Indonesia is investigating reports that US$1.4 billion held by Standard Chartered Plc in Guernsey, mainly on behalf of Indonesian clients, was transferred to Singapore just before the island moved to new tax transparency rules, officials said.

A source familiar with the matter said late last week, confirming news reports, that the Monetary Authority of Singapore (MAS) and Guernsey's Financial Services Commission were looking into that movement of assets in late 2015 - months before the Channel Island adopted a global framework in the exchange of tax data.

Under those rules, countries automatically share annual reports on accounts belonging to people subject to taxes in each nation. Britain, Guernsey and Singapore have all signed up, but Guernsey implemented the rules ahead of Singapore.

Indonesian and other regulators have not confirmed the nature of the customers or of worries around the funds, but a person familiar with the matter said part of the concern stemmed from links between some of those private banking clients and the Indonesian military.

"This was not a transfer by one Indonesian citizen but by many customers. We are now checking their annual tax reports, as well as their report of assets, for those who participated in the (Indonesian) tax amnesty," Hestu Yoga Saksama, a spokesman for Indonesia's tax office, said.

"If those assets are reported in annual reports or declared during the tax amnesty, it surely means there are no problems. But if they were not, we are going to follow up under the prevailing regulations."

Heru Kristiyana, the deputy commissioner for banking at Indonesia's financial regulator (OJK), told Reuters by text message on Monday that a supervisor was investigating the issue.

He said the regulator was co-ordinating with the director general of taxation and the anti-money laundering agency, the Financial Transaction Reports and Analysis Centre (PPTAK).

A spokesman at PPTAK had no immediate comment, while the anti-corruption agency did not immediately respond.

The investigation was first reported by Bloomberg, which cited anonymous sources saying that Standard Chartered had reported the matter itself to the regulators.

It said the sources said regulators were looking into Standard Chartered's processes, but had not suggested the bank colluded with clients to evade tax.

Standard Chartered and MAS have declined comment.

Standard Chartered said last year that it was to close its trust operations in Guernsey and centralize that part of its business in Singapore.

But the probe is a potential blow for the bank, which is trying to turn around a reputation bruised by bad loans and regulatory fines, and says it is tightening compliance under a new chief executive.

Singapore and Indonesia said in July they were ready to share financial data automatically for tax purposes.

Both countries could start exchanging financial information from next year if they introduce the necessary legislation, Indonesia's Finance Minister Sri Mulyani Indrawati has said.

The Indonesian government launched a tax amnesty scheme last year to improve compliance and to encourage tax payers to bring back billions of dollars stashed abroad. Most of the offshore assets declared by taxpayers during the amnesty program were kept in Singapore.