Countering money laundering: Asian update

Read the article in the Cayman Financial Review Magazine 

As more and more bank scandals are surfacing in the financial capitals of London and New York, Singapore seeks to implement tougher rules and strengthen existing standards as regulators move to safeguard and reinforce the reputation of Singapore’s fast-growing financial service sector. 

The Monetary Authority of Singapore (MAS) is designating a broad range of serious tax crimes as money laundering predicate offences. A predicate offence is a crime that, as a matter of logic or statutory provision, is or must be part of another offence.

Not falling behind the other key jurisdictions such as Australia, Hong Kong, Netherlands and the UK, this designation will be the latest addition to the list of over 400 other money laundering predicate offences designated by Singapore.

With effect from 1 July 2013, laundering money from tax offences will become a criminal offence. This is in view of the effort to protect Singapore’s reputation as a trusted international financial centre and the authorities’ intention to have a “tougher penalty regime” for people caught laundering money or financing terrorist activities.

Financial Institutions in Singapore must apply the full suite of anti-money laundering and countering-financing-of-terrorism measures in the relevant MAS notices, to prevent the laundering of proceeds from serious tax crimes. Failure to comply could mean fines of up to $1 million and a further fine of $100,000 for each day during which the offence continues after conviction.

It is imperative for Financial Institutions (FIs) to conduct rigorous customer due diligence and transaction monitoring, as well as proper reporting of suspicious transactions to manage and mitigate them.

To discourage the entry of tax evasion monies into the Singapore financial system, FIs have to remain vigilant against suspicious inflows in anticipation of agreements between foreign jurisdictions to resolve outstanding tax issues.

There will be severe penalties on private banks which accept such clients. The Private Banking Industry Group (PBIG), which looks at initiatives to spur the sector’s growth, has been developing a framework for implementing the new requirements and to ensure that proceeds from serious tax crimes are not booked here and that they are also not being used as a conduit for laundering proceeds from serious tax crimes.

According to the managing director of the MAS, Mr Ravi Menon, these measures are taken to increase the resources used to deal with suspicious banking activity and stepping up MAS supervision. Singapore will align its regime with the approach taken by the Paris-based watchdog Financial Action Task Force (FATF).

It is anticipated so as not to create a jurisdictional arbitrage between Singapore and Hong Kong, that Singapore may need to introduce legislation similar to Hong Kong where the client declares that they have duly complied and undertake to continue to comply with the tax laws and/or tax reporting obligations of the country where they are resident and/or of which they are citizens and/or of which they are subject to in respect of any funds and assets that they have placed and/or will place with the Bank from time to time and any profits and/or gains derived therefrom.

Hong Kong – No word of FATCA

Xi Jinping and Barack Obama both present themselves as men of the people. Xi Jinping was elected to party leader through a secretive collegial voting system, and in the USA, they spent $6 billion to achieve the same effect. So what will China’s new leadership mean for the rest of Asia, and in particular the region’s leading wealth management centres – Singapore and Hong Kong – in the next five to 10 years?

While Europe will continue to be pear shaped and America sailing close to the fiscal cliff, the picture is very different when you travel eastwards. India, in spite of its politicians, still registers an economic scorecard of 6.9 per cent. China, in spite of the global downturn and internal challenges, will continue to grow at around 8-9 per cent. In contrast the ‘developed world’ will, at best case scenarios over the next one to five years, manage 1-3 per cent growth.

So does it matter that Obama is rushing off to Myanmar (Burma), and Hilary was recently in Australia, as part of the pivotal Pacific strategy to counter China’s maritime ambitions – in my opinion, not really. What I believe is important to the wealth management sector of the Asian economies, is that economic growth in Asia is still happening. The West has now recognised this in the various government policy papers referring to the “Asian Century”.

One thing that will be important to watch is whether China agrees to sign up to FATCA. Only last week, Chinese banks signalled their withdrawal from London to Luxembourg. And why should China become a good global citizen and sign up to global warming initiatives, when it has larger internal challenges to deal with, such as corruption.

This will be an interesting issue to watch how they manage it. As we recently saw with the downfall of Bo Xilai, and Wen Jiabao’s family affairs being publicly aired. They all hold their private family related wealth through British Virgin Islands companies, managed out of HK.

Golden Map Ltd is said to be linked with Bo Xilai which bought ‘at least two flats’ in Kensington, London, in 2002 and 2003. As reported in the Financial Times, alleged fixer, French architect Patrick Devillers, helped secure these properties.

Are the politburo members really going to agree to sign FATCA so that Obama can see where their princelings have their bank accounts?


In summation, Singapore seeks to maintain strong competencies through such institutional initiatives promoted by the Institute of Banking and Finance and the new requirements set by the MAS.

With the recent uproar in the global financial crisis, the financial industry has earned a bad name. This need not be the case. As Menon mentioned, “With trust, Singapore must bring back to the centre of finance the notion of ethics – doing the right thing for customers, dealing fairly and acting with integrity at all times.”

Maintaining strict policies for the protection of the confidentiality of customer information will continue; it is a basic right and underpins confidence in Singapore as a wealth management centre.

But confidentiality cannot and will not be used to conceal financial crime or the flow of illicit funds. Neither will confidentiality stand in the way of cross-border exchange of information for investigating crimes.

There is no conflict between high standards of financial integrity and our attractiveness as a centre for managing wealth. The MAS intends for Singapore to continue to be a vibrant wealth management centre by having a clean regime that safeguards legitimate funds and eliminates tainted money.

Measures taken to counter money laundering to maintain Singapore’s reputation as a secure, clean and well-managed financial centre are intended to keep Singapore ahead of the global regulatory curve.

In the meantime, Hong Kong, with the big gorilla in the background will probably continue to remain a laissez-faire open economy, acting as the financial interface between mainland China, and the global markets.


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Angelo Venardos

Angelo holds degrees in Economics and Marketing, an MBA, a Master of Jurisprudence (Corporate & Commercial Law) and a Doctorate of Legal Science. He was the Chairman of the Singapore Chapter of the Society of Trust and Estate Practitioners (STEP) during 2009 to 2011, giving up the position to represent South-east Asia as a Council Member of STEP Worldwide in London.  Angelo is a banker by training, with many years of experience in corporate and offshore banking. He has been living in Singapore for the past 12 years.

Dr Angelo Venardos
Chief Executive Officer and Founder
Heritage Trust Group
50 Raffles Place
#15-05/06 Singapore Land Tower

T: +65 6533 0774            
E: [email protected]            


Heritage Trust Group

A Business That's Dependent On Trust.  Heritage is an independent trust company, providing a full spectrum of corporate services.  Located in Singapore and Hong Kong, we provide three core services:

  • Establishing international companies in various popular jurisdictions
  • Providing fiduciary and corporate secretarial services for ease of doing business
  • Structuring trust solutions for succession planning and asset protection

Our business partners and clients include families of notable wealth, the world's largest and boutique private banks and many established professional intermediaries in Asia and Europe.

Typically, the client is referred to Heritage by either a lawyer, a banker or an accountant. Our specific strength is working with financial institutions and professional intermediaries to assist their clients who are seeking confidentiality, asset protection, cross border tax-planning and effective commercial structures.


Heritage Trust Group - Singapore
50 Raffles Place
#15-05/06 Singapore Land Tower
Singapore 048623 

T :  + 65 6533 0774
E:  [email protected]