Private banks on guard against tax criminals

Private banks on guard against tax criminals

SINGAPORE - Some private banks in Singapore have established a set of guidelines aimed at protecting themselves from tax criminals.

The Private Banking Industry Group (PBIG) urges member banks to scrutinise the source of funds brought in by new clients and to continuously monitor account activity to spot suspicious transactions.

The hope is that by adhering to these core practices, banks will avoid being used as a platform to harbour proceeds from serious tax crimes or as a conduit to disguise the flow of such funds.

The new guidelines come ahead of a regulatory measure that, from July 1, will designate serious tax offences as money laundering predicate offences.

A predicate offence is a crime regarded in the eyes of the law as being part of another offence.

The PBIG guidelines say that when a private bank takes on a new client, staff should determine whether there are any reasonable grounds for suspecting that the funds are proceeds from serious tax crimes.

New clients should acknowledge in writing that they are responsible for their own tax affairs, and they should provide any information relating to their tax affairs, as required by the bank.

The procedures include signing a declaration to confirm that they have not committed or been convicted of any serious tax crimes.

Banks should then continuously monitor and assess any tax-related risks that could arise.

If there is reason to suspect that a client's assets are proceeds from serious tax crimes, the bank should file a suspicious transaction report and, where appropriate, discontinue its relationship with the client.

Banks should also maintain proper records of decisions made.

In addition, the guidelines urge banks to train staff and management, to ensure that they are aware of their obligations and equipped with the relevant skills.

Staff should know when to refer any suspicious activities to management for review.

As part of the training, banks should maintain an updated list of red flags that staff could look out for when performing due diligence on clients.

"Most wealth managers are already practising many of the principles and disciplines set out in the guidelines," said PBIG co-chair Deepak Sharma, who is also Citi Private Bank chairman.

"What we have done now is to promote industry-wide adoption. With this, Singapore's reputation as a trusted wealth management centre will be further strengthened."

The Monetary Authority of Singapore (MAS) welcomed the industry-led effort, saying that the new framework symbolises Singapore's continued commitment to strengthening the integrity of the local financial sector.

"The success of Singapore as a financial centre is underpinned by high standards of financial regulation and supervision," said MAS assistant managing director Ng Nam Sin, who also co-chairs the PBIG.

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