MAS issues stern money laundering warning; Jakarta starts StanChart probe

Singapore

THE Monetary Authority of Singapore (MAS) on Monday declared its firm commitment to keeping the country's financial centre clean and safeguarded from illicit activities.

Singapore's central bank and financial regulatory authority said in an evening statement to the press 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).

This followed a report by Reuters earlier on Monday that Indonesia is investigating reports that US$1.4 billion (S$1.9 billion) held by Standard Chartered (StanChart) in Guernsey, mainly on behalf of Indonesian clients, was transferred to Singapore in 2015, just before the Channel island implemented tax transparency rules.

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.

Reuters said Heru Kristiyana, deputy commissioner for banking at Indonesia's financial regulator (OJK), had disclosed in a text message that a supervisor was investigating the issue, in co-ordination with the director-general of taxation and the anti-money laundering agency, the Financial Transaction Reports and Analysis Centre (PPTAK).

Both agencies did not comment.

Investigations by Indonesia followed a Bloomberg report four days ago that regulators in Europe and Asia are investigating the bank over the role its staff may have played in transferring the money from private-bank client assets from Guernsey to Singapore before the Common Reporting Standard rules kicked in at the start of last year.

Citing anonymous sources, it said that StanChart had reported the matter itself to the regulators.

Bloomberg said that the assets, held in the bank's Guernsey trust unit for mainly Indonesian clients, some of whom had links to the military, were moved in late 2015.

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, the report said.

Events under probe

Bloomberg reported that people familiar with the probes said both MAS and Guernsey's Financial Services Commission are investigating the chain of events.

Standard Chartered had said last year that it was to close its trust operations in Guernsey and centralise that part of its business in Singapore.

The probe would be a potential blow for the bank, which is trying to turn around a reputation bruised by bad loans and regulatory fines, Reuters reported.

MAS said on Monday: "As our supervisory probe is still ongoing, we are unable to provide more information at this juncture."

It said it has put in place "a robust AML/CFT regime to detect and deter illicit activities in our financial sector" and the framework and supervision were deemed by the Financial Action Task Force to be robust in its 2016 assessment.

MAS said it has continued to build on these strengths by "intensifying its supervision of financial institutions that pose higher money laundering and terrorism financing risks.

"We have not hesitated to take firm action against financial institutions with control deficiencies, and have imposed financial penalties and prohibition orders on culpable individuals where there are serious lapses," it said.

"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.

In 2013, it designated tax crimes as money laundering predicate offences and directed financial institutions to undertake a critical review of their assets to ensure compliance with the revised laws.

A year later, Singapore further committed to implementing the Automatic Exchange of Financial Account Information (AEOI) under the Common Reporting Standard (CRS), an internationally agreed standard aimed at strengthening global tax transparency.

Singapore and Indonesia said in July they were ready to share financial data automatically for tax purposes.

Senior Minister of State for Finance and Law Indranee Rajah told reporters, after attending the International Tax Conference in Jakarta, that Singapore is ready to have an AEOI relationship with Indonesia; Indonesian Finance Minister Sri Mulyani Indrawati added that her ministry will maintain communications with Singapore on the AEOI agreements.

Two agreements

On June 21, Singapore signed two international agreements aimed at making it easier for the country to exchange tax information with other jurisdictions under ongoing global efforts to fight tax evasion and money laundering, as well as to improve tax transparency.

Called multilateral competent authority agreements (MCAAs), they lay out an international framework to facilitate the automatic exchange of tax information, thus obviating the need for countries to conclude multiple bilateral agreements.