Following the changes in the qualifying criteria of tax incentives for Single Family Offices last week, Singapore has announced other regulatory changes that will greatly impact the Single Family Offices in the country.
On 31st July, the Monetary Authority of Singapore (MAS) launched a revised framework that aimed at combating money laundering risks in the Single Family Office sector in Singapore. Single Family Offices in Singapore are now subject to anti-money laundering controls under the revised framework. The MAS has proposed to harmonise the exemption criteria for all Single Family Offices operating in the country. To qualify for the exemption, Single Family Offices must:
- be incorporated in Singapore;
- notify MAS and confirm that it is in compliance with the qualifying criteria under the class exemption when they commence operations in Singapore;
- report annually on total assets managed after the end of each calendar year; and
- maintain a business relationship with a MAS-regulated financial institution that will perform anti-money laundering checks on these Single Family Offices.
As sophisticated entities that manage the enormous wealth of ultra-high-net-worth families, Family Offices, particularly Single Family Offices tend to be discreet and private. The revised framework is set to spark concerns over privacy. The new tightened rules now require Single Family Offices to report to MAS annually on their total assets managed. Family Offices are often discreet about their information, especially their Asset Under Management (AUM). Alongside the other regulatory changes that concern the many aspects of Family Offices, this may dampen Singapore’s status as a Family Office hub.
It is believed that these rules are an effort to ensure the large influx of Single Family Offices is making an impact on the local economy. It is reported that the number of Family Offices continues to rise in Singapore, in the first four months of 2022 alone, more than 100 family office applications were approved by the MAS. However, despite hosting a large number of Family Offices, their share in the economy is questionable. Reportedly, as of 2021, Family Offices only made up 2% of the US$4 trillion managed in the country. While it is understandable to implement policies to regulate Family Offices in the country, other global cities such as Hong Kong and Dubai have been introducing policies in an attempt to lure more Family Offices in. Singapore’s decision to tighten rules for Single Family Offices may cause it to lose the race to become the top Family Office hub.
The new requirements may prompt demand for investment and compliance talent in the Single Family Office space in the country. Agreus is an established full-service resources and recruitment consultancy dedicated to working exclusively with Family Offices. We have established a global presence and have recently expanded to Asia by setting up an office in Singapore. If you need a more tailored conversation about hiring for your Family Office in Singapore, please do not hesitate to get in touch.