Banking Inside of Singapore
For high net worth locals and expats in Singapore, there are a number of banks that offer private banking with a focus on providing a high level of customer service. They not only want to keep their customers assets safe, but also help them to invest their assets and grow portfolios. Singapore does have advantages over many other developed jurisdictions when it comes to banking.
Advantages of Banking inside of Singapore
Singapore has proven to be very stable, both politically and economically. In 2010, Singapore ranked #1 in the TI Corruption Index. Singapore has retained a 'AAA' Standard & Poor's rating in a time when other countries have been downgraded as well. Another advantage is that, for the most part, Singapore does not place restrictions on investments from foreigners and actually provides incentives for investing in specific areas, such as Research and Development. To prove the openness of foreign investments into the country, Singapore was ranked as the #1 country for having the most open trade and investment in 2010 by the World Economic Forum and the easiest country to do business in by the World Bank in the same year. The areas in which Singapore does place some restrictions on foreign investment include property ownership, legal and similar professional services, financial services, domestic news media, broadcasting and telecommunications. Another advantage is that the high level of competition between banks in Singapore leave each bank working to provide the best service and features for their accounts to attract customers. Additionally, banks in Singapore generally have branches throughout the country, so finding a branch near you should not be a problem. Finally, most accounts can be managed via the internet, and telephone and electronic banking are common account features.
Disadvantages of Banking inside of Singapore
When using a foreign bank in Singapore, it is important to remember that the Monetary Authority of Singapore limits the number of ATMs that foreign banks can own and the access the foreign banks have to Singapore's ATM network, which lowers the ease-of-use for people's daily transactions. Additionally, ATM fees will be incurred for use of any ATM card that is from outside of Singapore altogether. In addition, Singapore has in recent years, greatly expanded its network of Double Taxation Agreements and other treaties with foreign nations. This has allowed multinational companies, and some individuals, in Singapore to save money on taxes if their home jurisdiction has entered into a treaty and they repatriate funds. Another result of these treaties is that is that the level of information sharing that Singapore engages in with other countries has increased dramatically. Any information that the Singapore government can obtain from banks may be shared with a company or person's home country if sufficient evidence is produced to prove to the Singapore government that action should be taken. This has raised fears among foreign companies and individuals in Singapore that prefer to keep their information private and out of the hands of any government.
Beyond these basic advantages and disadvantages, there are also some other important issues that should be considered when deciding to bank inside or outside of Singapore.
Singapore companies, whether they are operating companies or holding companies, can obtain great tax benefits when doing business in Singapore by taking advantage of the offshore exemption that Singapore allows for foreign businesses. A Singapore company will not have to pay taxes on any income that it receives as a result of business that is conducted offshore. However, Singapore (unlike many other popular offshore jurisdictions) has an additional caveat that makes banking in Singapore far less attractive. If any offshore income is remitted back to Singapore it will be subject to taxation. This means that an offshore company in Singapore will have to do its banking outside of the country in order to take advantage of the tax benefit.
Know Your Customer (KYC)
Among banking professionals all around the world, the phrase that may be most reviled is "Know Your Customer". Recently, governments around the world have been cracking down on banks and the individuals and companies that they do business with. Due to concerns such as tax evasion, terrorism and identity theft, many regulatory bodies have been digging deep into bank records and demanding that banks know exactly who their clients are and where their money is coming from. Today, KYC documents are normally required for opening bank accounts. Be it a corporate account, a personal account or any other type. These items will generally include:
Certified passport copy
Proof of address
Reference letter from your current employer, and possibly from a bank, lawyer, accountant or similar professional
Signed application form and other bank documents
Copy of National Registration Identity Card for Singapore residents
Detailed background information and information on source of wealth/funds
This information and documentation will be required for each person with access to the account and each director or significant shareholder related to a corporate bank account. In addition to the above documents, during the account opening process the bank may ask for additional supporting documentation should any questions arise. You should prepare to be asked for additional documents and for the process taking extra time, as banks are inclined to err on the side of caution.
Without having this information, banks are open to huge fines from governments and may even be denied the right to do business in a particular jurisdiction. This has recently been an issue with banks such as HSBC and Standard Chartered in the United States. Since Singapore is one of the largest and most developed business centers in Asia, it is safe to assume that every bank in Singapore will require KYC documentation in order to open an account. Although it may cause extra hassle in regard to opening your account, KYC also enables you to be confident that the bank with which you do business with is only working with other upright citizens.
As can be seen in the material above, the average person should be able to take advantage of the great banking services that Singapore provides. Whether you are a high net-worth expat or a local, Singapore's banks are open to nearly everyone and provide excellent customer service and account options. However, there are specific situations in which it will be beneficial to look outside of Singapore for banking services.
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