Written reply to Parliamentary Question on family office applications
Date: For Parliament Sitting on 20 March 2023
Name and Constituency of Member of Parliament
Mr Chua Kheng Wee Louis, Sengkang GRC
To ask 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).
Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1. Family offices can be either multi-family offices (MFOs) or single-family offices (SFOs).
2.MFOs manage third party assets of two or more families and are therefore regulated by MAS like other fund managers under the Securities and Futures Act (SFA). There is only one pending MFO licence application.
3. SFOs manage assets belonging to only the family. Similar to other major jurisdictions such as 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.
4.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.
5. 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).
6. 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.