11/08/23

FAMILY OFFICES: Proposed Regulatory Framework for Single Family Offices in Singapore

As published on: aseanbriefing.com, Friday 11 August, 2023.

The Monetary Authority of Singapore (MAS) is proposing a new regulatory framework for single-family offices (SFO) in Singapore that would allow MAS to enhance its defense against money laundering in the SFO industry.

The proposed framework aims to provide a set of qualifying criteria that, if fulfilled, the SFO will be exempted from licensing requirements to conduct fund management in Singapore. Since SFOs manage the wealth of a single family, they are not subject to licensing and regulation under Singapore’s Securities and Futures Act, or they can seek case-by-case licensing exemption from MAS.

Under the proposed framework, MAS will introduce a new class licensing exemption for SFOs and remove the case-by-case licensing exemption route.

What are the qualifying criteria under the proposed new framework?

If an SFO wants to conduct fund management activities in Singapore under the proposed class exemption, the SFO must meet the following criteria:

• The SFO must be an incorporated company in Singapore.
• The SFO must be wholly owned (directly or indirectly) by members of the same family. Family members are proposed to be defined as lineal descendants of a common ancestor.
• The SFO must conduct fund management activities on behalf of:
  • Family members, including trusts and corporations, which the family wholly owns.
  • Charitable organizations, which are funded by the family.
• The SFO must establish and maintain business relations with at least one MAS-regulated financial institution.
• The SFO must always have a designated employee who is a resident of Singapore to serve as the point of contact between the SFO and MAS.

 

Notification and reporting requirements

New SFOs will be required to report to MAS of their capacity to comply with the new qualifying criteria within seven days of commencing their operations in Singapore.

The SFO will need to provide an affirmation to MAS that it has sought legal opinion confirming that it can meet the qualifying criteria.

Further, the SFO must submit a signed declaration to MAS by the family members who own the SFO (the ultimate owners), as well as the CEO and directors declaring that:

• The ultimate owners are not under criminal investigations whether in Singapore or abroad;
• The ultimate owners, CEO, and directors have never been convicted of a serious crime or are involved in money laundering/ terrorism financing activities; and
• The SFO will not engage in any activities whether directly or indirectly with designated persons or entities.

The SFO must also submit an annual return within 14 days of the calendar year to report their:

• Total assets under management; and
• The name of the MAS-regulated financial institution with whom they have established and maintained business relations.

Transition period

MAS has proposed a six-month transition period from the effective date of the SFO framework for all SFOs in the country to confirm their capacity to adhere to the new qualifying criteria.

Strengthening Singapore’s standing as a financial hub

The proposed measures from MAS demonstrate Singapore’s standing as a global financial hub and a magnate for ultra-high-net-worth families. According to MAS, there are some 1,500 family offices in the city-state, managing around S$90 billion (US$66.8 billion) of assets in 2021, or just under two percent of the S$5.4 trillion (US$4 trillion) of assets managed in Singapore.

Tags

Family Offices Regulation Singapore