politics for the 99%

Published on Spiegel Online International, by Martin Hesse, November 1, 2013 (Photo Gallery).

Singapore has become an increasingly popular haven for money laundering and tax evasion. But now it faces calls for reform and a difficult dilemma: Can it be both a home for fortune hunters and a bastion of integrity? … //

… Singapore’s Ambitious Plan: … //

… Sketchy Money:  

The bruising recently sustained by established financial centers, like London, New York and Zurich, has benefitted Singapore and its banks. After major banks on Wall Street and the Thames were shaken by the financial crisis, many investors turned their attention to Asia. “We benefit from the flight to safety,” says Elbert Pattijn, the chief risk officer of DBS, the country’s largest bank. “Singapore has one of the most stable financial systems in the world,” Pattijn notes. And one of the most discreet.

When authorities in the United States and Europe began hunting down tax evaders in recent years and chipping away at Switzerland’s banking secrecy, many of the super-rich moved their assets to Singapore.

Whenever bankers like Pattijn are asked about possible illicit money from Europe, their answers are quick and mechanical. “We don’t want that kind of money,” Pattijn says. “We have no appetite for that.” But the revelations the emerged from Offshore Leaks — an April report by the International Consortium of Investigative Journalists which revealed the details of 130,000 offshore accounts — put Singapore in a tight spot. The data trails of the report led directly to Singapore or, more specifically, to Temasek Boulevard.

The Fountain of Wealth, the world’s largest fountain, is a bronze monstrosity located on the boulevard and surrounded by five gray office buildings, the Suntec Towers. The firm Portcullis Trustnet has its headquarters there. Portcullis builds what amount to virtual catch basins for fountains of wealth, establishes trust companies and moves assets to tax shelters.

Portcullis Chairman David Chong sharply rejected the indirect accusation by the journalists behind the Offshore Leaks investigation that Portcullis helps tax evaders hide their money. In the spring, Chong declared that Portcullis strictly adheres to laws and regulations against money laundering and tax evasion, and that it doesn’t do business with people who may engage in those activities. He has been silent since then.

Cleaning Up Singapore’s Image:

Now the Singapore government and the Monetary Authority of Singapore (MAS) are taking a more aggressive approach to improving the city-state’s poor image. “There is nothing inherently wrong with opening a trust account,” says MAS Managing Director Ravi Menon, when asked about Portcullis. So far, he says, the examination of the Offshore Leaks data has not revealed any wrongdoing. “Our anti-money laundering rules apply to the trust companies as well as to the banks.”

Menon likes to portray himself as someone who hunts down tax evaders and those who help them. “It is a serious misperception that there is a large flow of European funds to Asian centers like Singapore,” says Menon. Tax attorneys tell a different story, but no one is willing to be quoted. The prestigious consulting firm BCG estimates that 14 percent of the roughly $1 trillion (€740 billion) in offshore assets under management in Singapore and Hong Kong comes from Europe.

In 2009, Singapore endorsed the Organization for Economic Co-operation and Development (OECD) tax standard on the automatic exchange of information and integrated it into all double taxation treaties. Since July 1 of this year, willful tax evasion and tax fraud have been designated predicate offenses for money laundering. In October 2011, the MAS instructed banks to ensure that existing customers were in compliance with the future standards. And last but not least, Singapore is about to conclude an inter-governmental agreement that will facilitate Singapore financial institutions’ compliance with the American FATCA law. FATCA would require banks in Singapore to automatically transmit the account data of American citizens to US authorities.

“In principle, we are prepared to enter into a discussion with the European Union over the automatic exchange of information as well,” says Menon. “In the long run, this could become the new standard.” For Manon, a level playing field and a strict implementation in all major jurisdictions are preconditions for enhanced information exchange. “Singapore is extremely anxious not to come under suspicion, because it depends on its good reputation as a financial center,” says Ambassador Viets.

Loopholes for Foreigners: … //

… (full long text).