By Adam Richardson
One of the all time most viewed blog posts on the Q Wealth site is an article that is almost 3 years old now…
“How to Open an Offshore Bank Account in Singapore” continues to draw comments and questions like few other topics we’ve written about. So it’s high time for an update.
The following is a message from Q Wealth co-editor Peter MacFarlane that was delivered exclusively to subscribers of our free email newsletter. In it, Peter makes his case for Singapore still being an incredible place for many things…but banking is no longer one of them.
Before we move on I should point out that if you were a subscriber you would have received this information several months ago! So if this topic (or any topic you read about on the Q Wealth Report) interests you I urge you to at least sign up for our free newsletter to make sure you are always informed of the latest actionable, wealth protecting and growing intel from around the globe.
So much has changed in the past few years, here is Peter’s updated take on offshore bank accounts in Singapore.
WHY I DON’T LIKE SINGAPORE BANKS
Singapore has a lot going for it. I think in many ways, it’s almost the ideal model of the nation state of the future. At the same time, it’s a hark back to city states of the past, from the Roman empire to the Hanseatic League.
It has a great quality of life, a liberal, low-tax economy that encourages innovation and entrepreneurialism. It’s relatively quick and easy to acquire Singapore citizenship. Since Singapore operates as a benevolent dictatorship, it’s even quicker and easier to lose Singapore citizenship if you do something to upset the government!
All the above points are good in my view. But I’m totally fed up with Singapore as an offshore banking center.
I’ve never been overly keen on Singapore banking, but over the past two to three years it seems to have become ‘trendy.’ We had lots of clients wanting to open Singapore bank accounts. There was lots of talk of Singapore being ‘the next Switzerland.’ Swiss banks have moved major parts of their client base lock stock and barrel to Singapore.
Well now, Singapore really is the next Switzerland – its banking sector and its government are both feeling the pressure from high tax countries. Only Singapore has rolled over far more than Switzerland ever did. Singapore this week signed a tax information exchange agreement with Germany, and others, including the US and UK, are sure to follow soon. The Monetary Authority of Singapore has actually announced plans to penalize banks that open accounts with untaxed money. If Singapore banks were not paranoid enough already, this will surely make them more so.
Let’s go back to my personal experience, on the consulting side of our business, for a moment. As I said, it became ‘trendy’ a few years back for our clients to want bank accounts in Singapore, and to a lesser extent Hong Kong. We duly started to offer this service, putting people on the ground in both Asian financial centers. Whilst we certainly opened quite a number of these accounts successfully, I have never spent so much time putting out fires as for those clients who opened Singapore bank accounts.
Banks in Singapore have proven unpredictable. They offer to open accounts on certain terms, then when we take clients there ready to sign, with hundreds of dollars worth of specially notarized papers demanded by the bank, they change the terms or refuse to open the account altogether. They refuse other accounts for no logical reason. With others, they charge a huge due diligence fee to open the account, then close it unilaterally after a few months without even attempting to communicate with the client about any possible difficulties and without giving any hint of why they closed it.
Probably most of these problems are due to misunderstandings. While Singapore banks might be fluent in English, they are culturally very different. A common language does not necessarily mean other things in common. For example, I think the typical American client will find it much easier to deal with an Austrian banker than a Singapore banker, even though the Singapore banker is a native English speaker and the Austrian is not. So… why deal with banks where misunderstandings are likely to occur?
I have yet to find one Singapore bank where I could sit down and have a sensible partner-level conversation with someone who has the discretion to be a little flexible or to tailor services to our clients’ requirements, something that is quite normal in our relationships with European or Caribbean banks. Banks in Europe and the Caribbean want our business and are prepared to go that extra mile to get a good new client on board – banks in Singapore (and Hong Kong for that matter) act like they are doing us a favor.
And I’m not the only one with this problem. I’ve talked to bigger businesses than ours who send literally hundreds of new clients per year to Singapore banks. Still, the flexibility doesn’t extend any further than sending a low-level bank employee to visit the client rather than the client having to go to the bank. I’ve also talked to Singaporean financial advisers and they have exactly the same problem.
Maybe they don’t like our profile of clients. That is very likely. We have ‘middle class’ western clients depositing anything from $5,000 up to $5 million. They are more interested in Chinese clients who might walk in the door with $50 million from the sale of a factory. Or maybe they just have too much money already with them and they don’t know what to do with it. Seriously, that does seem to be a problem too.
Anyhow, this tax treaty with Germany is the final straw. While I certainly don’t expect a banking center to stand up and openly court clients who are evading tax in their home countries, volunteering to actively assist in the tax collection efforts of other nations is really too radical for me! That is something that Switzerland, for example, has never done. Switzerland has a centuries-old private banking industry, while Singapore’s is just celebrating a few decades. I predict Switzerland will still be active in this business once Singapore’s banking centre is a distant memory.
Now don’t think for a second that we would tell you what we no longer like without providing you a better option! As I said earlier, we live in a time of rapid change and shifting opportunities. But keeping you informed of the latest, safest, and most profitable changes is a job we take very seriously here.
Within the next few weeks we will be looking at your best banking bets for 2013. Join our mailing list to be among the first to get access to this information.
What are your views on or questions about Singapore banking accounts? Leave a comment!