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Beginner’s Guide on Starting a Financial Business in Singapore

Starting a Financial Business in SingaporeFor years on end, every country in the world has had its ups and downs in financial matters. For some, any challenge is a way to learn new things or unlearn what you know and relearn again. Singapore is no stranger to financial crises and has always come out stronger. It has become one of the reasons why people are starting a financial business in Singapore.

Finance collectively relates to money, cash flow, and the study of money, banking, investment, assets, and liabilities. Financial business is a legit business as it helps many to understand the breadth of their financial situation. It may begin with conventional banking and traditional money management. But as we progress, there are more demands to acquire the suitable financial instruments to meet our lifestyle.

Ever since independence, Singapore has had the advantage of being an international trading port. From then onwards, the city-state works out favorable frameworks and policies for traders. It has become a pivotal point of change for Singapore from a trading port to a financial hub, even better, a global financial hub.

Thus, Singapore has become a favorite for businesses to set up companies and offices, especially in the financial sector. Here is the guide on starting a financial firm in Singapore, which explains the industry practice, business registration, licenses, and permits.

Here we will get you sorted with our comprehensive guide to company registration in Singapore.


Singapore’s Financial Industry

The financial industry in Singapore makes up more than ten percent of the country’s gross domestic products. It encompasses banking, capital markets, wealth management, and insurance. The ever-blossoming industry employs up to 200,000 jobs, including investment analysts, underwriters, and compliance specialists. The Monetary Authority of Singapore (MAS) is the regulator of the financial industry and the central bank of Singapore.

Singapore’s integral sector of the financial industry is the banking sector. It has played a significant role in financing local and regional growth. Currently, there are over 200 banks in Singapore. More banks are choosing to base their operational headquarters here to service their group activities.


Adapting to Technology

As time goes by, the conventional financial and banking structure is slowly changing. Customers in the financial sector have always enjoyed excellent customer service as there was the human factor. Nevertheless, technology was imminent to the pursuant success of the financial industry. Many banks and financial institutions invested in technology to minimize human error and help cope with the expensive conventional methods.

In that light, many customers began adapting to the technologies that the financial industry is utilizing. Many more have demanded ease of understanding financial instruments to meet their lifestyles. Our modern and digitalized lifestyle, combined with the restrictions of the pandemic, has necessitated the need to offer a more digital-first financial experience. This impetus has proved fruitful as there are more fintech companies in Singapore than its neighbors. The rise of fintech is reassuring for those interested in starting a financial business in Singapore.

Going cashless is the buzzword today as it accommodates a wide range of services. It includes paying for groceries, shifting money between banks, applying for loans, and financing. Almost everything can be done in a few clicks. Complicated processes that involve anything to do with financing may be difficult for the person on the street. With fintech companies, their aim is to simplify these processes so that everyone can enjoy the benefits of financial tools.


Licensing Financial Businesses

Singapore’s financial industry regulator is the only body that can issue financial licenses to financial companies. MAS provides two categories of financial licensing, which is capital markets services and financial advising. Recently, MAS issued licenses for digital banks to operate in Singapore. It is the first in the city-state to have digital-only banks. However, several financial business activities are covered under the capital markets services and financial advisory licenses.

The capital market services license is deployed when starting a financial business that conducts the following activities:

  • Securities trading
  • Fund management
  • Securities financing
  • Foreign exchange trading
  • Trust companies
  • Collective Investment Scheme trusts

As for the financial advisory license, it covers activities such as:

  • providing advice on investment products,
  • issuing reports on investment products,
  • marketing of collective investment schemes such as unit trust and
  • making arrangements for life insurance products.

But, if the financial business has already applied for the capital markets services license and financial advisory for the related financial tools are incidental, there is no need for another financial advisory license.

There could be extensive business activities that fall within these two licenses. It is advised that you engage with a Singapore corporate service provider to know more about financial business licensing.

Approval of these licenses is subject to MAS’ set of criteria, which takes into account the following aspects:

  • Fitness and propriety of the applicant, its shareholders, and directors.
  • Soundtrack record and management expertise of the applicant & major shareholders.
  • Capability to meet the minimum financial requirements.
  • Business model and its associated risks.
  • Solid internal risk management and compliance systems.


Register First, Before Getting Licensed

As with other businesses in Singapore, you would need to register your financial business first. Whether you are a foreign investor or a local startup, the best way to get a company incorporated is through Singapore company incorporation services. Companies such as 3E Accounting have extensive knowledge and expertise in guiding potential businesses into fully functional and operational companies. The quick general guide to registering your financial company is summed up in the following steps:

  1. Register the financial company with Accounting & Corporate Regulatory Authority.
  2. Get registered with the Internal Revenue Board for the Singapore GST.
  3. Open a corporate bank account.
  4. Register with the Central Provident Fund.
  5. Register with the Skills Development Levy.

Business registration will need to comply with the Company Law in Singapore. In this case, it requires that your company employ a minimum of two directors, a CEO with at least ten years of experience, and three full-time Singapore-based employees with relevant experiences. It is also necessary to have a company secretary in place. To expedite the licensing process, the applicant will need to fill up the necessary forms and submit them to MAS with supporting documents.

Starting a Financial Business in Singapore

Future financial business owners may already understand the necessary process to register a company in Singapore. But, if you are still stuck in a rut, quit worrying and contact us.