21/11/23

SINGAPORE: Singapore Tightens Family Office Regulations, Extends Wait Times Amid Scrutiny

As published on: hubbis.com, Tuesday 21 November, 2023.

Applicants seeking to establish a family office in Singapore are now experiencing wait times of up to 18 months due to tighter regulatory oversight.

As Singapore strives to be a leading investment destination, its rapid growth in family offices has come under closer examination, particularly following the country's most significant money laundering investigation, reported the Financial Times in a recent article.

The sharp rise in the number of family offices in Singapore, managing substantial private wealth, has seen a slowdown in new registrations. The longer processing times, now extending far beyond the previous six-month period, are largely due to a combination of an application backlog and more rigorous criteria imposed by Singapore's authorities, which is turning away some prospective clients.

Legal and advisory professionals have reported a drop in queries from affluent parties, signaling a waning attraction. Approval timelines are inconsistent, with some applicants receiving a quicker response than others, highlighting the rigorous approach taken by regulatory bodies, especially following a substantial financial scandal involving various assets and parties.

The local government continues to endorse the establishment of these wealth management entities, looking to surpass regional competitors in drawing international capital. The national financial regulator has recognized the vast assets managed by these entities. However, it has also introduced more stringent regulations, such as increased minimum capital requirements and mandatory investments in domestic ventures, as well as employment mandates for investment experts.

Despite a noticeable deceleration in applications, particularly from the greater China area, the decrease is not extreme. The financial regulator has stated that while tax incentive evaluations may take longer due to intricate applications, the process has become more thorough post-investigation.

Industry specialists have remarked on a downturn in client transactions, with a shift toward more liquid assets and less binding investment forms. It is anticipated that the number of these wealth management entities might naturally decline, as the new operational requirements may influence high-net-worth individuals to reassess the benefits of such establishments in the region.

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Singapore Family offices