Tax cheats holding unreported offshore money in Singapore’s huge financial center will soon either sing no more or sing a sadder tune.  For as many Swiss banking clients were dumped by their bankers facing a new stricter global anti-tax evasion regime, Singapore tax-scofflaws may find the cozy Asian private bank hideaway suddenly unwelcoming.  In 2009 Singapore changed its laws to come into compliance with OECD anti-tax haven rules and has since entered into scores of exchange of tax information agreements with other OECD compliant countries.  These moves took Singapore of the so-called “gray list” of tax havens kept by the OECD. 

 Under its new laws Singapore banks have until July 1 to identify accounts strongly suspected of holding funds attributed to fraudulent or willful tax evasion.  After July 1, continuing to handle accounts containing the proceeds of tax crimes will subject the offending banks to potential criminal sanctions under Singapore law.

 Banks are fearful of the new rules and mindful of the taint to reputation that can attach to identified violators.  Thus, it is expected that banks will weed out suspicious accounts even if there is no hard proof of tax evasion.  The Monetary Authority of Singapore issued guidelines requiring banks by July 1 to identify and review existing “high-risk” accounts and end the relationship, when appropriate.  Other accounts must be reviewed by June 30, 2014.  The banks are expected to react to identifiable red-flags that include:

  •  Depositors who employ complex corporate structures to shield account holder identity.
  • Accounts with a large proportion of total client wealth not connected to other business or personal relationships with the city-state.

 Singapore has become the world’s fourth largest offshore financial center.  That it is joining other former tax havens in coming into line with OECD rules is evidence of the global pressure on tax havens to become better financial citizens in an increasingly inter-connected world financial system.  Expect this trend to continue and spread further reducing the foxholes to hide away money from the tax people.  The tax posse is chasing tax offenders from one hideout to another.  This game of cat and mouse will continue between tax authorities and those who are unwilling to read the writing on the wall.  The tax haven game is ending. Or, as we used to say when we’d play Monopoly, “Go to Jail.  Do not pass Go and do not collect $200.”

This post is partially based on a May 6 Reuters article by Rachel Armstrong, Saeed Azhar and John O’Callaghan, “Banks in Singapore Agonize Over Rich Clients in Tax Evasion Clampdown.”

© 2013 by Robert S. Steinberg, Esquire
All rights re

This entry was posted in 2012 OVDP, FBARS, NEW OVDP, TAX, TAX CRIMES, TAX INFORMATION EXCHANGE AGREEMENTS, VOLUNTARY DISCLOSURE and tagged , , , , , , . Bookmark the permalink.

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