Singapore’s trusts sector has been the target of misconceived views that they are little better than vehicles for people hiding their identities to evade taxes or for other illicit reasons, the Monetary Authority of Singapore has said.

Singapore’s trusts sector has been the target of misconceived views that they are little better than vehicles for people hiding their identities to evade taxes or for other illicit reasons, the Monetary Authority of Singapore has said.

There are, since mandatory licensing legislation took effect in Singapore in 2006, now 53 licensed trust companies in the city-state, with banks, law firms and other professional services firms growing their resources in this field, Jacqueline Loh, deputy managing director at the MAS, said in a keynote speech at a conference late last week.

“Notwithstanding the important and legitimate roles of trusts, the trust services industry has come under increased scrutiny for the confidentiality it provides. There is a misconception at times that trusts are mostly being used to conceal one’s identity or beneficial ownership for tax evasion or other illicit purposes,” Loh said.

“Indeed, if left unregulated, trust structures can be vulnerable to being abused by criminals,” Loh continued.

Her speech comes at a time when it is sometimes suggested that Singapore will grab some of the money that is no longer resident in Switzerland and other secretive locations but the tone of her remarks about trusts and tax doesn’t suggest the city-state wants to be seen as a soft touch.

“With the growing use of trusts, it is critical that we have in place regulatory frameworks that can support its development and help to ensure international confidence in the trust industry. Singapore maintains one of the most modern and robust frameworks for the regulation of trust companies - we are one of the first financial centres to have introduced mandatory licensing for trust companies, under the Trust Companies Act,” she continued.

She pointed out that trust companies regulated under the TCA must comply with the MAS Notice on Prevention of Money Laundering and Countering the Financing of Terrorism. The MAS Notice requires trust companies to identify and verify the identity of trust relevant parties, perform ongoing transactions monitoring and file suspicious transaction reports.

On the controversial issue, meanwhile, of beneficial ownership, which has raised fears that any disclosure to put legitimate private interests at risk, she said: “We believe that increased transparency on beneficial ownership is consistent with continued strong growth in the trust industry. Conversely, Singapore’s reputation as a dynamic trust centre could easily be tainted by just one or two incidents where proceeds derived from illicit activities are found to be linked to trust companies or trusts in Singapore because of inadequate due diligence.”

“Singapore’s approach has been to strike a balance between protecting the legitimate need for confidentiality, while ensuring that this protection is not abused for illegitimate purposes. This is consistent with our approach taken with regard to tax crimes,” she continued, reiterating Singapore’s recent support for G20 and other multinational agreements on tax transparency.