Singapore authorities are intensifying scrutiny of hedge funds and family offices, requiring more information while stepping up the closure of dormant firms after a series of scandals exposed weaknesses in the oversight of the city state’s financial sector, according to a report by Bloomberg.
The government’s efforts to tighten investment regimes have accelerated since March, with new requirements being set and inactive entities being removed. In March, the Monetary Authority of Singapore announced the repeal of a licensing regime for hedge funds with assets up to $250m – the Registered Fund Management Company license category, which has been used by many hedge funds since 2012 – by 1 August, moving them to a stricter Licensed Fund Management Companies reporting regime instead.
Additionally, family offices with tax exemptions received new forms in May requesting more details, which must be submitted by the end of June.
This move follows recent criminal cases, including a SGD3bn ($2.2bn) money laundering scandal linked to family offices that had received tax exemptions.
Under the new rules, family offices must now confirm that their key personnel have no history of money laundering or terrorist financing offences, adhere to domestic capital control regulations, and maintain accounts with Singapore-based private banks.
An MAS spokesperson speaking to Bloomberg emphasised that these changes are part of efforts to detect and minimise the impact of illegal activities. The authority is also tightening tax incentive processes, including appointing a panel to screen for money laundering and terrorism financing risks.
Inactive companies are also being targeted, with the Accounting and Corporate Regulatory Authority stepping up efforts to strike off firms no longer carrying on business. This is part of ACRA’s strategy to reduce the risk of inactive companies being used for illicit purposes.
While these measures may increase costs for smaller firms, they are expected to improve the quality of data provided to authorities and close existing loopholes.
