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Singapore: Law of Offshore

Banking Law

Banking secrecy is key to Singapore’s success as a financial centre. However, pressures from the US and Europe resulted in Singapore negotiating tax information exchange agreements (TIEAs) to remove the jurisdiction from the OECD’s “grey” list. This was achieved in November 2009, when Singapore signed its twelfth TIEA with France.

The TIEAs do, though, allow Singapore to reject requests for information that are spurious or frivolous, or are mere “fishing expeditions”. Information regarding a customer’s bank account can only be disclosed under a court order. Any disclosure that fails to meet Singapore’s banking secrecy rules can result in a SGD78,000 fine or three years’ imprisonment.

A foreign offshore bank must maintain eligible assets of not less than SGD5m in Singapore at all times. Foreign wholesale banks operating in Singapore are required at all times to maintain in Singapore the higher of an asset maintenance ratio of not less than 0.15 or eligible assets of SGD5m. Foreign full banks operating in Singapore must at all times maintain in Singapore the higher of an asset maintenance ratio of not less than 0.35 or eligible assets of SGD5m.

Banking law in Singapore has also allowed for the fast development of Islamic finance in the jurisdiction despite the economic downturn, driven by incentives offered by the Monetary Authority of Singapore (MAS) that mainly cater to the wholesale banking sector.

Singapore has set up a financial intelligence unit to combat money laundering and the financing of terrorism. The Financial Action Task Force reported in 2008 that Singapore’s initiatives to address weaknesses found on a previous investigation in 1998-99 had significantly strengthened the jurisdiction’s legal, institutional and supervisory framework.

 

 

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