Thousands of people go bust, and thousands lose their money! Nevertheless, there is a whole crowd of people willing to get everything at half price there and then with no prior research. A fool and his money soon part ways…
An interesting point is that when asked, the affected person understands the situation well: it’s impossible to open a bank account and become a signatory without personal presence in Hong Kong or Singapore. Well, everyone has to pay for their mistakes.
From time to time, our Singapore office is brimming with naive businessmen that play the victim. Some of them lost millions, however not one of them went to the police to file a report. Easy come, easy go.
Indeed, how can a person from Russia, Kazakhstan or Ukraine open an account for offshore purposes and obtain a bank token without the necessity to even step foot in Hong Kong or Singapore? In order to answer the question, one has to know a thing or two about the bank systems in Hong Kong and Singapore and the way they operate.
How is a bank account opened? The procedure is extremely simple – both the company and account are established by local professionals. As a general rule, citizens in Hong Kong or Singapore have their accounts opened shortly after submitting the relevant application to the bank. What should be noted is that the procedure implies signing a so-called mandate, depending on the offshore company’s Articles of Association. The mandate establishes who has a right to control the account, to add and withdraw signatories, and to close the bank account. A local Director therefore becomes a Beneficiary and Sole Manager of the bank account.
This offshore company with its account opened in Hong Kong or Singapore is later sold on to other jurisdictions such as Moscow or Kiev. The buyer believes he is introduced as a legitimate signatory, but has no idea that in fact he is merely given a token with the right to review and create bank transfer orders. Thinking he is the only manager of the account, the buyer can access it, creating and forwarding payments as he likes. The orders are in fact executed by another token that holds all rights and is still owned by the seller of the offshore company. So, a hapless buyer is confident he controls the account until a large amount is credited to the account of the offshore company in Singapore or Hong Kong. This is where it becomes interesting. The buyer creates and forwards a money order, a day later the order is still being processed. So the poor fellow calls a bank to find out that he is not at all a manager, rather a user with a limited scope of rights, and thus cannot be given any information regarding the bank account… Occasionally the money can be returned, not always though.
The moral of the story is that there is no point in trying to avoid local bureaucracy using any possible means. If banks consider personal attendance necessary in order to open an account, take the trip! Otherwise you risk becoming a victim of villains that can’t wait to catch another fool in their toils.