Sunday, March 6, 2016

Singapore using bank secrecy laws to help 1 MDB perpetrators , but US IRS seems likely to force disclosure .Falcon Bank may be the chink in Singapore's armour.

by Ganesh Sahathevan

An ongoing tax matter that is being prosecuted by the US Internal Revenue Service (IRS) provides some clues about how the Singapore Government may be using banking secrecy laws to ensure that evidence of the 1 MDB theft remains hidden if not obscured. According to Bloomberg:

The Internal Revenue Service is seeking to force UBS Group AG to turn over records on an account in Singapore held by a U.S. citizen, potentially opening a new front against offshore tax evasion beyond Switzerland.

Singapore Secrecy

The U.S. has focused largely on Switzerland in recent years as it has fought offshore tax evasion. More than 80 Swiss banks, including UBS and Credit Suisse Group AG, have agreed to pay a total of $5 billion or so in penalties and fines. The question is where the IRS and the Justice Department will turn next as they sift through a trove of data gathered from Swiss banks and from more than 50,000 U.S. taxpayers who disclosed their accounts to avoid prosecution.The Hsiaw case provides some clues. IRS agents served a summons on UBS in 2013 for records of his account in Singapore from 2001 to 2011. The bank said it couldn’t produce them because Singapore’s bank secrecy laws prevent disclosure without permission from Hsiaw, which he hasn’t provided, according to a court filing.

“Even if Singapore’s bank secrecy laws, as UBS contends, precludes disclosure of the summoned bank records relating or pertaining to Hsiaw’s Singapore account(s), international comity requires that the records be disclosed,” IRS revenue agent James Oertel said in the filing.

Neiman, the former prosecutor, said that “UBS can be held in contempt if they don’t produce the records. I think it’s the IRS’s way to start getting at Singapore.”

The 1 MDB matter is likely to give rise to a number of tax issues in the US given investments in that country by a number of main characters in the 1 MDB debacle.The main character ,Taek Jho Low, is said to be a US ciitzen, while his associates in the matter including PM Najib Razak's stepson have all been reported to have made investments in the hundreds of millions in the US out of the 1 MDB kitty.
Then there is this link which was reported on this blog:

Falcon Bank in breach of US Non-Prosecution Agreement: Swiss AG says quantum of related transactions is USD 4 billion,while Singapore MOF,MAS, remain silent

Meanwhile, the Singapore Government, notorious for its secrecy seems unable to comprehend that open source intelligence is a large and growing fascinating beast.

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