Singapore authorities are stepping up their focus on combatting money-laundering and terrorism financing in Singapore. This is resulting in increased pressure on financial institutions in Singapore.
Following the closure of the Singapore branch of an international bank for serious breaches of anti-money laundering (AML) requirements, the Monetary Authority of Singapore (MAS) has announced that they are investigating numerous other banks for lapses in AML controls related to fund flows originating from Malaysia's state development fund. This comes hot on the heels of an announcement by the United States DOJ that they have frozen funds and assets which are suspected to represent criminal proceeds related to those same fund flows.
In the context of these investigations the MAS has stated that they are cooperating and sharing information with regulators and enforcement agencies in other countries and that they "will take decisive regulatory actions against any FI that has breached regulations or failed to meet the expected AML standards".
The need to have an effective regime against money laundering and terrorism financing in place was also one of the key themes in the Managing Director of MAS, Ravi Menon's speech at the MAS' Annual Report 2015/16 media conference on 25 July 2016. In that speech Mr Menon declared that the MAS will be devoting more resources to AML supervision and controls. As a part of this push the MAS has created new dedicated AML supervision and enforcement teams which are due to become operational on 1 August 2016. Another key aspect highlighted in Mr Menon's speech is the fact that the MAS has established "effective channels to facilitate international co-operation and exchange of information".
It is likely that these statements have been made partly with an eye to the Financial Action Task Force (FATF) evaluation report which is due to be published and which is expected to criticise a perceived lack of enforcement by Singapore authorities in relation to AML/CFT.
The heightened focus on AML is also likely to cause concern in the context of an increased push by foreign tax authorities to identify and re-patriate funds held in Singapore bank accounts in breach of foreign tax laws. The evasion of foreign tax laws was elevated to a predicate offence under Singapore AML laws in September 2014 which makes it a criminal offence under Singapore law to assist a person in the evasion of foreign tax laws and/or to handle proceeds stemming from foreign tax evasion.
For example, the Indonesian tax amnesty is expected to cause many Indonesian nationals or entities who have been keeping their funds off-shore in Singapore with a view to evading Indonesian tax, to come forward. This will in turn open up Singapore banks to the risk of being seen as having been complicit in concealing those funds. A similar push against tax evaders and FIs who have been keeping US related accounts is being expected from US authorities in light of the recent US summons directed at the account of a potential US tax evader held at the Singapore branch of a large international bank (see our recent e-bulletin).