of SGD918,000.

The press reaction

Mainstream media is portraying this case as a disgruntled ex-employee causing almost SGD1m damage to the ex-employer. This misses the point.

Assuming 66% of NCS revenue came from government, that’s $1.7B that the government has paid NCS in 2023 for services. Hence a lot of data that pertains to Singapore residents, likely including Personally Identifiable Information, is kept in systems possibly built (infrastructure and engineering), managed (applications) and secured (cybersecurity) by NCS. This should be the story.

I am sure some people will argue that the systems that Mr Nagaraju had access to were not government systems but systems internal to NCS. Yes, but so what? If you cannot keep your own house in order, how can you help keep someone else’s? What type of governance does NCS have on it systems?

Think about it:

1 Mr Nagaraju accessed systems after he was fired, the HR system is likely not to be properly integrated with the other systems. Also note, he was fired, he did not resign voluntarily. This is really weird because in a previous project I was involved in, we did have to integrate with an HR system to control accesses systematically.

2 He accessed systems from India even. Hence there is no geographical restriction as to who can access NCS systems. While this is a good thing to allow employees to work from home or take care of emergencies, there should be some monitoring taking place, not a half-yearly review after the horses have bolted.

3 It is not mentioned whether he used an NCS device or his own personal device from India to access the systems; personal devices can be secured and 3 months is past most cases for reviewing accessed for personal devices. If he had an NCS laptop, again, the processes to secure the devices failed, and the device access was not cut.

4 He had admin powers and admin credentials. Either, again, his ID’s access to systems was not terminated, not something new. You would have thought lessons would have been learnt. Or it was a shared ID and password, a major no-no in the IT world. Basically NCS controls and governance on IDs and passwords and accesses were severely lacking. Not that I am saying NCS was the IT vendor, but even in 2017 the AG reviewed 2 critical government services (Ministry of Defence MINDEF, and Ministry of Manpower MOM, and Singapore Customs) and found similar lapses in IDs (5)

In brief, this case shows how bad the controls of NCS were. And I think it is legitimate to ask how likely this culture has affected the projects for which they earned around SGD1.7B in 2023 from the government.

I am sure nobody in SG has forgotten about the IHIS/SingHealth issues where even the then PM’s data was searched (6).

To me, focusing on close to SGD1M ‘losses’ to NCS is a red herring. And I would like to ask, isn’t NCS aware of back-ups? Apparently NCS only discovered the servers missing when someone tried to log into one of them the day after Mr Nagaraju deleted it. SGD1M worth of damage, I would find it hard to believe unless there are no back-ups. That would be another horror story on how NCS managed its servers.

Conclusion

I think it is important to understand that the real story is not the SGD1M NCS supposedly lost, but the fact that their governance, processes and security practices leave much to be desired.

It's all about culture: is securing your company's assets in your blood?

Data is crucial, especially when more and more government services are moving online. We trust certain organisations to keep our data safe, and they choose vendors who, we hope, will do so. Personally, when I see a major vendor for these government organisations having a loose data culture, I fear for my data.

Sunday 9 June 2024

Thinking Analytically: the case of Mr Shariff Uddin

I mentioned to someone recently that I believed analytics is an application using tools of a way of thinking. To think analytically is something that can be learnt/taught, and once you have that, tools don’t matter that much; hey you still need to know what questions to ask GenAI, no?

To give an example, I look at the case of Mr Shariff Uddin, a Bangladeshi author who was living and working in Singapore and recently left Singapore under less than clear circumstances.

Who is Mr Shariff Uddin?

Did you know that someone on a work permit authored (1) a book about his experiences as a work permit holder in Singapore, and won the prize for non-fiction in Singapore (2)

A fascinating, challenging and truly important book. Not only do we now at long last have access to the most sustained and authentic narrative and record of life and work as a Bengali migrant in 21st century Singapore, but also a genuine work of art in its own right. Sharif is an unprecedented and crucial voice in Singapore writing: perceptive, joyful, critical, constructive. With his characteristic modesty, he has something of moment to tell us and he does so from the heart beautifully.

– Richard Angus Whitehead, Lecturer, English Language and Literature Department, National Institute of Education

Mr Uddin has left Singapore. The aim of this blog is to explore his case using data-driven lens, and see what you think is the issue.

