A 54-year-old Singaporean was among three men arrested when Malaysian police busted a "black money" syndicate in Kuala Lumpur on Dec 26.
The scam is commonly associated with syndicates from Africa, said Malaysian police.
Promising rich returns, these groups dupe their victims into paying for boxes of "black money" which can be washed clean with a "special liquid".
Claiming the money to be cash smuggled out of a country, the syndicates then ship fake currency and sometimes, black pieces of paper.
The KL syndicate, which comprised two Chinese nationals and the Singaporean, operated out of a condominium unit in a posh corner of Jalan Ampang.
The three men were caught when police received a tip-off about a fight between the Singaporean and one of the Chinese nationals.
In the unit, officers found eight safe boxes and several travel bags containing RM1.7 million (S$656,000) in fake US$100 and RM100 notes.
Police told reporters that several glass bottles that contained a "special liquid" that could supposedly wash off the black coating on each note were also found.
The apartment had been occupied by the suspects since 2012 and was used to store counterfeit notes.
The three suspects had entered Malaysia on tourist visas on multiple occasions, and are suspected to have been involved in illegal activities since 2011.
Chief Assistant Commissioner Izany Abdul Ghani of the Commercial Crime Investigation Department said this was the first case which involved foreign nationals from China and Singapore.
He told a press conference on Thursday: "Usually, the suspects in such cases are Africans. We are investigating the possibility of other foreigners involved."
He added it is possible that the suspects had been operating in Klang Valley with a group of Africans since early last year.
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