SINGAPORE - Tax dodgers can no longer hide their funds in Singapore and there will be severe penalties on private banks which accept such clients.
The Monetary Authority of Singapore (MAS) yesterday said it is designating a broad range of serious tax crimes as money laundering predicate offences from July 1, 2013, in the effort to protect Singapore's reputation as a trusted international financial centre.
A predicate offence is a crime that, as a matter of logic or statutory provision, is or must be part of another offence.
The new laws, which have been expected for over a year now, will apply to both new and existing accounts.
In September 2011, MAS had told banks to remain vigilant against inflows from tax evaders. The following month, it said it would criminalise the laundering of proceeds from serious tax offences. Markets such as Australia, Hong Kong, the Netherlands and the UK have already designated tax offences as crimes.
MAS said the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act will be updated to include the designated offences, as tax evasion is not on the current list of serious crimes.
Financial institutions must use the full suite of the anti-money laundering/ countering the financing of terrorism measures to prevent the laundering of proceeds from serious tax crimes, MAS said.
This involves rigorous customer due diligence and transactions monitoring, as well as proper reporting of suspicious transactions, it said.
An MAS spokesman told BT that non-compliance by banks can result in a fine of up to $1 million and, in the case of a continuing offence, a further fine of $100,000 for every day during which the offence continues after conviction.
Bankers and tax consultants said the new laws are positive and will boost Singapore's reputation as a financial centre.
Tan Su Shan, DBS head of wealth management, said the new laws which the industry has been expecting "set the bar high".
"We don't want to be seen as a hot money hub for non-compliant money," said Ms Tan.
She said most private banks should have in place by now systems to comply with the new laws.