Singapore MAS Tharman Shanmugaratnam: Around 200 Single Family Office Tax Incentive Applicants Pending Approval & Screened for Money Laundering, Source of Wealth & Beneficial Owner, 1 Multi-Family Office Application Pending
23rd March 2023 | Singapore
Singapore central bank Monetary Authority of Singapore (MAS) Tharman Shanmugaratnam (Senior Minister & Minister in charge of MAS) reply to questions on family office tax incentive applications & source of wealth – Around 200 single family office tax incentive applicants pending approval & screened for money laundering, source of wealth & beneficial owner, 1 multi-family office application pending. MAS Tharman Shanmugaratnam: “Family offices can be either multi-family offices (MFOs) or single-family offices (SFOs). SFOs in Singapore are not subject to licensing … … and are in fact subject to our requirements with regard to money laundering and terrorism financing risks. There is only one pending MFO licence application. There are currently about 200 SFO tax incentive applicants pending approval.” See below for MAS statement
“ Around 200 Single Family Office Tax Incentive Applicants Pending Approval & Screened for Money Laundering, Source of Wealth & Beneficial Owner, 1 Multi-Family Office Application Pending “
Singapore Family Office Tax Exemption 13U & 13O – In 2022, the Monetary Authority of Singapore (MAS) introduced new family office tax exemption criteria for new applications from 18th April 2022. For 13U, the minimum fund size of S$50 million remains, with new criteria including hiring a minimum of 3 investment professionals with at least 1 non-family member, minimum annual business expenditure of S$500,000 and minimum of 10% of AUM or S$10 million to be invested in local investments (listed debts / securities, Singapore registered funds, private investments into Singapore companies). For 13O, a S$10 million minimum fund size (rising to S$20 million in 2 years), hiring 2 investment professionals, minimum of 10% of AUM or S$10 million to be invested in local investments (listed debts / securities, Singapore registered funds, private investments into Singapore companies), and minimum of S$200,000 annual business expenditure.
2nd March 2023 – Singapore Global Investor Program (GIP, 5-Year renewal residency program) has increased from S$2.5 million to a minimum of S$10 million ($7.4 million) in a business or S$25 million ($18 million) into approved GIP funds from 15th March 2023 (new applications), with family office requiring at least S$200 million AUM($149 million, Assets under Management) and at least S$50 million ($37 million) invested into 1 of 4 Categories: Qualifying Debt Securities, Certificates of Deposits, Singapore-Licensed Fund Managers or Private Equity into Non-Listed Singapore-Based Business. Singapore has granted around 200 Permanent Residency under the Singapore Global Investor Program (GIP) over 3 years from 2020 to 2022, with the program requiring S$2.5 million ($1.86 million) investment in a Singapore business or GIP Approved Fund, or setup a family office with at least S$200 million ($149 million). Singapore Global Investor Program (GIP) data October 2022: S$1.62 billion invested in GIP Approved Funds, with S$1.42 billion deployed into investments (65.6% / S$930 million invested in Singapore-based companies). The new qualifying requirement for $10 million investment into Singapore business is to hire at least 30 employees with at least 15 Singapore citizens. For family office requiring S$200 million AUM, at least 5 family office professionals need to be hired, with at least 3 Singapore citizens. The Singapore Global Investor Program was first launched in 2004 (S$1 million), revised in 2011 (S$2.5 million) and last revised in March 2020 (Family office S$200 million).
MAS Tharman Shanmugaratnam on Family office, Multi-Family Office & Money Laundering
Reply to Parliamentary Questions
20th March 2023 – 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.
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