SINGAPORE: The Monetary Authority of Singapore (MAS) is reviewing information about Singapore-based firm Asiaciti Trust, which has appeared in a massive leak of financial records dubbed the Pandora Papers.
“MAS is examining the information from these latest reports and will conduct supervisory follow-up as warranted,” an MAS spokesperson said in response to media queries.
“MAS does not tolerate the abuse of our financial system for illicit activities and will not hesitate to take action against FIs if they breach these requirements,” the emailed response added.
What are the Pandora Papers?
The Pandora Papers refer to a massive trove of almost 12 million confidential files leaked from 14 offshore services firms around the world, including Singapore-based Asiaciti Trust.
The files revealed secret offshore holdings of about 336 high-level politicians and public officials in 91 countries and territories, said the International Consortium of Investigative Journalists (ICIJ), which received these leaked documents and shared them with 150 media organisations to start a nearly two-year investigation. The investigation findings were released on Sunday (Oct 3).
ICIJ said it is not illegal to have assets offshore or to use shell companies to do business across national borders, but such transactions “often amount to shifting profits from high-tax countries, where they are earned, to companies that exist only on paper in low-tax jurisdictions”.
It is “especially controversial” for political figures given how offshore shelters may be used to keep politically unpopular or even illicit activities from public view, added the consortium.
The politicians and public officials named in the Pandora Papers include Jordan’s King Abdullah, Czech Prime Minister Andrej Babis and associates of Russian President Vladimir Putin.
India’s cricket superstar Sachin Tendulkar, Colombian pop singer Shakira and German supermodel Claudia Schiffer were also among those linked by the secret documents to offshore assets.
This came on the back of the ICIJ’s earlier investigations into data leaks branded as the Panama Papers in 2016 and the Paradise Papers in 2017.
But compared to the Panama Papers where the leaked files came from a single offshore services provider, the Pandora Papers provided “more than twice as much information” about the ownership of 29,000 offshore companies, said ICIJ.
The records also included information “about the dealings of nearly three times as many current and former country leaders as any previous leak of documents from offshore havens”, it added.
Several global figures, such as Jordan’s King Abdullah and Czech Prime Minister Babis, have since denied any wrongdoing, according to a Reuters report this week.
Out of the 11.9 million leaked documents, nearly two million came from inside Asiaciti Trust – a trust and corporate service provider with operations in Singapore, Hong Kong, the Cook Islands, Dubai, Nevis, New Zealand, Panama and Samoa.
The company was founded by Australian accountant Graeme Briggs in Hong Kong in 1978.
The leaked files, spanning from 1996 to 2019, showed that Asiaciti Trust served at least 25 politicians to set up and manage trusts and shell companies in secrecy jurisdictions, said the International Consortium of Investigative Journalists (ICIJ), which spearheaded the probe.
These clients include Brazilian politician Eduardo Cunha who was sentenced to 15 years’ jail in 2017 for corruption, tax evasion and money laundering; Thirukumar Nadesan, a member of the Sri Lankan prime minister’s family who has been charged with misappropriating public funds and is yet to stand trial; as well as Nigerian senator Abubakar Atiku Bagudu.
The senator was kept on as a client by Asiaciti Trust despite allegations that he had helped former Nigerian president Sani Abacha steal billions of dollars from the country, said a report from ABC Australia, one of the media agencies which worked with the ICIJ on the investigation.
The Pandora Papers also shed light on the company’s business dealings with three Russian businessmen. They involved a “complex structure of trusts” worth as much as US$70 million in various assets such as real estate in Moscow, as well as stocks and bonds, according to The Guardian, another media partner of the ICIJ.
These high-profile Russians are Kirill Androsov, a former deputy chief of staff to Russian President Vladimir Putin; Herman Gref, the chief executive of Russian bank Sberbank and a former minister of economics; as well as Evgeny Novitsky, former president of Russia’s largest publicly-traded diversified holding company Sistema.
According to The Guardian, the leaked files showed that Asiaciti Trust’s handling of some transactions involving two of the Russians was cited by MAS as examples of the business failing to properly corroborate the source of its clients’ funds.
The regulator also reportedly criticised the firm’s senior management for failing to set an “appropriate tone, risk appetite and compliance culture for the company”, the same report said.
The Guardian, citing the Pandora Papers, said this “was not the only risky business” that Asiaciti Trust was involved in.
The report pointed to a company presentation done in 2001 where it “explored apparently legitimate ways (to) help a hypothetical Mexican businessman who held offshore assets that ‘have not been declared to Mexican revenue authorities’ and who did not expect to need to bring the money back to Mexico”.
Asiaciti Trust had proposed shutting down existing structures in the Caribbean, while setting up a trust in New Zealand that would own a company in Singapore which would, in turn, hold the businessman’s offshore assets, said The Guardian.
This is not the first time that Asiaciti Trust has been flagged by the ICIJ.
The independent consortium had previously named the trust specialist as part of its investigations into the 2017 Paradise Papers. Then, its report described Asiaciti Trust as the “firm that managed millions for a carousel of millionaires and fraudsters”.
Last year, MAS slapped a S$1.1 million penalty on Asiaciti Trust for committing “serious breaches” in anti-money laundering and terrorism financing requirements between 2007 and 2018.
For instance, it failed to look into the background and purpose of “unusually large transactions with no obvious economic purpose” that were undertaken by “politically exposed persons”. Such individuals are defined as those who are or have been entrusted with prominent public functions domestically, in a foreign country or international organisation such as heads of state or government leaders.
MAS did not specify details of these breaches in its announcement then.
In its latest statement to the media, the financial regulator said following its enforcement action in July last year, Asiaciti Trust “had taken remedial measures to address the deficiencies identified by MAS”.
This included conducting a review of customer accounts and transactions, terminating a number of higher-risk trust accounts and filing suspicious transaction reports.
“MAS continues to exercise close supervision of Asiaciti Trust,” the spokesperson said.
REPORTS BASED ON INCOMPLETE INFORMATION: ASIACITI TRUST
In a statement posted on its company website on Monday, Asiaciti Trust said the reports published by the ICIJ and its media partners are “based on incomplete and sometimes erroneous information, including some confidential information that was illegally obtained from Asiaciti Trust as part of a global attack on industry service providers”.
“In many cases the stories published do not represent all the facts or context of a situation. This has led to grossly misleading inferences and conclusions about Asiaciti Trust,” it added.
The company also said that “any organisation operating over such a length of time is likely to have legacy matters that do not reflect the current business”.
“We recognise there have been isolated instances in the past where we have not kept pace, and in these situations, we have worked closely with regulatory authorities to address any deficiencies and quickly updated our policies and procedures.”
Asiaciti Trust went on to say it maintained a “strong compliance programme”, with each of its offices having passed third-party audits for practices to guard against money laundering and terrorism financing.
“No compliance program is infallible – and when an issue is identified, we take necessary steps with regard to the client engagement and make the appropriate notifications to regulatory agencies,” the statement read.