Quora Answer: Does Accrual Accounting Make Money Laundering Easy?

The following is my answer to a Quora question: “Does accrual accounting make laundering money easy?”

Accrual accounting records revenue and expenses when they occur, not when cash changes hands.  A sale gets booked the moment the invoice is issued, regardless of when the customer pays.  This is the standard method used by most companies, because it matches income to the period it was earned in, rather than the period the bank account happened to move.

Accrual accounting can be manipulated for layering and placement of illicit funds.  That does not make it any better or worse than any other accounting method for money laundering purposes.  The real trick in laundering money is beyond the accounting system.  It is the act of creating a plausible reason for the funds to exist in the first place, a step that happens before any accounting method gets applied.

A cash-intensive business works because there is no paper trail behind the transactions.  In that case, the accounting method used is irrelevant, since the underlying cash movement was never properly documented to begin with.

A Real Case Showing the Accountant, Not the Method, Was the Vulnerability

Ng Mann Shin, then 39-year-old former accountant and finance officer, was sentenced to six years and three months’ imprisonment in October 2025 for criminal breach of trust and money laundering offences.  He held internet banking tokens for the OCBC accounts of five companies he served, including Mr Shopper Studio Pte. Ltd., alongside direct access to Xero, the accounting software those companies used to record their own transactions.  He was convicted of falsifying electronic records under Section 477A of the Penal Code, alongside transferring property representing criminal proceeds under Section 47(1)(b) of the CDSA.  A further eighteen charges of criminal breach of trust, converting criminal proceeds, and falsifying records were taken into consideration at sentencing.  The vulnerability here was never the accrual method Xero applies by default.  It was a single individual holding both banking access and the software recording those transactions, with nobody independently checking whether the two matched.

The Construction Project Example

Buying into a failing construction project offers another route.  Ang Lye Soon, a 59-year-old sole proprietor of an engineering company, was sentenced to 30 weeks in jail in October 2023, after pleading guilty to five counts of forging invoices worth over S$1 million.  He received S$24,000 for his role.  He was the latest of twelve individuals charged in 2021 over a scheme that siphoned S$9.7 million from Civil Tech Pte. Ltd., a construction firm, after former employees identified an opening the company’s own internal controls missed.  The Corrupt Practices Investigation Bureau had been tipped off as early as 2017.  Forged invoices, not the accounting method recording them, moved the money.

Singapore’s Current Legal Framework

The Institute of Singapore Chartered Accountants issued Ethics Pronouncement 200, revised 1^st June 2023 and effective from 1^st July 2023, adopting the anti-money laundering and countering the financing of terrorism requirements set out in the Accountants (Prevention of Money Laundering and Financing of Terrorism) Rules 2023.  Every ISCA member must comply, and failure to do so can trigger an investigation by ISCA’s Investigation Committee.  The Accounting and Corporate Regulatory Authority adopted EP 200 as well, applying it to every public accountant and accounting entity registered under the Accountants Act.

The Financial Services and Markets Act 2022 became fully operational from 31^st July 2024, migrating Singapore’s AML and CFT framework away from the older Monetary Authority of Singapore Act 1970.  A financial institution can now be fined up to S$1 million for contravening MAS regulations issued under this Act.  A company itself could face criminal liability for money laundering, even without direct involvement, if its officers had reasonable grounds to suspect the funds were criminal proceeds and the company failed to act, carrying corporate penalties of up to S$250,000 per charge alongside possible director-level prosecution.  The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) remains the underlying criminal statute, and the 2024 Anti-Money Laundering and Other Matters Act amendment removed the earlier requirement to prove a laundered sum traced back to a specific, provable predicate crime.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code