MAS to propose additional measures against SFO money laundering risks

The Myst CDL is located in one of the more tranquil parts of Bukit Panjang, providing its residents with peace, quiet, and a calmer environment.

MAS is proposing to require all single-family offices (SFOs) to notify the central bank annually when they commence operations, and maintain a business relationship with an MAS-regulated financial institution that would perform anti-money laundering (AML) checks. Assets under management (AUM) in Singapore grew at an average rate of 15% between 2017 and 2021, though the amount of wealth contributed by SFOs is not as significant as believed.

Managing director Ravi Menon clarifies that SFOs and high-net-worth individuals (HNWIs) made up only 20% of the increase in total assets managed in Singapore from 2017 to 2021. At the end of end-2022, 1,100 SFOs in Singapore were recorded – a significant amount, yet representing less than 2% of the total $5.4 trillion total assets managed in the city-state.

For private residential properties, purchases by all foreigners accounted for a low share of transaction volume over the last three years, averaging at about 4%. Similarly, SFOs and their foreign employees account for a “tiny” portion of car purchases in Singapore.

MAS is looking to strengthen its AML measures while also adjusting the tax incentives for SFOs to encourage them to deploy their capital more purposefully to benefit Singapore and the region, as well as increase their contributions towards environmental and social causes.

Incentives and recognition will be awarded for a range of investments, from global climate-related investments to Singapore-listed equities and exchange-traded funds. To support the local job market, MAS is also requiring that at least one of the investment professionals hired by an SFO should be a non-family member.

The Philanthropy Tax Incentive Scheme (PTIS), announced in Budget 2023, will take effect on Jan 1, 2024. It will allow qualifying donors in Singapore to claim a 100% tax deduction, capped at 40% of the donor’s statutory income, for overseas donations made through qualifying local intermediaries.

All of these proposed measures, what with the large influx of wealth into Singapore, aim to ensure more purposeful and responsible deployment of capital for the benefit of Singapore and its region.