Wenceslas Hollar – Secrecy 2 (Photo credit: Wikipedia)
The US and Switzerland finally inked an information sharing agreement which will give US authorities access to Swiss bank records, the accounts of US correspondents and those who opted out of filing their Foreign Bank and Financial Account reports with the US tax office. From now on, Swiss banks are no longer a safe hiding place for US tax evaders.
The agreement is analysed in this great special report from the US based Association of Financial Crime Specialists. Industry insiders claim the agreement is ‘ the most far-reaching, expensive and ominous set of obligations, conditions and hazards ever imposed on a nation’s banking industry.’
Is there really nowhere to hide?
As Swiss banks will no longer be in a position to hide anything from the US, this effectively renders the sector less than appealing to anyone with some money to hide, whether you are a drug trafficker, terrorist financier, political campaign funder, tax evader or a corporate entity with skeletons in the financial closet. And those people will be looking for somewhere else to bank, with Asia’s increasingly sophisticated and well serviced
Mountain Jungfrau in The Sommer left at the Top, you See The Spinx Tower, in The Rock is the Final Railway Station, Just the Top of Europe (Photo credit: Wikipedia)
banking centres looking favourable.
However, Singapore has taken steps in the past year to stem the flow of untaxed funds into its coffers.
In 2011, Singapore signalled its will to align itself with the Financial Action Task Force‘s ‘designated categories of offences’ by making tax crimes predicate to money laundering and detailed its plans in this consultation paper from October 2012.
In May 2013, Singapore’s Ministry of Finance, Inland Revenue Authority (IRAS) and Monetary Authority (MAS) issued a joint statement outlining its intentions to obtain bank and trust information without the inconvenience of first obtaining a court order.
As of July 1st, all tax crimes committed in Singapore are predicate offences to money laundering and should be managed by financial institutions as such. This means applying customer due diligence skewed to identifying potential tax criminals and tweaking transaction monitoring systems to track their financial dealings.
For FIs, this means conducting reviews of all existing clients to assess the tax legitimacy of the assets held. If they discover the clients asset contain the proceeds of foreign tax crimes which would also be a crime in Singapore, or have reasonable grounds to suspect this, they should file a suspicious transaction report. The response to the October consultation contains some useful work on this area.
I’d be interested to hear about any plans the US has to broker agreements with other nations, particularly those in Asia.
Financial Crime Asia 