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Tax transparency





In recent years, there has been a global movement towards greater tax transparency and
increasing information reporting for the purposes of combating tax evasion. As a centre for
wealth management excellence, Singapore is committed to playing a role in the global fight
against tax evasion.

Over the last six months, several measures have been announced which demonstrate
Singapores commitment to meeting international standards and best practices in this area.
The key measures have been set out below, along with a summary of the necessary steps that
Financial Institutions (FIs) should be taking to ensure compliance with the new rules.
Designation of tax crimes as money laundering predicate offences
in Singapore
In February 2012, the Financial Action Task Force (FATF), which sets the international
benchmark for anti-money laundering regulations, recommended that tax evasion be made a
predicate offence for the purposes of combating money laundering. The effect of this is that tax
evasion crimes will be included in a countrys anti-money laundering regime.
On 9 October 2012, the Monetary Authority of Singapore (MAS), responding to the FATF
recommendation, issued a consultation paper to propose the designation of tax crimes as
money laundering predicate offences in Singapore (Consultation Paper). The consultation
closed on 9 December 2012.
The Private Banking Industry Group (PBIG) in Singapore has inserted by way of Addendum 1
to the Code of Conduct for Private Banking in Singapore, a guide on Customer Due Diligence
(CDD) in respect of tax evasion crimes. Please see:
http://www.abs.org.sg/pdfs/Publications/Singapore_PB_Code_with_ISP_FINAL.pdf
Enhancements to existing CDD regime of Financial Institutions (FIs) as
expected by MAS

When the regulations take effect, MAS expects FIs to enhance its existing anti-money
laundering (AML) and CDD framework. MAS requires that:
FIs must develop, implement and enforce internal policies, controls and procedures that
effectively detect and deter the laundering of proceeds from wilful or fraudulent tax
evasion through the financial system.

FIs and their staff do not knowingly aid or abet their clients in committing tax crimes.

FIs should also continuously assess and adopt measures to manage and mitigate the tax
related risk exposures arising from the conduct of their business, including any
unfavourable reputational fallout.
In its response dated 28 March 2013 to the feedback received in respect of its Consultation
Paper, the MAS has clarified that FIs should take a risk based approach to undertaking its due
diligence as prescribed by FATF.
Financial Services
Tax Bulletin
June 2013
MAS further clarified that its supervisory expectations in respect of deterring money from tax
evasion crimes from being laundered through the financial system are similar to those applied
to other predicate offences pursuant to the AML regime.
Accordingly FIs are expected to review their existing AML and CDD policies and procedures to
ensure that the same remain relevant and enhanced, as required, in respect of tax evasion as
additional predicate offence.
MAS has further clarified that FIs are expected to:
assess whether there is suspicion that a client's assets emanate from serious offences
which include fraudulent or wilful tax evasion;

file suspicious transactions report; and

apply appropriate risk mitigation and control measures.

It is a notable point as clarified by the MAS that FIs are not expected to determine if their
clients are fully compliant with all their relevant tax obligations globally. They are,
however, expected to determine whether there are reasonable grounds to suspect that client
accounts contain the proceeds from tax evasion - a degree of tax awareness is therefore
required.
Application
These regulatory requirements on enhancing AML regime to include tax evasion (as is the case
for other predicate offences), when implemented, will apply to both existing and new accounts.
MAS requires FIs to undertake a critical review for all existing accounts to assess any suspicion
of proceeds from tax evasion crimes of assets booked and identify high-risk accounts in that
respect.
MAS has clarified that FIs should apply a risk based approach to prioritise this review. The
MAS expects that:
accounts that the FI designates as high risk are reviewed by 30 June 2013; and
review of all other accounts to be completed by 30 June 2014 with justification noted
as to why these are not high risk accounts.

Effective date
Criminalisation of the laundering of proceeds from tax offences will be effective 1 July 2013.

Exchange of information

On 14 May 2013 it was announced that Singapore further intends to bolster its framework for
international cooperation to combat cross boarder tax evasion. The necessary legislative
amendments to implement the following measures are intended to be implemented by the end
of 2013.
1. Singapore will extend Exchange of Information (EOI) assistance to all existing double
tax agreement partner jurisdictions, without having to update the terms of its bilateral tax
agreements.

2. Singapore will sign the Convention on Mutual Administrative Assistance in Tax Matters.
The Convention, which was developed jointly by the Council of Europe and the OECD, is
designed to facilitate better international cooperation in the administration of national
tax laws, whilst respecting the fundamental rights of taxpayers, and provides for
administrative cooperation between member jurisdictions in the assessment and
collection of taxes. By signing the Convention, Singapore will expand its network of EOI
partners by 11 jurisdictions, most notably including the United States.

