SINGAPORE: Wealthy families interested in setting up single-family offices (SFOs) in Singapore and wanting to tap tax incentives offered by the Monetary Authority of Singapore (MAS) will face stricter checks by the regulator almost immediately.
According to Gillian Tan, MAS’ assistant managing director (development and international), the regulator will strengthen the due diligence checks conducted at the point of application and swiftly withdraw tax incentives should subsequent monitoring and events detect adverse activities.
These enhanced measures will largely take effect in December, and family office applicants and industry players are being informed, where applicable, according to the MAS.
MAS is refining the terms and conditions of the tax incentive scheme to guard against illicit actors by being able to quickly suspend or withdraw tax incentives where individuals or entities are investigated, whether in Singapore or elsewhere, for money laundering and terrorism financing offences.
In October, State for Trade and Industry Minister Alvin Tan said the regulator was reviewing its internal incentive administration processes for SFOs and would tighten them where necessary.
One reason was that one or more of the accused in a recent money laundering case may have been linked to SFOs that had been awarded tax incentives by the MAS.
One main change is that the scope of due diligence checks is being widened to a larger group of individuals and entities associated with the SFOs applying for the MAS tax incentives.
It is understood that these checks could include individuals and entities that may have contributed to or seeded the creation of wealth, such as immediate family members and the family business.
These checks could also take place when there is a change in key people, including shareholders, directors or employees.
MAS said there will also be a panel of specialised firms to screen these individuals and entities for money laundering and terrorism financing risks, and their findings will be provided to MAS.
More details on the panel will be released in the next few months.
If the screening throws up an adverse news report about the applicant, for example, additional documentary validation may then be required.
This could mean that applicants need to furnish a statutory declaration and, where applicable, a certificate of non-criminality from the country from which the adverse news originated.
Any false declaration or provision of information, if found to be false subsequently, may result in penalties.
Family offices are private wealth management advisory firms set up by wealthy families to oversee the day-to-day administration and management of assets and investments with the goal of preserving wealth and transferring it to the next generation.
An SFO manages assets on behalf of one family.
There has been a rise in the number of SFOs as more families choose Singapore as a base. At the end of 2022, there were 1,100 that had received tax incentives, up from 700 in 2021. In 2021, these had assets under management of S$90bil.
Tax incentives were introduced to spur the growth of the asset and wealth management industry by providing a conducive tax environment for Singapore-based fund management companies.
This included family offices, to grow assets under management here.
These include exemption from Singapore income tax on specified income derived from certain designated investments, such as stocks and shares of qualifying companies and qualifying classes of debt securities. — The Straits Times/ANN
Source: The Star