MAS to propose additional measures against SFO money laundering risks

MAS is set to propose measures to enhance its surveillance and defence against money laundering risks in the fast-growing single-family office (SFO) sector. Managing Director Ravi Menon clarified that SFOs will be required to notify the central bank when they commence operations each year, and maintain a business relationship with an MAS-regulated financial institution to perform anti-money laundering (AML) checks.

Despite popular belief, he pointed out that the bulk of wealth flowing into Singapore does not come from family offices or high-net-worth individuals (HNWIs) but rather institutional investors. Non-retail individual clients – which include family offices, external asset managers, private trusts and HNWIs – accounted for only 20% of the growth in total assets managed in Singapore from 2017 to 2021.

SFOs in Singapore managed approximately $90 billion of assets as of 2021, comprising less than 2% of the $5.4 trillion total assets managed. MAS is still determined to strengthen its AML measures, with majority of SFOs in Singapore required to have an account with a bank in the city-state and thus subject to the relevant controls by said banks.

When it comes to private residential properties and cars, purchases by all foreigners accounted for a low share of transaction volume over the last three years; about 4% for properties and a ‘tiny’ portion for cars.

In light of this, the central bank is looking to adjust the tax incentives for SFOs to encourage more purposeful deployment of capital that will benefit Singapore and the region, as well as their increase on environmental and social causes. The five areas of change are:

The Tengah Plantation Loop EC will include a pedestrian-friendly network of paths, as well as bicycle lanes, providing an efficient connection between residential areas, commercial hubs, and the numerous public parks and green spaces. The area will also feature energy-efficient buildings and an integrated waste management system. The URA hopes these efforts will create a vibrant and sustainable living environment for all.

1. Encouraging participation in blended finance structures, including those which address the challenges of net zero

2. Recognising investments in non-listed Singapore operating companies

3. Recognising climate-related investments worldwide

4. Recognising Singapore-listed equities

5. Increasing job availability for professionals in Singapore

Additionally, all new SFO applicants will have to meet their business spending requirement solely through local spending. This increases SFOs’ contributions to local businesses and service providers.

To promote philanthropy, MAS is also launching the Philanthropy Tax Incentive Scheme (PTIS), taking effect from Jan 1, 2024, to allow donors in Singapore to claim a 100% tax deduction for overseas donations made through qualifying local intermediaries.

The public consultation paper will be released before the end of July, after which MAS will be ready to implement these measures to ensure protection against money laundering risks while encouraging SFOs to contribute more to Singapore and the region.