Singapore has reportedly asked banks not to discuss the origins of significant sums of money flowing into the city, particularly from wealthy Chinese individuals, according to a report by Financial Times.

The move comes amid rising tensions between Beijing and Washington, as China’s President Xi Jinping has launched a regulatory crackdown on businesses and an anti-corruption campaign.

The Monetary Authority of Singapore (MAS) is said to have issued a tacit directive during a meeting of an industry group made up of bankers and regulators on February 20, according to multiple sources who attended.

The group includes members from major banks such as HSBC, Standard Chartered, UBS, BNP Paribas, JPMorgan, and Citigroup, as well as local banks DBS and Bank of Singapore.

The meeting was jointly chaired by representatives from UBS and the MAS, and the directive was reportedly given to prevent public discussion of the phenomenon, which has become a politically sensitive issue in Singapore.

The flow of money from mainland China into Singapore has become a politically sensitive issue domestically, and the MAS wants banks to keep public discussion of the phenomenon to a minimum, said three people with knowledge of the talks. Although China was not mentioned by name, it was clear that regulators were referring to the country, they added.

Lawyers and industry groups estimate Singapore had 1,500 family offices by the end of last year, with a large chunk of them from China.

MAS estimated there were about 700 family offices at the end of 2021. Industry experts say the current estimate is more like 1,400, with mainland Chinese the biggest drivers of growth.

According to the Financial Times report, the MAS told banks that when they report the sources of their inflows, they should not single out any particular markets.

One senior banker briefed on the discussion summarized the MAS’s message as being that private banks should “just quietly do your job” because “you don’t want to antagonize.”

While the directive has raised concerns about transparency and accountability, some bankers have suggested that the MAS is simply trying to safeguard Singapore’s status as a neutral financial centre.

One banker said it was not the first time the MAS has used the forum to address large capital inflows from a particular market. In the past, booming Indonesian wealth — and the local scrutiny it attracted — concerned regulators.

“They desperately want to be the regional hub of private banking, and the situation has kind of granted them that wish,” said the banker. “[The Chinese flows] are probably overrunning their best expectations of what was going to happen.”

Wealth moving into Singapore but not investing

According to a report by Bloomberg, ultra-wealthy Chinese entrepreneurs moving to Singapore have driven up prices, but have not been investing in local capital markets.

Despite spending lavishly on mansions, luxury cars, and golf club memberships, few meetings with Chinese tycoons have resulted in business beyond basic custodian deals, according to hedge funds, banks, and private equity firms.

Finance executives cited two main reasons for the reluctance: the tiny capital markets in Singapore and Southeast Asia, and the time needed for tycoons to feel comfortable with advisers they barely know.

Furthermore, the local bourses lack the liquidity and high-profile names on the scale of New York and Hong Kong, while private equity and venture capital across the greater Southeast Asian region remain relatively small compared with China and Silicon Valley.

The limited investment is surprising, given there is plenty of evidence that Chinese tycoons are setting up bases and spending loads of money on other things.

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