MAS to propose additional measures against SFO money laundering risks

MAS will release a public consultation paper before the end of July, proposing measures to step up surveillance and defence against money laundering risks in the fast-growing single-family office (SFO) sector. All SFOs will be required to notify the central bank when they commence operations every year and to maintain a business relationship with an MAS-regulated financial institution that will perform anti-money laundering (AML) checks. Contrarily to popular belief, the majority of wealth flowing into Singapore comes from institutional investors rather than family offices or high-net-worth individuals (HWNIs). As of 2021, the number of SFOs that the MAS awarded tax incentives grew to 1,100.

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The MAS is seeking to strengthen its AML measures when it comes to family offices in Singapore. Currently, the majority of SFOs in Singapore are required to have an account with a bank in Singapore and are thus subject to the anti-money laundering controls applied by those banks.

When it comes to private residential properties, purchases by all foreigners account for a low share of transaction volume, averaging at about 4%. Additionally, there have been no purchases by SFOs in the past three years, and SFOs and their foreign employees account for a “tiny” portion of car purchases in Singapore.

To encourage the deployment of capital in a purposeful way to benefit Singapore and the region, as well as increase their contributions towards environmental and social causes, the MAS will adjust the tax incentives for SFOs. The scope of eligible investments will be broadened, and the SFOs’ climate-related investments worldwide will be recognised. Additionally, all new SFO applicants will have to meet the business spending requirement solely from spending locally. Lastly, Singapore’s Philanthropy Tax Incentive Scheme (PTIS) will be launched, allowing qualifying donors to claim a 100% tax deduction for overseas donations.

MAS is hoping that the introduction of the PTIS will inspire greater philanthropic giving from family offices in Singapore. The public consultation paper for the MAS’ proposals is to be released before the end of July.