The US Senate Permanent Subcommittee on Investigations, which began its investigation into tax haven banks in February by looking at how they may be helping US taxpayers to evade tax and manipulate reporting obligations, has issued more than 35 subpoenas and conducted numerous interviews with bankers, trust officers, taxpayers, tax and estate planning professionals.

Meanwhile, some Europeans have also been moving their money out of Switzerland to avoid paying withholding tax on their interest as required by the European Union.

All this was unfolding against a backdrop of great wealth in Asia with funds from the region, particularly China, Indonesia and India, dominating the bulk of Singapore's private banking business, said Mr Leow.

Asia is emerging as the world's fastest-growing wealth market underpinned by India and China which are reporting respective rapid high-net-worth individual population growth rates of 22.7 and 20.3 per cent respectively, according to the latest wealth report by Merrill Lynch and Capgemini.

The wealthy are attracted to Singapore's strong regulatory environment, sound legal system and transparent financial systems in addition to the local government's efforts to propel the city state into a private banking hub through the offering of a favourable tax regime and launch of Asia's first educational institute specialising in wealth management.

Singapore's private banking assets under management have grown in recent years by an average of 20 per cent per annum to reach an estimated US$200 billion, according to the Monetary Authority of Singapore.

Private banks have fuelled the growth by expanding their wealth management services, most notably in the setting up of trust companies. There are 38 licensed trust companies in Singapore.

'A decade ago, the industry was small and existed only to help local Singaporeans set up offshore trusts but today it is virtually the opposite. The trust industry is helping foreigners set up trusts in Singapore,' Mr Leow said.

To cater to the explosive industry growth, the Monetary Authority of Singapore has introduced a licensing regime for trust companies to ensure minimum standards are maintained and adequate anti-laundering requirements are in place, so that trust companies can be better monitored and are subjected to the same requirements as banks.

Unlike in Europe where the wealthy have created and used trusts for generations, Singapore's industry is still in its infancy with ample room for development.

'Unlike the Europeans, Asian clients previously did not have full knowledge of what trusts can do such as the complicated tax structures,' said Mr Leow. 'As the trust industry develops, it will not only grow in terms of the number of trusts or customers or assets under management, but also in terms of sophistication.'

With the private banking and trust industry growing in tandem, the kind of individual who set up a trust would typically be a private banking client, said Mr Leow.

With business from wealthy clients showing no sign of abating, Mr Leow said Singapore's greatest task would be to manage its image both at home and abroad.

'Singapore's challenge will be to maintain its own reputation to ensure it isn't seen in the same light as other offshore centres. We will have to be careful about regulating ourselves or else we could lose our reputation, which is also our advantage.'