Let’s get financial practitioners duly certified

Automatic exchange of information today means tax compliance is high on agenda, according to forum

By HABHAJAN SINGH / Pic By HUBBS

Asian financial outfits have to give serious thought to enhancing their expertise via certification, unlike how the engineering and the medical fraternities go about their business. At the same time, the players and regulators will also likely pay more heed towards transparency.

These two issues were echoed at a recent compliance forum in Singapore.

Noting that Asians have always been very education and certificate focused, one banker suggested that, moving forward, the region needs to make sure that its practitioners are duly certified.

LGT badges itself as the world’s largest private banking and asset management group, fully owned and managed as a family business

“I think, if we’re going to be very serious as a financial centre, for the region, if not internationally, as well as promoting ourselves as one of the leading financial centres, we need to make sure that our practitioners are duly certified and that at least they have minimum, if not average, standards, which the rest of the world, our clients, believe in,” LGT Bank (Singapore) Ltd MD/deputy CEO Conrad Lim said at the recent Compliance in Asian Wealth Management Forum 2018 in Singapore.

LGT badges itself as the world’s largest private banking and asset management group, fully owned and managed as a family business.

Lim took part in a panel session discussing the hot topics and trends in compliance.

He was joined by Hubbis general counsel/MD Gez Owen, Credit Suisse compliance head for private banking for South-East Asia Stefan Kuhn, Standard Chartered Bank plc compliance head for wealth markets products and sales Alison Fidler, Schroders Wealth Management head of compliance and risk Marina Woon, Associates Pte Ltd chief risk officer Matthew Maddocks and Helvetic Investments Pte Ltd fund manager Ville Oehman.

Global Transparency
On transparency, a Singapore-based lawyer noted that there was a global change towards transparency.

“And as a result, we’re probably going to see a lot more onshoring of companies,” Vikna Rajah, a partner at Singapore law firm Rajah & Tann Singapore LLP, told the forum.

“In fact, I’ve seen that in practice for trust structures moving away from offshore underlying holding companies to onshore holding companies, because in many instances it can actually be tax neutral, but you do not have the stigma of having offshore companies in play,” added Vikna, who heads the firm’s tax, trust and private client unit.

Their remarks were made available in a post-event note by the one-day forum organiser, Hubbis (HK) Ltd.

In the note, Hubbis observed that automatic exchange of information today meant that tax compliance is now high on the agenda for private banks and other wealth managers in a world where cross-border regulatory cooperation is becoming the new norm.

In this area, Vikna noted that the global climate is changing towards tax avoidance.

“What would have been acceptable, tax efficient planning 10 years ago, could be considered tax avoidance now. Actually, what could be considered tax avoidance a few years ago may even cross the line to evasion. And it’s something which I’ve seen in practice,” he said.

One contentious area involves how multinational corporations (MNCs) handle their tax returns. At the global level, Organisation for Economic and Cooperation Development (OECD) is pushing for the Base Erosion and Profit Shifting project which aims to foster consensus on how to modify corporate tax rules to prevent MNC tax avoidance.

On Jan 24, Malaysia signed the OECD-led multilateral instrument, effectively joining the international community in taking collective measures to make it more difficult for large corporations to artificially shift their profits to low, or no tax jurisdictions.

Avalanche of Regulations
In the same post-forum note, Hubbis noted that compliance issues are ever more onerous in both their sheer number, and their complexity, creating numerous challenges for private banks and wealth management firms of all sizes.

When dealing with regulation, LGT’s Lim noted that it is always a challenge with the “avalanche of regulations”. “We’ve been pretty reactive, we’re always under-resourced. The difficult thing is trying to cope with the core, the crux of what these regulations are trying to deal with. It is typical of any of us in the risk management sphere, dealing with the unknown unknowns,” he said.