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May 1, 2008updated 04 Apr 2017 3:58pm

Singapore insists it will not relax banking secrecy

They allow for the necessary transparency in combating criminal activity, while safeguarding investors interest for safety and security, the official said.The EU is pressing for more transparency in Singapores banking regime and participation in the EU savings tax directive, so the MAS position could undermine talks for a trade agreement between Singapore and the EU.Some members of Singapores Parliament told EU counterparts last month that they are planning legislative changes on their banking secrecy laws, triggering the swift MAS declaration

By PBI Editorial

Despite pressure from the European Union, Singapore has declared that it will not relax its strict banking secrecy laws. Singapore has no plans to change banking secrecy laws, an official at the Monetary Authority of Singapore (MAS) said. “They allow for the necessary transparency in combating criminal activity, while safeguarding investors’ interest for safety and security,” the official said.

The EU is pressing for more transparency in Singapore’s banking regime and participation in the EU savings tax directive, so the MAS position could undermine talks for a trade agreement between Singapore and the EU.

Some members of Singapore’s Parliament told EU counterparts last month that they are planning legislative changes on their banking secrecy laws, triggering the swift MAS declaration. Among the changes sought by the EU is the greater exchange of information between Singapore and EU countries on suspicious movements of money between them.

While Singapore’s secrecy laws have helped make it a growing global private banking hub, the city insists that it won’t become a shelter for money laundering, particularly with the opening of two multi-billion dollar casinos in 2009 and its proximity to countries that are battling terrorist groups.

The European Commission has been negotiating a trade agreement with Singapore since 2005. In their talks, both sides got to a point where they were very close to an agreement but banking secrecy remained a stumbling block, EU representatives said.

Singapore is resisting pressure to join in the EU withholding tax arrangements, introduced in 2005, which impose a tax on the investments of EU nationals residing in another EU country. They are seen as the main stumbling block to a trade agreement. Switzerland caved in to the pressure and now collects withholding tax for remittance to the member states of the EU.

In its statement, the MAS noted: “The Singapore constitution does not allow us to collect taxes on behalf of a foreign country.”

However, the central bank did not indicate whether Singapore will look into changing its constitution to permit the levying of withholding taxes on EU citizens.

Singapore will introduce new measures in November to try to detect money laundering and terrorism financing, the Singaporean police declared. Anyone carrying or posting cash or negotiable instruments of more than S$30,000 ($20,650) or the equivalent in foreign currency, in or out of Singapore, will have to submit a report to immigration authorities, they said. “This measure is intended to detect and monitor the movements of currency or bearer negotiable instruments by cash couriers supporting terrorism financing or money laundering activities,” according to a police statement.

Hong Kong to overtake in personal wealth

Personal wealth in Hong Kong will increase faster than rival Singapore, with the number of millionaires predicted to rise from 51,000 in 2006 to over 83,000 by 2011, according to a new survey.

A report by researcher company Datamonitor found that assets held by Hong Kong millionaires will increase from $150 billion to almost $250 billion over this period, an average annual increase of nearly 11 percent.

“It is Hong Kong’s open economy that has seen its financial services industry thrive. Competition in the industry is saturated, with many of the world’s largest financial institutions operating there,” said David Lalich, Datamonitor analyst and report. “The nation is heavily dependent on its services industry, which accounts for almost 90 percent of its GDP.”

There were over 50,000 wealthy individuals living in Hong Kong in 2006 with $1 million or more in onshore liquid assets; this is an increase from 31,000 in 2002 and represents 12.8 percent annual compound growth.

“The number of millionaires in Hong Kong will increase at an annual compound rate of 8.8 percent over the next five years, to reach 83,000 by 2011. This group of individuals will hold aggregate onshore assets of around $250 billion by 2011, with their onshore liquid assets likely to increase by 8.9 percent annually over the period,” Lalich said.

By contrast, the number of Singaporean millionaires is expected to increase 7.3 percent annually compounded between 2007 and 2011, while the onshore liquid assets they hold will increase 7.5 percent annually compounded. At the same time, rocketing real estate prices and climbing office rental costs could erode Singapore’s role as a major private banking hub.

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