SINGAPORE – The Monetary Authority of Singapore (MAS) plans to step up its fight against potential money laundering at single-family offices (SFOs) through a revised framework to strengthen the country’s defence against such risks.

MAS is proposing that all SFOs operating here be subject to anti-money laundering controls by introducing a consistent set of exemption criteria from licensing requirements.

The financial regulator launched a public consultation on these measures on Monday.

An SFO usually manages the assets of only one wealthy family and is wholly owned or controlled by its members.

These entities do not manage third-party assets, so they can currently rely on existing class exemptions from licensing requirements under the Securities and Futures Act or apply to MAS for case-by-case exemptions.

To qualify for the proposed class exemption, SFOs must be incorporated in Singapore, notify MAS and confirm that it complies with the qualifying criteria under the class exemption when they start operations here.

They must also report annually on total assets managed after the end of each calendar year, and maintain a business relationship with an MAS-regulated financial institution that will perform anti-money laundering checks on SFOs.

Interested parties can go to bit.ly/43QJpCJ to submit their comments by Sept 30.

There are about 1,100 SFOs in Singapore, going by the number of those that had been awarded tax incentives by MAS as at end-2022. This is up from 700 at end-2021.

The consultation comes after MAS managing director Ravi Menon said in July that the authority will take additional measures to strengthen surveillance and defence against potential money laundering in the SFO sector.

MAS identifies the SFO sector as a key risk when it comes to wealth inflows into Singapore.

“Be it high-net-worth individuals or SFOs, MAS expects financial institutions servicing them to apply stringent anti-money laundering controls,” he said at the regulator’s annual report briefing.

MAS issued a circular in March telling financial institutions to be alert to additional money laundering and terrorism financing risks when dealing with arrangements that are used for wealth management purposes. These include family offices. 

Mr Menon noted that family offices in Singapore are already substantially covered for money laundering risks.

Multi-family offices, which manage third-party funds and are licensed by MAS, are already subject to the same anti-money laundering controls that the authority applies to all regulated financial institutions.

Meanwhile, the majority of SFOs in Singapore – which are granted tax incentives by MAS – are required to have an account with a bank here, and are thus subject to anti-money laundering controls applied by the banks.

The remaining SFOs are likely to have engaged the services of other financial institutions or professional services entities such as lawyers or corporate service providers in Singapore that are similarly required to apply suitable anti-money laundering measures on clients. 

MAS said on Monday that the new measures will allow it to better monitor SFOs operating in Singapore and address any money laundering risks in the sector.