MAS Strengthens Anti-Money Laundering Measures with New Single-Family Office Framework

Singapore Emerges as a Key Global Hub for Single-Family Offices (SFOs)

Singapore has become a favored destination for ultra-high-net-worth families, with 250 new single-family offices established in the first eight months of this year. This brings the total number of SFOs in the city-state to 1,650, with projections indicating that the number of new setups this year will surpass last year’s 300.

To combat money laundering risks, the Monetary Authority of Singapore (MAS) has introduced a new exemption framework for SFOs. Under the new regulations, SFOs must meet stringent conditions to operate in Singapore, providing clarity and accountability for their operations.

The MAS, after public consultations last year, announced responses to industry feedback earlier this month. Currently, SFOs operating under the Securities and Futures Act 2001 are exempt from licensing. However, with rising concerns over money laundering, the new framework will impose stricter requirements.

Monetary Authority of Singapore (MAS) Framework for Single-Family Offices (SFOs)

Exemption Standards

• Ownership through trusts, foundations, or other structures is permitted as long as all assets are entirely sourced from family members.

• Non-family key personnel, such as executive directors, CEOs, CFOs, and other investment professionals, can hold up to 10% of the managed assets or shares.

• Family lineage cannot extend beyond five generations.

• The definition of family members is expanded to include in-laws and other extended relations.

  
  

Operational and Compliance Requirements

• SFOs must open accounts with banks regulated by MAS.

• Notify MAS within 14 days of commencing operations.

• Appoint designated liaison personnel who must be direct employees of the SFO and new Singapore residents.

• Submit annual reports within four months of the fiscal year-end.

• File yearly reports listing all banks the SFO operates with.

  
  

Market Reaction

Legal experts view the framework positively, citing its clear guidelines and inclusivity. Vikna Rajah from Rajah & Tann highlights that the broader definition of "family" and allowance for non-family key personnel to hold equity make the framework attractive for wealthy families. However, some industry players note the potential for increased compliance costs, which could drive certain families to consider alternative jurisdictions like Hong Kong or Dubai.

Despite potential challenges, the robust regulatory framework positions Singapore as a preferred destination for families seeking stability, efficient wealth planning, and strong anti-money laundering measures.