Background on the case

Things started falling apart early this year while Mr Uddin has been working in Singapore for 16 years. His employer started receiving threats from loansharks alleging Mr Uddin had borrowed money from them and failed to repay the debts.

From threats at the work place, things escalated to informing the other tenants of the work place, and eventually also to the home of the business owner and even to the business owner’s sister. (3)

There have been a few controversies in this case. The most interesting one was that Mr Uddin argued that the police and/or the Ministry of Manpower advised his employer to terminate his employment, as stated in his termination letter

“under police and MOM officer advice ... because of the troublesome bring along from your loan shark issue for us”(4)

Something the authorities vigorously denied (4). It turned out, something that is not contested, that the police officer whom the business owners talked to at Geylang Police Post as per this official Facebook post (5) “The officer, out of concern for her family’s and her well-being, also advised her generally that harassment would usually stop after the work pass of a foreign worker being harassed had been cancelled, and the worker no longer worked for the employer.”.

There has been some confusion whether the lady involved was the sister or daughter of the business owner was the person involved, as you can see the MoM refers to daughter (5) but the business owner says sister (3).

And importantly, the Police investigation found no evidence that Mr Uddin borrowed anything from loan sharks, hence the harassment was totally unfounded as Mr Uddin had been saying all along - Investigations eventually concluded with the authorities finding no evidence that Mr Sharif had borrowed money from unlicensed lenders. -(3)

I am not a social crusader so what does this case have to do with data?

What data?

Data does not mean just things on a spreadsheet, but pieces of information

Mr Uddin’s details (presumably including his work permit number and employer) were used to obtain a loan from a loanshark
the loan shark decided, as per usual practice, to harass the debtor where he/she can be damaged, here the place of employment
they went further by informing other tenants
they went even further and obtained information on where the sister of the employer lives, and caused harassment there. This is important, it is not the employer’s home but the sister’s.
Mr Uddin was terminated by his employer
Mr Uddin found a new employer who also received threats and as per the reports (3) only the first employer and MoM were aware of this new job offer
Mr Uddin found no other suitable alternative employment
At the expiry of his extended pass, he left Singapore.

Who dunnit?

This is kind of the information we have, so now the question is what is likely to be the most likely interpretation?

Mr Uddin took a loan from a loanshark and fed the him/her information, he is responsible
Mr Uddin took a loan from a loanshark with long arms and was hell bent chasing Mr Uddin out.
One or more people with access to government systems leaked information
Mr Uddin’s employer wanted Mr Uddin to leave Singapore

Actually…

Actually, I have no idea which is the correct interpretation, but I have a fairly good idea how this can be resolved. Since it is common for loansharks to obtain photocopies of NRIC/FIN/WP in order to give a loan, all parties have some reason to have access to the data.

The keys are

- Address of the sister of the employer; the employer claims it is via her car plate number (LTA system)
- Details of new employer of Mr Uddin

I have no clue who has access to what data in the government systems. In a nutshell:

MoM databases should hold data related to employees and people on various passes in Singapore, and data on the change in the passes.
ACRA should have access to directorships, including directors’ addresses, but not family members details.
LTA should have access to car owners’ data, and that includes vehicles owned by both individuals and corporations and as such some information on company directorships, but not comprehensively.
The Police force database should have access to multiple databases, or even copies of their data such as ICA who controls identity of everyone in Singapore

I assume that information is siloed, but even if it is not, access to information should be on need to now basis. And since this is considered PII, should fall under PDPA (although the government if exempted (6)), and at the very least all data requests for PII information should be logged and thus traceable.

Hence, to resolve the issue and find some justice for Mr Uddin, all that is required is the logs for say April onwards for the agencies above and understand who made requests for

New employer of Mr Uddin
Address of the sister of Mr Uddin’s previous employer

These 2 pieces of information should suffice in resolving the issues.

It is not rocket science, it is basic analysis.

Conclusion

There are 2 conclusions:

The case is closed, but to me some grey areas remain. They may not be of help to Mr Uddin, but intrinsically I believe it would be important to know what data in the various agencies has not been misused without detection.

It’s not very difficult to think of simple things analytically, is it?