SINGAPORE, Oct 2 (Reuters) - Singapore’s refusal to soften its strict bank secrecy laws could scupper talks with Europe about a trade agreement, a European politician said on Tuesday.

The European Union and the 10-member Association of South East Asian Nations (ASEAN) are negotiating partnership and cooperation agreements, which are a prerequisite for a fully fledged free trade deal.

However, for such agreements to come into force, the EU wants ASEAN countries to help it make European tax evaders pay tax to their home countries on interest earned offshore.

“Is this a dealbreaker? Potentially yes,” Glyn Ford, a Member of the European Parliament, told journalists during a visit by the parliament’s International Trade Committee.

The EU adopted the savings directive in 2005 but efforts to force Hong Kong and Singapore to join have been unsuccessful.

European banking havens Switzerland and Liechtenstein have agreed to apply a so-called withholding tax.

“We say that we don’t think there’s money laundering going on here, but clearly people engaged in money laundering are looking for places like Singapore with low levels of transparency to actually engage in money laundering,” Ford said.

“If I was looking for somewhere to do my money laundering, Singapore would be getting towards the top of my list these days,” he added.

Singapore has been promoting itself as a financial hub in Asia in recent years, attracting a number of large European and U.S. banks that have set up private banking offices to manage money for local and foreign clients.

Ignasi Guardans-Cambo, another member of the parliament’s trade committee, said Singapore needed to step up transparency of its financial sector to avoid the possibility of attracting organised crime given that it was due to open the first of two multi-billion dollar casinos in late 2009.

“The big money laundering hubs in the world are disappearing and nobody wants Singapore to replace them. And, of course, nobody is accusing Singapore now, but that’s a reality not only in terms of financing of terrorism, but also in terms of organised crime.”