SINGAPORE: In the wake of the S$2.8 billion money laundering case in August, the largest in Singapore’s history, inquiries for setting up family offices appear to have slowed down, reported Nikkei Asia earlier this week.

While the number of family offices grew from 400 to 1,100 between 2020 and 2022, there has been a decrease since then, industry experts told Nikkei Asia. A family office is a private wealth management firm catering to high-net-worth and ultra-high-net-worth individuals. In July, reports said that over half of the family offices in Asia—59 per cent—may be found in Singapore.

But this was before the large-scale money laundering bust occurred the following month. In August, 10 foreigners faced charges in court after authorities seized and froze assets, including luxury real estate, vehicles, luxury goods, gold bars, cryptocurrencies, and cars.

Minister of State Alvin Tan said in Parliament last month that at least one of the individuals involved may have been connected to single-family offices that had been given tax incentives.

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“Ongoing investigations and supervisory engagements suggest that one or more of the accused persons in this case may have been linked to SFOs (single family offices) that were awarded tax incentives,” Mr Tan said on Oct 3. He added that officials are looking into single-family offices’ role in the case.

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Nikkei Asia quoted senior partner and head of tax practice at Dentons Rodyk, Mr Edmund Leow, saying, “Recently, the number [of inquiries into family office setups] has dropped because authorities have tightened the requirements following money laundering activities.

There is also some suspicion that some families were setting up family offices in order to obtain an immigration status in Singapore, rather than for the purpose of managing their funds in Singapore.”

His colleague at Dentons Rodyk, Mr Kia Meng Loh, said that during the pandemic, the firm fielded two or three inquiries per week, but more recently, this number has decreased to two or three each month.

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Nikkei Asia also talked to a spokesman from the Monetary Authority of Singapore, who said that MAS still receives a high volume of applications for tax incentives from single-family offices.

The difference now, however, is that applying for these has gotten longer, now taking between nine months to one year.

“The screening process by MAS has also lengthened in view of the more stringent criteria for tax incentives announced in 2022 and 2023 and greater scrutiny following the money laundering arrests in August 2023,” the spokesperson told Nikkei Asia.

In October, Mr Tan said that MAS had not detected any “adverse information of note” about the persons involved in the case when they applied for the tax incentives, but he added, “Nonetheless, MAS is reviewing our internal incentive administration processes, and will tighten them where necessary.”

He also said that MAS will “study whether further measures beyond those that have been proposed in the consultation are necessary”.

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“More broadly and even before this case, MAS had already in July 2023 announced plans to strengthen its surveillance and defence against potential ML (money laundering) risks posed by SFOs. The consultation, which just closed this Saturday, on 30 September, proposed specific requirements to ensure that all SFOs, regardless of whether they apply for tax incentives, are subject to strict anti-money laundering controls,” he said.

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