Fine & Jail for Fraudulent GST Refund Claims and Money Laundering Charges
More than 1,300 charges brought against five
Five Indian nationals (“the accused persons”) – Karunanithi Saravanan (aged 36), Karunanidhi Rajesh (aged 32), Waithiyalingam Karunanidhi (aged 61), Kothandaraman Gnanam (aged 29), Ramaiyan Karthikeyan (aged 43) - were convicted of offences relating to fraudulent Goods and Services Tax (GST) claims under the electronic Tourist Refund Scheme (“eTRS”). They were also found guilty of money laundering offences by taking the cash arising from the fraudulent GST refunds out of Singapore. Each of these accused persons faced over 200 charges of engaging in a conspiracy to claim fraudulent GST refunds amounting to approximately $167,253. For bringing criminal proceeds out of jurisdiction, the 5 accused persons faced a total of 127 charges amounting to $112,924.
Fraudulent GST Refund Claims
The five accused persons were arrested by the Inland Revenue Authority of Singapore (IRAS) and Singapore Customs on 1 Feb 2017 for making fraudulent GST refund claims at Changi Airport. Their fraudulent schemes were exposed in a joint operation by IRAS and Singapore Customs. Investigations revealed that fraudulent claims of approximately $167,253 in GST refunds were made by the five accused persons since 2015. As part of their illegal scheme, the accused paid other customers (who were not entitled to the eTRS refund) for their jewellery invoices. With these invoices and using their passports, the accused masqueraded as “tourists” to obtain eTRS tickets from the respective shops and, subsequently claimed eTRS GST cash refunds at Singapore Changi Airport. Removing Criminal Proceeds arising from Fraudulent GST claims from Singapore
As tax crimes were designated as money laundering offences with effect from 1 July 2013, the case was also referred to the Commercial Affairs Department (CAD) of the Singapore Police Force (SPF) for further investigations into possible money laundering offences. CAD’s investigations revealed that between March 2015 and May 2016, the five accused persons removed criminal proceeds amounting to $112,924 out of Singapore. Hence, the accused persons faced a total of 127 counts of offences under section 47(1)(b) of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA), Chapter 65A, for removing cash arising from fraudulent GST refund claims out of Singapore.
Measures to Prevent eTRS abuse
Retailers that operate the tourist refund scheme are obliged to put in place safeguards to prevent abuses. In respect of the minority of retailers assessed to pose higher risks, IRAS requires that they put in place additional measures. They serve to deter fraud, and to facilitate IRAS’ efforts in fraud detection, while allowing genuine tourists to continue enjoying a seamless tourist refund process. For example, these retailers are required to install a CCTV surveillance system on their retail premises to record the eTRS tickets issuance and sale process. They must also indicate prominently on each sale invoice, whether or not an eTRS ticket has been issued at the point of sale. The measures, taken together, are aimed at deterring fraudsters from obtaining eTRS tickets using invoices purchased from local customers who are not entitled to eTRS tickets.
Zero Tolerance towards Tax Fraud, Corruption and other Criminal Activities
Singapore has always adopted a zero tolerance approach towards tax fraud, money laundering and other criminal activities. The authorities take a serious view on such fraudulent GST refund claims and money laundering activities and will not hesitate to take stern enforcement actions against these individuals and any persons assisting them. Anyone who commits the offence of wilful intent to make a false GST refund claim or, assist any other person to make such false claim faces a penalty of up to 3 times the amount of refund wrongfully claimed and a fine not exceeding $10,000, and/or imprisonment of up to 7 years. Anyone who commits a money laundering offence of converting, transferring or removing benefits from criminal conduct from jurisdiction under section 47(1)(b) of the CDSA shall be liable on conviction to a fine not exceeding $500,000 or to imprisonment for a term not exceeding 10 years or to both.
Source: IRAS, Singapore Customs and Singapore Police Force