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 developed in recent years into a sophisticated private banking and wealth management base for Asia. But besides targeting their traditional but fast growing market of wealthy entrepreneurs in Asia, banks in Singapore today are also developing products and services tailored for North Americans, Europeans and Australians, including multi currency accounts.
Typical investors from this latter group are looking for first-world banking services, delivered over the internet in English, in an independent-minded, sovereign country that is outside the zone of influence of the United States and the European Union.
One of the world’s most prosperous countries, Singapore fits the bill perfectly. Today it boasts a prominent financial center and 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.
In common with most offshore financial centers, interest earned by individuals on bank deposits and foreign sourced income – including foreign sourced dividends received on non-Singaporean securities – is exempt from Singapore taxes. Singapore also has no capital gains tax nor estate duty on bank deposits and investments.
Accounts can be freely maintained in all major currencies. These multi currency accounts provide an excellent hedge for those of us who foresee major devaluations of currencies like the dollar and the euro in the months and years ahead.
Accounts may also be opened in the name of foreign entities like corporations, trusts and LLCs, achieving even greater privacy and asset protection benefits, and sometimes legally sidestepping any requirement to report assets as personal holdings.
All these benefits are delivered in a strong bank secrecy regime, helping account holders to protect their investments from prying eyes inside or outside the country. Banking secrecy in Singapore is not just laid down by law, but is part of the national business culture. Indeed, tax authorities in Singapore are specifically blocked from having any access to individual bank accounts.
As in Asia in general, a lot of business in Singapore has traditionally been carried out in cash. This is epitomized by the $10,000 bill, the highest value bank note in the world: at current exchange rates (February 2010) one of these bills is worth well over seven thousand US dollars. These days, however, as restrictions on cash are becoming tighter, sophisticated internet banking is becoming the norm.
So, if you are not resident in Singapore how can you access these banking services? Everything starts with opening a basic current, savings or checking account – the basis of your banking relationship.
One of the disadvantages of banking in Singapore is that you will need to go there to open an account. Banking regulations do not permit the opening of accounts by mail, unless the client is already known to the bank. The only possible exception to this is opening an account at one of the many banks in Singapore that send officers to visit their wealthier clients in their overseas homes, or have associated offices in other countries. HSBC clients, for example, may be able to open accounts at HSBC in Singapore via their local offices. The above process, however, is not advisable if banking secrecy is important to you, since it leaves details of your accounts accessible in other jurisdictions. In any case I always recommend visiting at least once so you can get to know your banker personally.
Apart from that, opening your account should be relatively straightforward. 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 higher deposit, let’s say over a hundred thousand dollars or equivalent (bank 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. It is always easier, however, if you have an introduction from a regulated professional who is known to the bank, such as a lawyer, accountant or company formation agent.
In terms of documentation, you will be expected to provide proof of who you are (a copy of your passport), where you live (such as a utility bill) and most importantly of all, proof that the funds come from a legitimate source. For example, if the funds you are depositing were obtained from a real estate sale or from an inheritance, you would show the relevant legal documents to prove this. Finally, it is advisable to take a letter of reference from your bankers at home, introducing you as a responsible account holder. This bank reference may be addressed ‘to whom it may concern.’
So if you are considering banking offshore – consider Singapore!