It has sometimes been said that when Switzerland’s bank secrecy rules were under assault – they are now more or less dead at least as far as cross-border banking goes – some of the hot money that once resided in the Alpine state would head eastwards to Singapore. Well, leaving aside some of the natural cynicism that might arise when thinking about what regulators say, there is little doubt that Singapore does not want to be seen as a soft touch for dirty money.

In the short run, the ban may cause more pain for some in the Singaporean private banking industry already feeling pressure from decelerating Asian economic growth and the Indonesian tax amnesty. This publication, like others, is seeking clarity on what happens to the employees of Falcon in Singapore. The bank’s CEO, Walter Berchtold, who took up the post only a few weeks ago, said the firm will focus on growing its business in the “core locations of Switzerland, Middle East and London”. The bank has also said it is talking to staff, clients and partners so as to bring about an orderly wind down of its business. It may take some time before the specific impact is known and no doubt headhunters in Asia will be busy fielding calls from anxious Falcon staff about what they should do next. It is notable that during a press conference in Zurich yesterday, Berchtold felt obliged to say that the Middle Eastern owners of Falcon are not looking to sell. 

These are already unsettled times in Singapore, which is anxious to put itself forward as the foremost wealth management centre in Asia. The city-state faces the loss of some assets held in private banks because of the Indonesian tax amnesty, although fears of a wholesale pull-out of Indonesia-related money may be overdone, as discussed recently here. The scandal around allegedly dirty money flows from Malaysia’s 1MDB is potentially damaging, although Singapore is by no means the only jurisdiction affected – Switzerland, Luxembourg and the US have become involved. In Switzerland, for example, bank accounts linked to the affair have been frozen.

Ironically, Falcon’s name was mentioned to your correspondent recently by industry sources as a potential buyer of other Asia-based private banks as it seeks to gain scale, and as some banks look to offload non-core business. There is press speculation, for example, that ABN AMRO, the Dutch bank, is preparing to spin off its private bank in Asia. (That bank has declined to comment.) Falcon might, in happier circumstances, have been a suitor.

Falcon, which is owned by UAE-based International Petroleum Investment Company, joins a number of foreign-owned banks that in very different circumstances have shipped out of Singapore. Societe Generale and Barclays sold their Singapore-based private banks to local players; BSI has been told to leave the city-state and now Falcon has had to do the same. Despite all those comments about the ascent of wealth in Asia, the region has not proved a happy hunting ground for some foreign banks, and in the case of BSI and Falcon, they have the unenviable reputation of being shown the door for regulatory lapses.

There can be little doubt that the war against illicit money is not going away and the sooner that banks and other financial players live up to their commitments to run compliant businesses, the better.