3. Singapore will allow overseas tax authorities of double tax agreement partner
jurisdictions to obtain bank and trust information from FIs without the need for a court
order. This change will streamline the administration of the EOI framework. It should be
noted, however, that all other current safeguards will remain in place to ensure taxpayers'
rights continue to be observed.

4. Singapore will conclude a Model 1 FATCA intergovernmental agreement (IGA) with the
United States. The IGA will streamline compliance with the FATCA provisions by foreign
financial institutions (FFIs) in Singapore. Significantly, under the Model 1 framework,
FFIs will report account information to the Singapore authorities, who will exchange the
information automatically with the US Internal Revenue Service (IRS). This will
eliminate the need for Singapore FFIs to enter into FATCA agreements individually with
the IRS and to report account information directly to the IRS.


What does this mean for Singapore FIs?

Increasing emphasis is being placed on FIs to assist national governments in helping ensure
tax payers meet their tax obligations. Singapore FIs have a role to play in this global movement
and will be expected to implement the new rules set out by MAS. There is clearly much to do
in the short and medium terms term and we have set out an indicative timeline of the actions
to be taken in the Appendix.






Who can I approach?

Should you have any questions or require assistance with these developments, please do not
hesitate to contact your usual PwC tax contact or the contacts listed below.


2013 PricewaterhouseCoopers Services LLP. All rights reserved. PricewaterhouseCoopers and "PwC" refer to
PricewaterhouseCoopers Services LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms
of the network, each of which is a separate legal entity.

Tax Financial Services Financial Services Industry Practice Regulatory
Anuj Kagalwala
Partner
+65 6236 3822
anuj.kagalwala@sg.pwc.com

David Sandison
Partner
+65 6236 3675
david.sandison@sg.pwc.com

Lim Maan Huey
Partner
+65 6236 3702
maan.huey.lim@sg.pwc.com

Tan Hui Cheng
Director
+65 6236 7557
hui.cheng.tan@sg.pwc.com

Paul Lau
Partner
+65 6236 3733
paul.st.lau@sg.pwc.com
Yip Yoke Har
Partner
+65 6236 3938
yoke.har.yip@sg.pwc.com

Carrie Lim
Director
+65 6236 3650
carrie.cl.lim@sg.pwc.com

Michael Brevetta
Associate Director
+65 6236 3801
michael.j.brevetta@sg.pwc.com

Nick Moore
Senior Manager
+65 6236 3689
nick.moore@sg.pwc.com


Kwok Wui San
Partner
+65 6236 3087
wui.san.kwok@sg.pwc.com

Radish Singh
Associate Director
+65 6236 3022
radish.kg.singh@sg.pwc.com
www.pwc.com/sg/tax

2013 PricewaterhouseCoopers Services LLP. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Services LLP,
which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
These notes are designed to keep clients up to date with tax developments and do not constitute professional advice. They are of a general
nature only and are not intended to be comprehensive. Readers are therefore advised that before acting on any matter arising from these notes,
they should discuss their particular situation with the Firm. No liability can be accepted for any action taken as result of reading the notes without
prior consultation with regard to all relevant factors.
Appendix

Projected timeframe for implementation of new rules designating tax crimes
as money laundering predicate offences in Singapore

Phase 1 Completion by July 2013
Carry out high level review of existing anti-money laundering / countering the financing of terrorism
(AML/CTF) policies in context of FATF recommendations and MAS notices on tax evasion.
Develop and implement framework for risk-based approach (RBA) for segregating client accounts (red
flag indicators).
Prepare robust documentation for finalised RBA framework.
Review existing client accounts in accordance with RBA identifying high-risk and non-high risk clients.
Undertake critical review of high-risk clients and file reports of the findings.
Conduct enhanced due diligence and AML/CFT remediation on non-high risk clients where necessary.
File suspicious transaction reports (STRs) where necessary.
Provide high level communications to staff explaining their obligations under new rules.
Advising clients on options for tax regularisation.

Phase 2 Completion by July 2014
Conduct detailed review of existing AML/CTF policies in context of FATF recommendations and MAS
notices on tax evasion in addition to consideration of global developments regarding tax evasion.
Implement updates to existing AML/CTF policies to the extent required following review.
Undertake critical review of non-high risk clients and file reports of the findings.
Conduct enhanced due diligence and AML/CFT remediation on non-high risk clients where necessary.
File STRs where necessary on an ongoing basis.
Provide detailed training to staff regarding their obligations under new rules including possible
assessment and/or interviews as well as to increase their general tax awareness.
Advising clients on options for tax regularisation.

Phase 3 From July 2014
Undertake periodic independent audits of client onboarding process.
Ongoing monitoring of staff awareness of obligations under new rules including possible assessment
and/or interviews.
Ongoing updating of tax related red flag indicators.
Advising clients on options for tax regularisation.

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