The Monetary Authority of Singapore said it’s committed to safeguarding the city-state’s financial system from being used as a haven to harbor illegitimate funds or as a conduit to disguise the flow of such funds.
“While MAS is committed to maintaining an open financial system, it will not tolerate the use of the financial system to conduct criminal and illegitimate activities,” according to an e-mailed statement today.
The comments come as regulators in the U.S. and Europe have been cracking down on tax evasion. The Swiss government agreed in March 2009 to adopt international standards on the exchange of information on tax evaders after being accused by Germany and the U.S. of helping to shelter cheats. The policy was the biggest change to the country’s banking secrecy laws since their introduction in 1934.
“There are a number of different tax treaties going on and the MAS wanted to make sure the industry as a whole is cognizant of that,” said Deepak Sharma, chairman of Citigroup Inc.’s private banking business in Singapore, and co-chair of the Private Banking Industry Group.
The amount of undeclared money in Switzerland is estimated by some observers at between 300 billion francs ($353 billion) to 1 trillion francs, the International Monetary Fund said in May.
At the end of 2010, Singapore had $512 billion in offshore private banking assets, according to the Boston Consulting Group.
The MAS said financial institutions must continuously assess the legal, regulatory and reputational risks associated with their business and that they should be alert to tax agreements between countries before accepting any transfers.
If financial institutions have any reason to suspect that the assets being transferred are illegitimate, they should file suspicious transaction reports, and where appropriate, discontinue the business relationship, it said.
“The message for all banks and people in this industry is that you cannot run going forward,” said Justin Ong, Asia Pacific Private Banking Leader, Pricewaterhouse Coopers LLP, in a media briefing yesterday. “It doesn’t matter where you sit, the regulators will come after you.”
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