Consultation Paper on Proposed Framework for Single Family Offices

In an effort to standardize licensing requirements or exemptions thereof for Single Family Offices (SFOs) operating in Singapore and to manage the potential money laundering threats posed by SFOs, the Monetary Authority of Singapore (MAS) has launched a consultation (P009) on a new proposed regulatory framework for SFOs. The key aim of the proposed framework – which would consist of modifications to Regulation 55 and the second schedule of the Securities and Futures (Licensing and Conduct of Business) Regulations – is to improve oversight over SFOs which are typically owned by high net worth families and which are often exempt from any regulatory requirements and monitoring. Specifically, the new framework would consist of:
(1) a class exemption from licensing requirements, if prescribed criteria are met:
Specifically, MAS proposes to set out a number of criteria that Single Family Offices would have to meet to be exempt from licensing requirements in Singapore. Such conditions would include, among others, that
– the SFO is incorporated in Singapore;
– the SFO must be entirely owned by one and the same family;
– fund management of the SFO must be on behalf of such family or on behalf of an entity entirely owned by the family; and
– the SFO must maintain a business relationship with at least one registered financial institution in Singapore such as a bank licensed under the Banking Act 1970, a registered fund management company, or a licensed trust company (a full list is provided in Annex 1).
(2) various notification requirements, including the following:
Within seven days of commencement of operation of an SFO, a legal opinion must be furnished to MAS confirming compliance with the above noted criteria. Furthermore, MAS must be notified of various particulars of the new SFO, such as its name, location, date of incorporation, assumed assets under management, etc. The SFO must also submit to MAS a declaration of all family members, CEO, and director confirming that
– there are no outstanding criminal investigations or civil procedures against the family members, CEO, or director;
– there haven’t been any convictions of serious crimes, including money laundering matters, of aforementioned persons; and
– neither of the aforementioned persons will engage with sanctioned individuals or entities.
Finally, the owners, CEO, and director must confirm that the SFO fulfills all the criteria to be exempt from licensing requirements pursuant to the newly proposed class exemption.
(3) an annual reporting requirement:
Thereafter, MAS would require SFOs to file within 14 days after the end of a calendar year a return indicating the amount of assets under management and the institution(s) with which the SFO maintains business relationships in accordance with same criteria under point (1).
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MAS proposes to implement a transitional period of 6 months for existing single family offices to provide the above noted information to ensure they qualify for the class exemption. Their existing exemption will be withdrawn either way – with or without notification of MAS. If MAS has been notified, they can continue business as usual.