Liechtenstein probe likely to boost Singapore

John Burton

Financial Times


Monday, 3 March 2008, 12:28 pm Singapore Time

Singapore, the world’s fastest growing private banking centre, could be the main beneficiary from the Liechtenstein tax evasion investigation, according to the global head of Société Générale’s private banking business.

“Because of what happened in Liechtenstein, we will see a higher flow of funds into Singapore,” said Daniel Truchi, who previously headed SG Private Banking’s Asian operations from Singapore. “The momentum is accelerating.”

The recent events in Liechtenstein are “sort of like an earthquake for European private banking” because “it undermines client confidence” and its effects will be felt in other European wealth management centres, including Switzerland and Luxembourg, Mr Truchi said.

Singapore will attract more money because its bank secrecy and trust laws governing inheritance are among the tightest in the world, Mr Truchi said. Those who break Singapore bank secrecy laws are subject to harsher punishments than applied in Switzerland. Singapore also has no laws against international tax evasion.

Singapore has introduced new rules on bank secrecy and trusts in the past few years in consultation with the global private banking industry as the south-east Asian city-state has identified wealth management as a growth industry.

Singapore could receive a significant boost as money flows from Europe.

“Switzerland’s private banking business is 10 times bigger than Singapore’s but if we see 10% of those funds moving from Switzerland, it will double the amount of assets managed in Singapore,” Mr Truchi said.

However, Singapore is under growing pressure from the European Union to ease its secrecy rules to help catch tax evaders. The issue has emerged as the main stumbling block in a trade pact being negotiated between Singapore and the EU.

“Singapore is not a tax haven. We are a low-tax country but not a tax haven. The situation that arose in Liechtenstein cannot happen here,” said George Yeo, the Singapore foreign minister, after meeting his German counterpart last week to discuss the issue.

Singapore’s bank secrecy laws are “very important” to Singapore’s development as an international finance centre but “we do not condone drug money or terrorism money or money laundering. These are crimes,” Mr Yeo said.

Mr Truchi said that Singapore is unlikely to bow to EU pressure in the near-term as it seeks to expand its *private banking business.