SINGAPORE - Banks here are urgently scrutinising their account holders as an imminent deadline on stricter tax- evasion measures forces them to decide whether to send some of their wealthiest clients packing.
Singapore's assets under management have increased to more than $1 trillion, with 50 per cent growth in the five years to 2011, according to the latest government data.
But with United States and European regulators on the hunt for tax cheats, the Singapore Government is clamping down to forestall the kind of onslaught from the foreign authorities that is now hitting Switzerland's banks.
Before July 1, financial institutions here must identify accounts they strongly suspect hold proceeds of fraudulent or wilful tax evasion and, where necessary, close them. After that, handling the proceeds of tax crimes will be a criminal offence under changes to Singapore's anti-money-laundering law.
Said Mr Erik Wilgenhof Plante, head of compliance at Germany's DZ Privatbank here: "Because of banking secrecy, Singapore used to be an attractive place to put money if you didn't want the authorities back home to know about it. That has left legacy problems for some banks."
Officials here have said the country's secrecy rules were aimed at safeguarding investors' legitimate interest in privacy and did not mean it was a haven for illicit funds.
But as the centre for managing wealth in fast-growing Asia, and with more millionaires per capita than any other country, Singapore's pain from the purge is likely to be short-lived and the gains long-lasting.
Mr Deepak Sharma, chairman of Citi Private Bank Singapore and co-chair of the Private Banking Industry Group, said: "Having a more-robust framework against illicit money flows is a fillip for Singapore. I think Singapore's size and reputation as a clean and efficient global financial hub will grow."