There are limited risks when banking in Singapore. In fact, unlike other offshore banking jurisdictions, Singapore’s banking sector is financially sound, well-capitalized, and is perceived as one of the best banking jurisdictions in the world.
That said, like any jurisdiction, there are some (albeit limited) risks to banking in Singapore. So, we’re going to break down the Singapore-specific risks that you should consider before applying to open bank accounts below.
This article is part of our free series on banking in Asia, specifically in Singapore, which you can access by clicking here right now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Risks of Banking in Singapore
- Is Singapore Safe for Banking?
- Frequently Asked Questions
- Ready to Open an Offshore Bank Account?
Risks of Banking in Singapore
The main risks of banking in Singapore include non-resident banking risks and (closely associated) account closure risks. In other words, choosing the wrong bank could impact your ability to open accounts, access specific products and services, and keep your account opening long-term.
Is Singapore Safe for Banking?
Yes, Singapore is safe for banking if you choose the right bank, deal with competent bankers, and maintain reasonable deposits that match your risk tolerance.
In fact, Singapore is the pinnacle of banking stability. Banks here are financially sound, and well-capitalized, and offer world-class finance solutions, Singapore banking services, and customer service.
That said, like banking in any country, choosing the right bank, including the best bank in Singapore for your banking needs requires careful consideration. This is because, if you choose a bank that has poor management, irresponsible lending, and investing practices, and does not maintain adequate capital and liquidity ratios, it would not be considered “safe”.
As mentioned, there are two main risk factors that you should consider before banking in Singapore, especially if you’re looking for private banking in Singapore, which are non-resident banking risks and account closure risks. We discuss these risks in detail below.
Non-Resident Banking Risks in Singapore
Unfortunately, not all local banking groups, including the largest banks in Singapore, accept foreign non-residents. Likewise, those that do will not accept foreign non-residents from every jurisdiction. This means that, depending on your citizenship, opening accounts in Singapore can be difficult, time-consuming, costly, and unsuccessful.
Additionally, Singapore is also a member of most international regulatory bodies and information-sharing agreements, which means it is difficult for residents of FATF, EU, and UK-blacklisted countries to bank here. Likewise, account information is shared with the governments where an individual is a tax resident.
Importantly, another factor to consider beyond risk is the operational expense and cost of banking in Singapore as a foreign non-resident. Each bank has its own fee structure, including account opening, maintenance, and activity fees. While not all Singaporean banks charge all of these fees, many do. So, it’s important to confirm the bank’s fee structures before deciding where to open.
Of course, these risks and challenges can be overcome if you know which banks to approach and have the right account opening strategy. In certain instances, this might mean depositing a specific amount while in others you may need to just speak to the right banker.
These factors are very important in successfully opening an account here as they can impact your ability to transfer payments or send money to Singapore and can cause issues for individuals (or businesses) banking in the country. That said, if you are looking to open an account in the local tender and currency of Singapore, there are options worth considering.
Account Closure Risk
As one of the top banking jurisdictions in the world, it should be no surprise that Singapore abides by international banking regulations and follows standard compliance practices.
With this in mind, when a country gets added to a blacklist or when new regulatory and compliance requirements are introduced, existing accounts are often impacted. A recent example of this includes the accounts of Russian residents held at local institutions and Singapore banks. In many instances, these accounts were immediately closed, regardless of deposit.
That said, account closure risk is not a reason to avoid banking in one of the best jurisdictions available. Instead, it simply means that you should always have a backup bank account in another jurisdiction as well.
Additional Singapore Banking Nuances to Consider
In addition to risks, there are annoyances to banking in Singapore that you may want to consider before opening personal, private, or business bank accounts here.
In particular, one thing that differentiates Singapore banks from other banks is that the compliance and KYC are standardized. Because of this, it makes it very difficult to re-apply at other Singapore banks.
In other words, if you’ve been rejected for an account at one bank in Singapore, the chances of opening at another bank are very slim. With this in mind, it’s important to have an account opening strategy when approaching banks in Singapore. This way you avoid ruining your chances of accessing personalized banking solutions and opening a personal bank account in Singapore.
Economic Country Risks of Singapore
Like many banking jurisdictions, Singapore has been exposed to recessions, market volatility, and political events. These factors have impacted the economic stability of financial institutions in Singapore.
In fact, risks of regional conflict in the South China Sea could have an impact on Singapore’s appeal to international clients, specifically those looking for business bank accounts in Singapore, resulting in deposits leaving the country. Although this is highly unlikely, it still could be possible.
Additionally, like many banking jurisdictions, risks of a recession could impact Singapore’s economy due to weakening in the global oil and gas and transportation sectors.
With this in mind, we suggest taking a close look at your client profile, understanding your banking needs, determining your risk tolerance, and deciding whether or not opening an international account or accessing offshore banking in Singapore is the right decision for you or your business.
In other words, if you pass the initial account opening procedure, meet the Singapore banking requirements, and overcome the challenges, opening a bank account in Singapore may still be worth it. In fact, when the right bank is chosen, there are financial rewards and benefits to banking in Singapore, which you can learn more about by clicking here and accessing our free guide.
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Frequently Asked Questions
Below are a few of the most common questions we receive from people asking about the risks of banking in Singapore. If you have further questions you would like answered, don’t hesitate to get in touch.
What Are the Biggest Risks in Banking?
The biggest risks in banking include operational, market, credit, and liquidity risks. That said, banks can be exposed to a variety of other risks, including those directly tied to the jurisdiction where the bank is located. With this in mind, it’s important to choose banks with strong management and banking jurisdictions with stable banking systems.
What Are the Risks in International Banking?
The risks of international banking may include market risks, political risks, country risks, currency risks, bank risks, and credit risks. These risks are just some of the leading risks that can impact the international banking system. Of course, whether or not these risks impact you personally will depend on your residency, the country you want to open an account in, and the reason for an international bank account.
What Are the Threats to DBS Banks?
According to the CEO of DBS, Piyush Gupta, there are two main threats to DBS banks. These threats include low interest rates and rising defaults. With this in mind, if you plan on banking with DBS (or any major international bank) you should consider these two factors and how they could impact your account balance at the bank.
Ready to Open an Offshore Bank Account?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
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