ONE multi-family office (MFO) application and about 200 single-family office (SFO) tax incentive applicants are pending approval, said Senior Minister Tharman Shanmugaratnam in a written reply to a parliamentary question on Monday (Mar 20).

MFOs, which manage third-party assets of two or more families, are regulated by the Monetary Authority of Singapore (MAS) like other fund managers under the Securities and Futures Act (SFA), said Tharman.

He added that SFOs, which manage assets belonging to only the family, are not subject to licensing in Singapore. This is similar to other major jurisdictions such as US, UK, Europe, Switzerland and Hong Kong.

Addressing Workers’ Party Member of Parliament Louis Chua’s (Sengkang GRC) question about the processes to check applicants’ identities and source of funds, Tharman noted: “However, the majority of SFOs apply to MAS for tax incentives on income derived from their investments managed in Singapore, and are in fact subject to our requirements with regard to money laundering and terrorism financing risks.”

Individuals and entities involved in the SFO are first screened by MAS against databases and other information sources for money laundering, terrorism financing and other adverse news.

The authority also reviews the SFO’s business plans.

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Additionally, SFOs applying for the tax incentive must open and maintain a MAS-licensed bank account, with the bank required to conduct customer due diligence in turn.

“This includes assessing whether there is a clear and legitimate purpose for the use of the SFO structure, ascertaining the ultimate beneficial owners, and corroborating the sources of wealth and funds of both the SFO and any beneficial owners,” the senior minister said.