Indonesia Scrutinizes U.K. Bank's Clients -- WSJ

At issue is whether tax is owed on transfers at Standard Chartered accounts

By Margot Patrick 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 11, 2017).

Indonesia is investigating whether dozens of citizens with trust accounts at Standard Chartered PLC owe tax after transferring $1.4 billion from Guernsey to Singapore in 2015.

The transfers, made just before an automatic tax information sharing program took effect in Guernsey, involved 81 Indonesians, Indonesia's top tax official said late Monday. He said no names from the military, police or other law enforcement were on the client list, contradicting earlier reports that Indonesian military officials were among the account holders.

The client transfers and subsequent probes by regulators in Guernsey and Singapore were reported by Bloomberg last week. On Monday, Singapore's Monetary Authority confirmed it is conducting an investigation and will take "firm action" against any financial institution or individual found breaking its anti-money-laundering or counter terrorist financing rules. Guernsey's Financial Services Commission didn't immediately return a call Tuesday.

Ken Dwidjugiasteadi, director general of tax at Indonesia's finance ministry, said 62 of the 81 people had participated in a recent tax amnesty program in Indonesia. He said ministry tax officials have been studying the matter for two months and expect to finish by the end of October.

Standard Chartered self-reported the transfers after questions were raised internally over their timing, and on due diligence conducted on the clients, a person familiar with the matter said. It acquired at least some of the clients in 2008 when it bought American Express Bank Ltd. and its trust business. Last year, Standard Chartered said it was moving the Guernsey trust business to Singapore because of changing client needs.

Guernsey joined other countries automatically exchanging tax information on individuals and companies a year earlier than Singapore. It committed to make its first exchange in 2017, while Singapore isn't due to exchange information until 2018 under the common reporting standard endorsed by the OECD.

The standard is part of a global effort to crack down on tax evasion.

--I Made Sentana in Jakarta and P.R. Venkat in Singapore contributed to this article.

Write to Margot Patrick at [e-mail]

(END) Dow Jones Newswires

October 11, 2017 02:47 ET (06:47 GMT)

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