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STANDARD Chartered Bank (StanChart) conducted a full account review of trust structures at the centre of a transfer of US$1.4 billion of funds and had proactively made a report to the relevant authorities, the lender said on Tuesday.
The bank was responding to news reports that Indonesia is probing allegations about the bank moving assets, allegedly held on behalf of Indonesian clients, to Singapore in 2015 from Guernsey, just before the Channel Island implemented tax transparency rules last year.
Under these rules, countries automatically share annual reports on accounts belonging to people subject to taxes in each nation. Britain, Guernsey and Singapore are signatories, but Guernsey, a known tax haven, implemented the rules ahead of Singapore.
A StanChart spokesman said that the bank is working closely with regulators, and therefore is unable to provide any more information.
Indonesia's Finance Ministry said late on Monday night that there were no Indonesian public officials, either from the Indonesian military (TNI) or within the government, among the 81 individuals with links to the illicit fund transfer from Guernsey to Singapore.
Its director-general of tax Ken Dwijugiasteadi said the assets in question were owned by "business people" and that preliminary findings showed that the transfers were "business transactions" and had no connections to the military.
He added that 62 of the 81 had taken part in Indonesia's recently completed tax amnesty programme, which ran from July 2016 to March this year and some of the funds were transferred "to participate in the tax amnesty, while others were transferred because they wanted to avoid the new information disclosure measures (in Guernsey)".
The tax amnesty was a part of President Joko Widodo's tax reforms, aimed at recovering billions of dollars in revenue lost to widespread tax evasion and in assets hidden overseas by wealthy citizens and businesses.
An earlier report by Bloomberg said that regulators in Europe and Asia are looking into the matter. The bank's processes and the way the transfers were handled are being examined, but regulators have not suggested that bank employees colluded with clients to evade tax,it said.
Citing anonymous sources, Bloomberg reported that both Monetary Authority of Singapore (MAS) and Guernsey's Financial Services Commission are investigating the chain of events.
MAS, Singapore's central bank and financial regulatory authority, on Monday said that it takes a serious view of and will take firm action against any financial institution or individual found to have breached its requirements relating to anti-money laundering (AML) and countering the financing of terrorism (CFT).
"Where egregious breaches of our laws are detected, MAS has worked with our law enforcement agencies to pursue criminal prosecutions."
Singapore will not tolerate the abuse of its financial system as a refuge or conduit for tax-illicit funds, it added.
On the StanChart issue, MAS said: "As our supervisory probe is still ongoing, we are unable to provide more information at this juncture."
Mohammed Reza, partner at law firm Simmons & Simmons JWS, said MAS is looking into the fund transfers between Guernsey and Singapore in its capacity as supervisor of Singapore's financial sector.
"As supervisor, MAS is concerned with the effective monitoring and mitigation of risks in the financial system as a whole as well as individual institutions, in this instance StanChart. The supervisory probe is focused on whether a breach of applicable anti-money laundering and countering the financing of terrorism requirements has taken place," he said.
On StanChart's proactive move to work with the authorities, Mr Reza said the senior management of any financial institution needs to be aware of what the institution is doing.
"Where non-compliance has been identified, there needs to be a serious effort to address that issue. This may include making timely reports to the relevant authorities, whether as a matter of law or as a matter of prudent accountable behaviour to the regulators.
"This is increasingly pertinent given the rise of international cooperation between financial regulatory authorities and the internationalisation of financial standards across jurisdictions."