MAS Proposes New AML Framework for Improved Oversight

MAS Strengthening AML Framework for Single Family Offices in Singapore

In a bid to close AML loopholes and standardize licensing exemption criteria for Single Family Offices (SFOs), the Monetary Authority of Singapore (MAS) has proposed a new AML framework. This move comes as SFOs witness strong growth in Singapore, prompting concerns about potential money laundering risks. To bolster surveillance and defence against these risks, MAS aims to establish more uniform Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) oversight for family-owned firms.

Previously, SFOs enjoyed exemptions from having to apply for a Capital Markets Services (CMS) License under the Securities and Futures Act (SFA) based on the requirements of paragraph 5(1)(b) of the Second Schedule of the Securities and Futures (Licensing and Conduct of Business) Regulations. However, given the substantial wealth managed by SFOs, including investments, vehicle purchases, and real estate transactions, MAS seeks to ensure robust AML oversight, even for exempted entities.

 

Qualifications Given for SFO

The proposed framework defines the features of a qualifying SFO, creating a class exemption for all eligible firms. Key criteria include:

1. Family ownership, encompassing connected trusts and organizations.
2. Exclusive management of funds for the family and select key employees.
3. Incorporation in Singapore.
4. Designation of a Singapore-based employee as the MAS point of contact.
5. Maintenance of a business relationship with a MAS-regulated financial institution, thus subjecting the exempted SFO to MAS AML/CFT oversight.

Additionally, SFOs must promptly notify MAS of their exemption status upon commencing operations, accompanied by legal declarations and signed statements from family members and owners. Annual reporting requirements will also apply to exempted SFOs.

 

SFOs Recommended to Work with Legal Experts

To ensure compliance with these proposed changes, Singapore-based SFOs are advised to seek legal counsel, even if they currently meet existing exemption criteria. The consultation process offers firms an opportunity to voice their opinions on the potential benefits and drawbacks of the new framework, with feedback accepted until September 30, 2023. Furthermore, MAS remains committed to strengthening its surveillance and defence against money laundering risks associated with the SFO sector, aligning with the evolving landscape of financial regulation.

 

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