Case Law Database

Money laundering

Offences

• Acquisition/possession/use of proceeds of crime
• Conversion/transfer of proceeds of crime
• Concealment/disguise of nature/ source/ location/… of proceeds of crime

Originating Offences

• value added tax fraud

Keywords

• Proceeds of crime

Steep Rise Ltd v Attorney-General [2020] SGCA 20

Fact Summary

In 2010, French authorities investigated value added tax (VAT) fraud and money laundering in the French carbon stock exchange. The investigations revealed that B Concept, a French firm, had purchased tax-free carbon emission allowances and then sold them to French companies with tax included, thereby committing VAT fraud. The tax amount charged was not paid to the state but were laundered into bank accounts owned by companies incorporated in various countries. The accounts were owned by Mr Fabrice Touil, his siblings and other related persons identified as part of the fraud scheme. The estimated damage caused to the French government by this scheme was EUR 68.5 million in lost tax revenue.

After discovering suspicious transfers into a Singaporean bank account owned by Axcel Inc, the French Ministry of Justice sent an “International Request for Legal Assistance in Criminal Matters” dated 17 September 2014 (“the First Request”) to the Attorney-General of Singapore. France requested assistance in obtaining banking documents related to the Axcel Inc account and to Mr Touil in general and further requested the freezing of the account. The documents obtained subsequent to the request showed that all of the funds in the account owned by Axcel Inc had been transferred into the Bank of Singapore account owned by Steep Rise Ltd. Consequently, on 28 October 2015, the French Ministry of Justice sent another International Request for Legal Assistance in Criminal Matters (“the Second Request”) to the Attorney-General requesting assistance in obtaining banking documents related to account with the Bank of Singapore as well as in freezing the aforementioned account.

On 8 August 2017, the Attorney-General filed an ex parte application in Originating Summons No 898 of 2017 (“OS 898”) to restrain dealings with the funds in the account. The application was made under s 29 of the Mutual Assistance in Criminal Matters Act (Cap 190A, 2001 Rev Ed) (“MACMA”), to be read with s 7 of the Third Schedule of the MACMA. The affidavit filed in support of the application stated that the requirements for obtaining a restraint order under the MACMA were met, referring to information provided by a certificate issued by the Tribunal de Grande Instance de Paris on 22 June 2017 and an e-mail from the French authorities on 26 July 2017 confirming that judicial proceedings would be commenced in August 2017. The affidavit did not, however, refer to the requests. On 22 August 2017, the judge granted the restraint order, barring Steep Rise Ltd, Mr Touil and the Bank of Singapore from dealing with the money in the account.

On 31 August 2017, French authorities commenced criminal proceedings against Mr Touil in the High Court of Paris. The French Ministry of Justice confirmed that fact in a second certificate. The Attorney-General of Singapore adduced this certificate in OS 898 by way of a supplementary affidavit on 11 December 2017.

On the 18 July 2018, Steep Rise Ltd applied to the High Court to vary restraint order to allow to withdraw some money in order to pay for legal advice and representation. Mr Touil exhibited letters from the Singapore police demonstrating that the account had already been seized one year ago. The report on the seizure was made to the magistrate in the State Courts on 22 August 2017, the exact day on which the judge granted the restraint order.

On 3 October 2018, the appellant applied to discharge the Restraint Order.  At first instance,the Judge dismissed the application to discharge the Restraint Order.  This decision was affirmed by the Court of Appeal in its grounds of decision of 24 March 2020.

Commentary and Significant Features

In this case, the Court of Appeal of the Republic of Singapore examined the question of whether there was a requirement of a risk of dissipation when filing an application to restrain the dealings with funds on a specific bank account pursuant to a request for mutual legal assistance aiming at confiscating proceeds of crime under the Mutual Assistance in Criminal Matters Act (“MACMA”). The Court did not find that such a requirement existed under the MACMA. The Court further held that there was no suggestion that the parliament intended for the risk of dissipation to be a factor in the court’s decision to grant a restraint order. The Court analysed the United Nations Convention against Transnational Organized Crime ("UNTOC"), which was “impetus for the enactment of the MACMA”. The Court found that there was no suggestion of a need for a risk of dissipation with regards to granting a restraint order under UNTOC. Likewise, the applicant's legal counsel was not able to point to any working papers evidencing that such a requirement was featured in the UN Working Group’s discussions. The Court, hence, concluded that UNTOC did not intend grant of restraint orders to be affected by the risk of dissipation and consequently dismissed this argument.

Cross-Cutting Issues

Offending

Details

• occurred across one (or more) international borders (transnationally)

Involved Countries

France

Singapore

International Cooperation

Measures

• Mutual legal assistance

Outline

The French Ministry of Justice sent two International Requests for Legal Assistance in Criminal Matters dated 17 September 2014 and 28 October 2015, requesting assistance in obtaining documentation on and freezing of Singaporean bank accounts owned by Axcel Inc (the subject of the first request) and Steep Rise Ltd (the subject of the second request). Regarding the former, French authorities received the requested documents. Subsequent to the latter, the Attorney-General applied to restrain dealings with the funds regarding account owned by Steep Rise Ltd, which was granted by the judge on 22 August 2017.

