Preparing for the new regulations, which were announced in October by the Monetary Authority of Singapore, has been “an unrelenting slog” for Singapore’s banks over the past six months, according to a story in the Straits Times this morning.
“The effort has involved updating IT systems, training staff and scouring through client accounts,” it said.
“It has been hard work – the biggest such operation they have had to undergo in years – but the banks say they are ready.”
The new regulations were described by MAS, when it unveiled them in October, as being part of its “ongoing efforts to protect the integrity and reputation of Singapore as a trusted international financial centre”.
They are taking the form of updates to Singapore’s Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act.
As part of the new rules, Singaporean banks, from today, will be required to assess the tax risk of all individuals who are seeking to open an account, and ensure that the money they are depositing with the institution are not proceeds from tax evasion.
The new law takes effect less than two months after Singapore unveiled a raft of measures aimed at making it easier for the city-state to share information with other jurisdictions about individuals under investigation for tax evasion.
Other measures being taken by Singapore include extending its Exchange of Information framework, in accordance with the internationally-agreed standard, to all of its existing tax agreement partners; signing the Convention on Mutual Administrative Assistance in Tax Matters; and allowing the country’s Inland Revenue Authority to obtain bank and trust information from financial institutions without any longer having to seek a court order first.
The country has also said it will conclude an Intergovernmental Agreement (IGA) with the US in order to enable Singaporean financial institutions to comply with the Foreign Account Tax Compliance Act.
Financial institutions told to ‘review accounts’
In the run-up to today’s implementation of the new tax evasion law, Singapore’s financial services institutions had been told to review the accounts of existing clients whose client profile may have suggested they could be a potentially "high tax risk" individual.
Banks are also being told they will have to complete a review of all remaining client accounts by 30 June, 2014.
"If they come across any potential tax crimes in these reviews, they will have to file regulatory reports with the MAS and decide whether they want to continue the relationship with the client,” the Straits Times reported today.
In outlining its strategy for "significantly" strengthening its international tax cooperation framework in May, MAS chairman Tharman Shanmugaratnam noted that the new standards could "only work if all jurisdictions subscribe to them".
"Singapore will work with our international partners to achieve just that, and ensure there is no room for regulatory arbitrage," Shanmugaratnam, who is also Singapore’s deputy prime minister and minster for finance, added.
He stressed that there was "no conflict between high standards of financial integrity and keeping our strengths as a centre for managing wealth", noting that "Singapore will continue to be a vibrant wealth management centre, with laws and rules that safeguard legitimate funds, and reject tainted money”.
