This month’s key regulatory and compliance-related developments in private banking and wealth management PBI.
Bank of Singapore to launch Luxembourg wealth business
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Bank of Singapore, the private banking unit of OCBC, has received an investment company licence to set up a wealth management subsidiary in Luxembourg. The move is said to be a first for a private bank in Singapore. The new subsidiary, BOS Wealth Management Europe, is scheduled to become operational in the third quarter of this year and officially launch in the second quarter of 2019. The business will enable Bank of Singapore to provide private banking and investment advisory services to UHNW and HNW clients in the European Economic Area and UK. At present, the bank services European clients from its Singapore base and the London office of its parent. The Luxembourg unit will be led by Anthony Adriano Simcic, who joined Bank of Singapore in March this year. Simcic was previously head of private banking at HSBC Private Bank in Luxembourg. In his new position, he will report to Bank of Singapore’s global market head for Singapore, Malaysia and international, Olivier Denis.
Credit Suisse fined $77m by us regulators for hiring practices in Asia
Credit Suisse Group has agreed to pay a fine of around $77m to US regulators to resolve charges of offering jobs to the friends and family of Chinese officials in an effort to gain business opportunities. The Swiss bank’s Hong Kong arm will have to pay around $30m to the Securities and Exchange Commission (SEC) and a $47m criminal penalty to the US Department of Justice. Chief of the SEC enforcement division’s Foreign Corrupt Practices Act (FCPA) unit, Charles Cain, said: “Bribery can take many forms, including granting employment to
friends and relatives of government officials. Credit Suisse’s practice of engaging in these hiring practices violated the law, and it is now being held to account for having done so.” The regulators accused the bank of breaching the FCPA by hiring and promoting individuals referred by or connected to government officials. According to the watchdogs, the bank recruited over 100 such individuals between 2007 and 2013 to generate more profit. The regulators also alleged that other bank subsidiaries were aware of the hiring practices, and in some cases approved the referral hires. Credit Suisse admitted the wrongdoing, saying the referral hires were less qualified than other staff at the same level, vetted less strictly, and were provided several benefits to help the bank win banking business. The bank also said the settlement would have no material effect on its results.
NPB Neue Privat Bank fined $5m over US tax evasion charges
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By GlobalDataZurich-based NPB Neue Privat Bank has agreed to pay a $5m penalty to resolve the US Department of Justice (DoJ)’s allegations of helping US clients to evade taxes. The DoJ alleged that, until 2012, the private bank operated a cross-border banking business that helped US clients dodge taxes by enabling them to maintain undeclared accounts in Switzerland. The regulator also accused the bank of providing various banking services, such as numbered accounts and mail holding, which could help clients hide assets and income from the US authorities. According to the DoJ, NPB managed assets of around $400m in 353 US-related accounts – both declared and undeclared – between 1 August 2008 and 31 December 2015.
The bank has now signed a non-prosecution agreement with the DoJ, agreeing to cooperate in criminal or civil proceedings. The DoJ tax division’s principal deputy assistant attorney general, Richard Zuckerman, commented: “The Department of Justice is committed to ending the practice of using foreign bank accounts to evade taxes. “Taxpayers and financial institutions should take notice that the department is continuing to aggressively pursue these cases.”
Australia approves fund passport bill for Asia
The Australian parliament has passed the Asia Region Funds Passport bill, which will enable Australian funds to access Asian markets under a funds passport agreement. The bill, which amends the Corporations Act 2001, will enable Australian managed funds to serve as passport funds and sell products to participating nations. Australia, New Zealand, Japan, South Korea and Thailand are the current signatories to the agreement. Minister for Revenue and Financial Services Kelly Megan O’Dwyer said: “Australian fund managers will be able to sell a single product across Asia and achieve greater economies of scale. This should allow lower costs for consumers.” The latest decision was welcomed by wealth industry data manager APIR Systems. APIR CEO Chris Donohoe said: “The passing of the bill follows the launch of a pilot program at the start of this year to test the regulatory framework and to investigate operational requirements, and APIR has been a strong supporter and participant in the pilot.”
