S’pore does not tolerate abuse of financial system: MAS

SINGAPORE — The Republic does not tolerate any abuse of its financial system, the Monetary Authority of Singapore (MAS) said on Monday (April 11), in response to queries on the use of offshore vehicles prompted by the rapidly expanding global scandal linked to offshore dealings by Panamanian law firm Mossack Fonseca, which has an office in Singapore.

“Singapore is firmly committed to being a clean and trusted financial centre and does not tolerate the abuse of its financial system as a refuge or conduit for illicit fund flows. The use of offshore vehicles, in and of itself, is not illegal. Businesses and individuals may set up offshore vehicles for a variety of legitimate commercial or other reasons. However, it is important that offshore vehicles are not used for illicit purposes,” said a spokesperson for the MAS.

The comments come amid a mushrooming global scandal following revelations of a web of Panama-based offshore financial dealings after a large cache of more than 11 million pages of documents was leaked from Mossack Fonseca and published by the International Consortium of Investigative Journalists (ICIJ). 

According to global media reports, the countries that had the most active intermediaries in terms of the number of offshore companies are Hong Kong (37,675), Switzerland (34,301) and the United Kingdom (32,682). Singapore, where the intermediaries are said to have set up 4,050 offshore companies, was ranked No 9. Singapore is also one of the 21 jurisdictions named by the ICIJ as a tax haven used by Mossack Fonseca. 

Businesses and individuals may set up offshore vehicles for legitimate uses such as wealth protection or benefiting from a different regulatory regime, but the offshore entities can also be used for illicit purposes such as money laundering and terrorism financing. 

MAS said that it has a strict legal and regulatory framework to guard against money laundering and terrorism financing through Singapore’s financial system. All financial institutions in the city-state — including banks, fund managers and trust companies — are required to know their customers well, including any persons that their customers may be acting on behalf of, it said. The MAS added that financial institutions are required to scrutinise customers’ sources of funds and wealth, and check for any adverse information about them. If offshore vehicles are being set up, financial institutions must ascertain their purpose and satisfy themselves that such vehicles are not meant to be used for unlawful ends, it said.
Singapore’s authorities — including the MAS, the Commercial Affairs Department, the Attorney-General’s Chambers, and the Inland Revenue Authority of Singapore —have established effective channels to exchange information, in view of the often cross-border nature of money laundering and terrorism financing, added the spokesperson. WITH AGENCIES