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Singapore. Singapore has signaled its commitment to align with beefed-up global guidelines to help countries combat money laundering. The new recommendations made by the Financial Action Task Force (FATF) call for more effective international cooperation and for countries to criminalize the laundering of proceeds from serious tax offenses.

“The revision will enable national authorities to take more effective action against money laundering and terrorist financing at all levels — from the identification of bank customers opening an account through to investigation, prosecution and forfeiture of assets,” the FATF said in a statement.

Under existing laws, if an overseas customer evades tax in his home country and brings the funds to a bank in Singapore, the bank need not make a report. But after the legislation is amended, if a bank suspects that its customer is bringing funds that represent the proceeds of such tax evasion, it will have to make a report, says lawyer Edmund Leow.

The FATF is the global standard-setter for measures to combat money laundering and terrorist financing.

The standards have also been expanded to deal with new threats such as the financing of proliferation of weapons of mass destruction, and to be tougher on corruption.

The changes include making it more difficult for criminals and terrorists to conceal their identities or hide their assets.

Singapore’s Finance and Home Affairs Ministries and the Monetary Authority of Singapore (MAS) said in a joint statement that several of the latest recommendations have already been implemented here.

Singapore has also announced its intention to criminalise the laundering of proceeds from serious tax offences, they noted.

MAS managing director Ravi Menon gave a speech to wealth management professionals in October last year, outlining a new get-tough regime for people caught money laundering or financing terrorist activities. He also announced that laundering money from tax offences will become a criminal offence.

‘We will review our international cooperation channels and other pertinent aspects of our regime to ensure compliance with the new FATF recommendations,’ the three government agencies added in the statement yesterday.

Edmund Leow, a principal at law firm Baker & McKenzie.Wong & Leow, said the new standards mean that banks will need to become more conscious of tax issues in their clients’ home countries.

“We will need to amend our existing anti-money laundering legislation, because it currently covers a list of offences, which does not include tax evasion,” he added.

Under existing laws, if a customer evades tax in his home country and brings the funds to a bank in Singapore, the bank need not make a report, he explained.

But after the legislation is amended, if a bank suspects that its customer is bringing funds that represent the proceeds of such tax evasion, it will have to make a report.

“However, this development has already been anticipated by MAS, so the industry here is already aware of the need to make this adjustment,” Leow said.

Nonetheless, there will be costs involved, noted Alan Lau, a tax partner for financial services at KPMG.

“This is unprecedented and may ultimately translate back into higher tax compliance costs for the banks.”

Singapore’s Private Banking Industry Group (PBIG) said in a statement that it is working closely with experts to implement the enhanced FATF standards.

“The PBIG believes that such actions by Singapore and the industry would help lay a strong foundation to bring Singapore’s private banking industry to the next phase of growth,” said co-chair Deepak Sharma.

Several banks, including UBS and HSBC, told The Straits Times that they welcomed the Government’s commitment to implement the FATF recommendations.

“As we continue to see strong business growth from the different markets where we have presence, we will ensure that our systems and processes are robust and can guard against the use of our banking services to facilitate any illegal or criminal activities,” said Bank of Singapore chief executive Renato de Guzman.

DBS Bank’s group head of wealth management, Tan Su Shan, said the new recommendations should not have a great impact on the way banks here operate.

“In terms of what the bank is doing, we have always adopted stringent due diligence practices which are in line with international anti-money laundering standards, and will continue to do so.”

The same can be said of the trust industry, said Goh Seow Chee, the president of The Society of Trust & Estate.

“The industry understands that the application of such policies plays an important role in the protection of the integrity of the Singapore trust business and should help to build a strong foundation here for future quality growth.”

Reprinted courtesy of Straits Times Indonesia. To subscribe to Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.