 

Procedural Information

Legal System:
Common Law
Latest Court Ruling:
Appellate Court
Type of Proceeding:
Civil
 
Proceeding #1:
  • Stage:
    first trial
  • Court

    Court Title

    High Court of the Republic of Singapore

     

    Location

  • City/Town:
    Singapore
  • • Civil

    Description

    On 3 October 2018, Steep Rise Ltd applied to discharge the restraint order. It argued that the Attorney-General was in breach of his duty of full and frank disclosure for the following reasons: the Attorney-General failed to disclose that the French authorities’ purpose for seeking the restraint order was to “guarantee the effectiveness of a fine” and not to support a potential confiscation order; the Attorney-General further failed to disclose that any payment purportedly received by the firm in connection with the VAT fraud and money-laundering offences was approximately EUR 3 million at most.

    Steep Rise Ltd argued that the restraint order was defective and made ultra vires, since its purpose was to satisfy a fine and, hence, not within the scope of the Mutual Assistance in Criminal Matters Act ("MACMA") and that the restraint order should not have restrained more than EUR 3 million (out of the SGD 8.8 million in the account).

    Lastly, the applicant also argued that the Attorney-General failed to demonstrate a risk of dissipation of the funds in the account, since it had already been subject to a seizure order.

    The judge held that while the requests made reference to the effectiveness of a fine, the affidavit referred to the e-mail of French authorities and deposed that there were reasonable grounds to believe that a foreign confiscation order may be made and that, therefore, there was no reason to doubt the application of s 29(1)(b) of the MACMA.

    Furthermore, the judge found that since French law allowed for confiscation in the value of the payment received in connection with the fraud, the whole amount in the account would be subject to a confiscation order in French proceedings and that, hence, there was no reason to limit the restraint order.

    For these reasons, the judge found that there was no material non-disclosure by the Attorney-General.

    The judge further held that the MACMA did not require a risk of dissipation to be shown and, in conclusion, dismissed the application to discharge the restraining order.

     
    Proceeding #2:
  • Stage:
    appeal
  • Official Case Reference:
    Steep Rise Ltd v Attorney-General [2020] SGCA 20
  • Decision Date:
    Tue Mar 24 00:00:00 CET 2020

    Court

    Court Title

    Court of Appeal of the Republic of Singapore 

     

    Location

  • City/Town:
    Singapore
  • • Civil

    Description

    The applicant filed an appeal regarding the prior judgment of High Court. In its decision, the Court of appeal analysed the Attorney-General’s duty of full and frank disclosure in ex parte applications as well as the requirement to show a risk of dissipation under the MACMA.

    Regarding the scope of such duty of the Attorney-General, the Court held that there is a difference between the duty of full and frank disclosure in ex parte MACMA applications and ex parte applications in civil matters generally. The reason behind this distinction is that the Attorney-General is constrained by the information he received from the foreign authorities when pursuing requests for mutual legal assistance. The Court found that there is no duty by the Attorney-General to further inquire or investigate if all the requisite information under s 19(2) of the MACMA was provided by the foreign authority. Such requisite information includes the purpose of the request and the nature of the assistance sought, a summary of relevant facts and laws and the status of the foreign proceedings. For this reason, the Court held that the Attorney-General’s duty of full and frank disclosure to the court is limited to all material facts that are within the actual knowledge of the Attorney-General. The Attorney-General does not have a positive duty to investigate further into the facts provided by the foreign authority or to examine the strength of the case against the accused if the information provided by the foreign authority is otherwise sufficient to satisfy the MACMA requirements. However, if the Attorney-General becomes aware of any facts that might cast doubt on the application, such information should be shared under this duty.

    The Court also examined the question whether the duty was in fact breached by failing to share that at least one of the purposes of the requests was to secure the effective payment of a fine if Mr Touil was convicted. The Court pointed out that the purpose of restraining the dealings in the account was also to “pave the way for an eventual confiscation of the proceeds of the fraud and money-laundering offences”. The Court found that if both purposes remained active at the time of the application, the existence of them should have been disclosed. However, in this case the Court came to the conclusion that the restraint order was sought for the sole purpose of confiscation by the time of the application in 2017. The conclusion was based on the first certificate from the Tribunal de Grande Instance de Paris dated 22 June 2017 which confirmed that judicial proceedings would be instituted in France for the purpose of confiscating the proceeds of crime. For this reason, the Court held that the Attorney-General was under no obligation to inform the judge that the initial request may have suggested another purpose as this was no longer the case.

    Regarding the issue of whether a risk of dissipation must be shown, the Court held that the MACMA itself did not state that a risk of dissipation was a requirement to be satisfied before the High Court could grant the order. The Court went on to state that the structure of the MACMA shows that the Attorney-General should assess the need for and the importance of a restraint order and that once an application is made, the Court may not refuse the grant on the basis that there is no risk of dissipation. Finally, the Court distinguished the authorities referred to in the English cases that the applicant relied upon to support the requirement for a risk of dissipation.

    For these reasons, the Court dismissed the appeal and awarded costs fixed at SGD 40,000 to be paid by the appellant to the Attorney-General.