Beyond the financial sector, law and accounting firms have also expanded their expertise to provide trust-related services to support this growing industry. “Myths” versus reality 7. Notwithstanding the important and legitimate roles of trusts, the trust services industry has come under increased scrutiny for the confidentiality it provides. There is a misconception at times that trusts are mostly being used to conceal one’s identity or beneficial ownership for tax evasion or other illicit purposes. Indeed, if left unregulated, trust structures can be vulnerable to being abused by criminals. The Financial Action Taskforce (“FATF”), an inter-  BIS central bankers’ speeches  1  governmental body that sets the global standard for measures to combat money laundering, terrorist financing, and the financing of proliferation, has identified specific typologies to illustrate common activities related to money laundering. In one such example, criminals could set up trusts to receive stolen assets, and then separate themselves from the assets by creating multiple layers. Singapore’s regulatory framework deters and prevents such criminal abuse. 8. With the growing use of trusts, it is critical that we have in place regulatory frameworks that can support its development and help to ensure international confidence in the trust industry. Singapore maintains one of the most modern and robust frameworks for the regulation of trust companies – we are one of the first financial centres to have introduced mandatory licensing for trust companies, under the Trust Companies Act (“TCA”).
As part of this effort, two key global standards are relevant to the trust industry – (i) transparency of beneficial ownership, and (ii) tax transparency through Automatic Exchange of Information (“AEOI”) between tax jurisdictions. These rules, when applied appropriately and consistently across all jurisdictions, can help to more effectively combat money laundering and other serious financial crimes including on tax. This in turn, will safeguard the integrity of the global financial system, of which the trust industry is a part, and create the conditions for sustainable growth. Increased focus on transparency of Beneficial Ownership 11. Let me first touch on the increased focus on beneficial ownership. 12. Given the risks of the misuse of corporate vehicles for illicit purposes, there has been increased international focus on transparency of beneficial ownership. Initiatives such as the FATF Anti-Corruption Work Group and the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes (“Global Forum”) are good examples. 13. There is also growing recognition that transparency of beneficial ownership will help to prevent and combat financial crimes. We can thus expect international standards setters such as the FATF to probe deeper in their assessment of how countries promote transparency of beneficial ownership. For example, the revised FATF Recommendations  2  BIS central bankers’ speeches  now include additional elaboration on the manner in which countries can go about enhancing the transparency of trusts.