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US clients turned away by Singapore Banks due to onerous US tax laws

US clients turned away by Singapore Banks due to onerous US tax laws

That is what some of the world's largest wealth-management firms are saying ahead of Washington's implementation of the Foreign Account Tax Compliance Act, which seeks to prevent tax evasion by Americans with offshore accounts.

HSBC, Deutsche Bank, Bank of Singapore and DBS all say they have turned away business.

"I don't open US accounts, period," said Ms Tan Su Shan, head of private banking at DBS, South-east Asia's largest lender, who described regulatory attitudes toward US clients as "draconian".

The 2010 law, to be phased in starting Jan 1 next year, requires financial institutions based outside the United States to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all US citizens living abroad, which could affect their ability to generate returns.

The almost 400 pages of proposed rules issued by the US Internal Revenue Service (IRS) in February create "unnecessary burdens and costs", the Institute of International Bankers and the European Banking Federation said in an April 30 letter to the IRS, one of more than 200 submitted to the agency. The IRS plans to hold a hearing May 15 and could amend how and when some aspects of the rules are implemented. It cannot rescind the law.

Most of the hedge funds I know in Asia won't take American clients," said Mr Faber.

Bank of Singapore, the private-banking arm of Oversea-Chinese Banking Corp (OCBC), ranked strongest in the world for the last two years by Bloomberg Markets magazine, has turned away millions of dollars from Americans because it does not want to deal with the regulatory hassle, according to chief executive officer Renato de Guzman. The bank had US$32 billion (S$40 billion) under management as of the beginning of the year.

"It's too complex, too challenging," he said. "You probably should have a dedicated team to handle them or to understand what can be done or what cannot be done."

At industry meetings he attends in Singapore, not accepting US clients is "quite a prevailing sentiment", he added. There are 18 private banks operating in Singapore, including units run by UBS, Credit Suisse, Deutsche Bank and HSBC, he said.

"We have enough business in Asia, so we don't want to make our lives too difficult," Mr de Guzman said.

Asia has the world's fastest-growing number of people with more than US$1 million in investable assets, according to a report last year by Bank of America and Capgemini. Singapore is Asia's largest wealth-management centre, with US$512 billion in offshore assets in 2010, data compiled by the Boston Consulting Group show... BLOOMBERG

Read more at: Tax Times blog

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