A twist to In­done­sia’s tax amnesty

> Banks in Sin­ga­pore share with lo­cal po­lice names of clients who join scheme

The Sun (Malaysia) - - SUNBIZ -

SIN­GA­PORE: Pri­vate banks in Sin­ga­pore are shar­ing with lo­cal po­lice the names of clients em­brac­ing an Indonesian tax amnesty, peo­ple aware of the mat­ter said, a move that could un­der­mine the amnesty and dam­age the banks’ busi­ness with their big­gest client pool.

Sin­ga­pore’s Com­mer­cial Af­fairs Depart­ment, a po­lice unit that deals with fi­nan­cial crime, told banks last year they must file a re­port when­ever a client takes part in a tax amnesty scheme, the sources told Reuters.

Af­ter ini­tial re­sis­tance from the banks, wor­ried they might lose clients, that mes­sage was re­in­forced this year by the Mon­e­tary Author­ity of Sin­ga­pore (MAS) when In­done­sia launched a tax amnesty aimed at woo­ing back some of the cash its wealthy cit­i­zens have stashed in Sin­ga­pore, the sources said.

“The mo­ment the client tells you he’s par­tic­i­pat­ing in the amnesty, you have a sus­pi­cion that the as­sets with you are not com­pli­ant, and so you have to re­port to the au­thor­i­ties,” said a se­nior ex­ec­u­tive at a Sin­ga­pore­based wealth man­ager.

Sin­ga­pore made tax eva­sion a crim­i­nal of­fence in 2013, and is tough­en­ing up the im­ple­men­ta­tion of the law af­ter a money-laun­der­ing in­ves­ti­ga­tion into state-backed fund 1MDB in neigh­bour­ing Malaysia ex­posed how some of its banks failed to im­pose ro­bust con­trols on sus­pi­cious money flows.

In­done­sians ac­count for an es­ti­mated US$200 bil­lion (RM829 bil­lion) of pri­vate banking as­sets man­aged in Sin­ga­pore, or 40% of the to­tal. Both the Sin­ga­pore po­lice and MAS de­clined to com­ment.

A sec­ond per­son with di­rect knowl­edge of the mat­ter said banks had started send­ing to the po­lice so-called sus­pi­cious trans­ac­tion re­ports re­lated to Indonesian clients who have par­tic­i­pated in the amnesty regime.

The po­lice web­site says it has used such fil­ings to de­tect fi­nan­cial crime.

That means if there is any ev­i­dence of wrong­do­ing from these fil­ings, au­thor­i­ties can fur­ther probe clients or banks.

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