Let me stress that banking confidentiality is not absolute. It is intended to protect the legitimate privacy needs of investors. But we will not allow banking confidentiality to be used to shield criminal activities. Where there are sufficient grounds to indicate that a crime has been committed with wilful intent, then confidentiality is no bar to co-operation. MAS will review the Banking Act to ensure that this continues to be the case, as new modalities on cross-border co-operation evolve. Enhanced vigilance against suspicious flows Let me move on to my fourth point on enhanced vigilance against suspicious flows. Some people have alleged that Singapore is benefiting from an inflow of hot monies, especially from Europe, supposedly following the adoption of enhanced exchange of information provisions among EU countries. Tales of large inflows of funds from Europe into Singapore are vastly exaggerated. According to the Boston Consulting Group, European wealth is estimated at just 10 percent or $ billion of the $ billion offshore assets under management in Singapore and Hong Kong.3 This is corroborated by anecdotal feedback. As one banker puts it, the emergence of Singapore and Hong Kong as wealth management hubs has to do with more Asian wealth being retained in Asia rather than a flight of new funds to Asia. The growth of Singapore’s private banking industry has been and will continue to be spurred largely by the wealth created from the strong economic growth in Asia. Nonetheless, we must remain vigilant against potential negative spillovers of illicit funds triggered by external developments.

What makes Singapore attractive as an international financial and wealth management centre? Wealth desires stability. Singapore’s political and economic stability, transparency in governance, and sound and predictable regulation, are often cited by private bankers and clients alike as the fundamentals underpinning its attraction. Efficiency, connectivity, and sound infrastructure are added advantages. Singapore has been ranked by the World Bank, for the sixth year running, as the easiest place to do business in the world. Perhaps the decisive advantage is the larger financial eco-system that exists in Singapore. Strong capabilities in asset management, foreign exchange and derivatives trading, coupled with deep and liquid capital markets – these are the ingredients that make Singapore the ideal base for the intermediation of wealth in Asia. But to use a common phrase in the industry, past trends are no guarantee of future performance. Whether Singapore continues to do well in wealth management will depend critically on three imperatives.   First, we must raise competencies in the industry.   Second, we must enhance market conduct.   Third, we must keep the financial sector clean. Strong competencies Let me begin with raising competencies. The wealth management industry in Asia is facing a shortage of talent. Private banks are rapidly expanding to meet the needs of a growing affluent class. If Singapore is to sustain its growth as a wealth management centre, there is an urgent need to raise competency levels in the industry and to build a strong pipeline of talent.