Mr Chua Kheng Wee Louis asked the Prime Minister (a) what is the number of family office applications that are pending; (b) whether there is a growing backlog of such applications; and (c) whether the Monetary Authority of Singapore conducts due diligence and imposes Know Your Client (KYC) standards to ascertain the identity and source of funds for those setting up Single Family Offices (SFOs).
Mr Tharman Shanmugaratnam (for the Prime Minister): Family offices can be either multi-family offices (MFOs) or single-family offices (SFOs).
MFOs manage third party assets of two or more families and are, therefore, regulated by the Monetary Authority of Singapore (MAS) like other fund managers under the Securities and Futures Act (SFA). There is only one pending MFO licence application.
SFOs manage assets belonging to only the family. Similar to other major jurisdictions, such as the US, UK, Europe, Switzerland and Hong Kong, SFOs in Singapore are not subject to licensing. However, the majority of SFOs apply to MAS for tax incentives on income derived from their investments managed in Singapore and are, in fact, subject to our requirements with regard to money laundering and terrorism financing risks.
First, MAS screens the individuals and entities involved in the SFO against databases and other information sources for money laundering, terrorism financing and other adverse news, and reviews the business plans of the SFO.
Second, an SFO applying for the tax incentive is required to open and maintain an account with a bank licensed by MAS. The bank is, in turn, required to conduct customer due diligence. This includes assessing whether there is a clear and legitimate purpose for the use of the SFO structure, ascertaining the ultimate beneficial owners and corroborating the sources of wealth and funds of both the SFO and any beneficial owner(s).
There are, currently, about 200 SFO tax incentive applicants pending approval. To safeguard against money laundering risks and ensure that Singapore reaps the benefits of hosting these SFOs, MAS and banks take care to ensure that these evaluation processes are conducted properly and are not rushed.
Prime Minister’s Office
20 March 2023
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=written-answer-na-13141
Office of the Leader of the Opposition 