Heavy penalties for Singapore banks that facilitate tax evasion

New law takes effect in July.

A new law comes into effect in July will impose hefty penalties on banks that facilitate tax evasion. This means assisting tax evaders hide their funds will be a money laundering offense for a bank.

A predicate offense is a crime that is a component of a more serious offense. In the case of money laundering, the crime that produces the funds that are to be laundered is the predicate offense.

Minister for Finance Tharman Shanmugaratnam said there is no conflict between high standards of financial integrity and keeping Singapore’s strengths as a center for managing wealth.

“Singapore will continue to be a vibrant wealth management center, with laws and rules that safeguard legitimate funds and reject tainted money.”

The finance ministry will take four steps to significantly strengthen its rules for combating tax offenses. It will conclude an inter-governmental agreement with the USA, thereby making it easier for financial institutions in Singapore to comply with the Foreign Account Tax Compliance Act.

Singapore will also increase the number of countries with which it can exchange information without being restricted by domestic banking secrecy laws. It will also sign an international tax convention launched in 1988 by the OECD and the Council of Europe that helps countries tackle tax evasion.

Singapore will also allow its tax authority to obtain bank and trust information from financial institutions without having to seek a court order.