Singapore is “a convenient destination to protect and add value to your international wealth,” according to the website of one of the 205 banks operating in Singapore today. So is Singapore the best offshore banking country for the new decade?
Singapore has become a sophisticated private banking and wealth management base for Asia in recent years. But in addition to targeting its traditional but fast-growing market of wealthy businessmen in Asia, banks in Singapore today are also developing tailored products and services for North Americans, Europeans and Australians, including multi-currency accounts.
Typical investors in the latter group are looking for first-world banking services, delivered over the Internet in English, in an independent-minded sovereign country that lies outside the sphere of influence of the United States and the European Union.
Singapore, one of the most prosperous countries in the world, fits the bill. Today it has a prominent financial center and a highly developed economy. Its flexible regulatory framework, independent judiciary and practical legal system based on English common law have become the foundations of the country’s success.
As with most offshore financial centers, interest earned by individuals on bank deposits and foreign source income, including foreign source dividends received on non-Singaporean securities, are exempt from Singapore tax. Singapore also has no capital gains tax or inheritance rights on bank deposits and investments.
Accounts can be freely held in all major currencies. These multi-currency accounts provide an excellent hedge for those of us who anticipate large devaluations of currencies such as the dollar and the euro in the coming months and years.
Accounts can also be opened in the names of foreign entities such as corporations, trusts and limited liability companies, achieving even greater privacy and asset protection benefits and sometimes legally circumventing any requirement to report assets as personal property.
All of these benefits are delivered under a robust bank secrecy regime, helping account holders protect their investments from prying eyes inside or outside the country. Bank secrecy in Singapore is not only established by law, but is part of the national business culture. In fact, the Singapore tax authorities have specifically blocked access to individual bank accounts.
As in Asia in general, much business in Singapore has traditionally been conducted in cash. This is summed up by the $10,000 bill, the highest value banknote in the world: at the current (February 2010) exchange rate, one of these bills is worth more than seven thousand US dollars. These days, however, as restrictions on cash get tighter, sophisticated internet banking is becoming the norm.
So if you are not a Singapore resident, how can you access these banking services? It all starts with opening a checking, savings or basic checking account, the foundation of your banking relationship.
One of the disadvantages of banking in Singapore is that you will have to go there to open an account. Banking regulations do not allow account opening by mail, unless the bank already knows the customer. The only possible exception to this is to open an account at one of the many banks in Singapore that send officials to visit their wealthiest clients in their homes abroad or have partner offices in other countries. HSBC customers, for example, can open HSBC accounts in Singapore through their local offices. However, the above process is not recommended if bank secrecy is important to you, as it leaves your account details accessible in other jurisdictions. In any case, I always recommend visiting at least once so you can meet your banker personally.
Other than that, opening your account should be relatively easy. There are few complications. If you choose one of the commercial banks, a few hundred dollars will be enough to open an account. If you want a higher level of personal service and are prepared to make a larger deposit, say more than $100,000 or the equivalent (banking policies vary widely), contact one of the private banking operations.
A list of banks operating in Singapore is available on Wikipedia and you can contact them directly. However, it is always easier if you have a presentation from a regulated professional who is known to the bank, such as a lawyer, accountant or company formation agent.
In terms of documentation, you are expected to provide proof of who you are (a copy of your passport), where you live (such as a utility bill), and most importantly, proof that the funds came from a legitimate source. . For example, if the funds you are depositing were obtained from a real estate sale or from an inheritance, you will need to show the relevant legal documents to prove it. Finally, it is advisable to carry a reference letter from your bankers at home, presenting you as the responsible account holder. This bank reference can be addressed ‘to whom it may concern’.
So if you are considering offshore banking, consider Singapore!