Singapore money laundering – The impact of the raids on the 10 Fujian Gang Members on Family Office Setup in Singapore

Singapore Money Laundering – Since our last article here where we covered a brief overview of the case and how it happened and some FAQs, some of my friends have asked me on the implication of such raids on the ease of setting up Family Offices in Singapore so I thought it would be appropriate to do an article covering this issue.

There are two general types of family office structures in Singapore in the market today:

Single Family Office

• the first type of family office in Singapore that is hogging the headlines is the Single-Family Office which basically allows a family to manage its own investments so costs and compliance costs less than a regulated entity. As we explained previously, the Single-Family Office scheme is and continues to be a tax incentive scheme and does not confer on any family any licence to carry out fund management in Singapore.  The Monetary Authority of Singapore continues to exempt such Single-Family Office companies which manages monies of their immediate family.

Multi-Family Office

• this is a multi family office structure where an external fund manager (usually with a capital markets services licence in Singapore or previously registered fund manager (now going to be phased out)) manages the investments for and on behalf of the family. So the ultimate legal and ongoing investment obligations falls on the external fund manager.

 

Lack of Succession Planning

We have heard many business families reluctant to pay fees for such professional fund managers to manage their wealth.  This is typical for wealth in the first generation where the founder believes that wealth creation is his forte but unfortunately most of them forget that their descendants may not be as capable as them or live in a different times subsequently where political trends/macro economic trends threaten the  main family business so succession planning or wealth preservation is thrown out of the window.  Most founders think that their children will not fight after their demise but that is hardly true.  Merely having a company and willing the shares to their children is bad family business succession planning.

 

A prime example was the case of Yeo Hiap Seng where the children fought after the founder passed away and as a result Yeo Hiap Seng was taken over by the Far East Group.  Here we learn that merely willing the shares of a holding company to your children does not result in proper succession planning across multi generations.  This business was a cash cow and if the holding structure of the family business had been properly structured the control of the business may still be within the family.

 

New Business Ventures

Some of these family offices also have a mandate not only to preserve wealth but have a venture capital arm to invest into new ventures proposed by the next generation.  Such a venture division usually has a mixed investment committee which comprise both family and professional investors who are hired to run investments for the family office.

 

An example of this was recently featured in the Edge Magazine where Kuok Min Ru from the Robert Kuok family (the Sugar Billionaire of Malaysia) had to pitch his new idea to the family investment committee and developed a detailed business plan to explain how he would scale Bandlab in terms of profitability and revenue over time before his family would fund his business (using a private equity and venture capital lens).

 

Singapore Money Laundering – Impacts of the recent raids on Family Office Setup in Singapore

 

For Single Family Offices:

• the Financial Times reports an 18 months waiting time for MAS to grant the tax incentives[1];

 

• MAS is increasing the minimum investment amount for SFOs to S$20 million; and

 

• All Single Family Offices need to have at least one Singapore financial institution so that such banks can run anti money laundering and know your client checks on their monies.

 

For Multi- Family Offices

For multi-family offices that have an existing variable capital company with an umbrella structure with an existing tax incentive, clients would probably take about 2-3 months to open an account with them.  Thus, instead of heading for the SFO route (which has been the most popular), many clients have started setting up a family office under a multi-family office structure.  In a well structured MFO, the professional team can take a long term view of the client’s investment assets and ensure proper succession planning for both operating business assets and financial assets.

 

In conclusion, the long time taken by the MAS for S13) and S13U tax applications on behalf of the Single Family Office represents a good opportunity for Multi Family Offices to set up family office structures for business families.

新加坡洗钱 – 福建帮成员突袭对新加坡家庭办公室建立的影响

新加坡洗钱案 – 自我们上一篇文章中概述了该案件的简要情况、发生经过以及一些常见问题后，一些朋友向我咨询了此类搜查对在新加坡建立家族办公室的便利性的影响，因此我认为撰写一篇文章探讨这个问题是适当的。

目前新加坡市场上存在两种主要类型的家族办公室结构：

独立家族办公室

(a) 新加坡备受关注的第一种家族办公室类型是独立家族办公室，基本上允许一个家族管理其自身的投资，因此成本和合规成本低于受监管实体。正如我们之前解释过的那样，独立家族办公室计划是一项持续存在的税收激励计划，不授予任何家族在新加坡进行基金管理的牌照。新加坡金融管理局继续豁免这类管理其直系亲属资金的独立家族办公室公司。

多家族办公室

(b) 这是一种多家族办公室结构，外部基金经理（通常在新加坡持有资本市场服务牌照或先前注册的基金经理（现在将被淘汰））代表家族管理投资。因此，法律义务和日常投资义务最终落在外部基金经理身上。

缺乏继承规划 我们听说很多企业家家族不愿意支付专业基金经理管理其财富的费用。这在第一代财富积累时很典型，创始人认为财富创造是他的专长，但不幸的是，大多数人忽略了他们的后代可能不如他们那样有能力，或者生活在随后的不同时期，政治趋势/宏观经济趋势威胁到主要家族企业，因此放弃了继承规划或财富保值。大多数创始人认为，他们去世后，他们的子女不会争夺，但这并不真实。仅仅拥有一家公司并将股份遗留给子女并不是良好的家族企业继承规划。

一个典型的例子是庆和成(Yeo Hiap Seng)的案例，在创始人去世后，子女们发生了争执，结果庆和成被远东集团接管。在这里，我们了解到仅仅将控股公司的股份遗留给子女并不能产生跨越多代的良好继承规划。这家企业是一只摇钱树，如果家族企业的控股结构得到正确设计，业务的控制可能仍然在家族手中。

新业务创意 一些家族办公室不仅有保值财富的任务，还设有一个创业风险投资部门，用于投资下一代提出的新创意。这样的风投部门通常设有一个混合的投资委员会，包括家族和专业投资者，后者被聘请来为家族办公室运营投资。

新加坡洗钱案 – 对新加坡家族办公室设置的最近搜查的影响

对于独立家族办公室：

(a) 《金融时报》报道，新加坡金融管理局(MAS)批准税收激励计划需要等待18个月；

(b) MAS正在将独立家族办公室的最低投资金额提高到新币2,000万；和

(c) 所有独立家族办公室都需要将其资金存放在新加坡金融机构的私人银行中，以便这些银行可以对其资金进行反洗钱和了解您的客户的检查。

对于多家族办公室

对于已经拥有带有伞形结构的可变资本公司并享有现有税收激励的多家族办公室客户来说，可能需要大约2-3个月的时间来与他们开立账户。因此，与其选择独立家族办公室的路径（这是最受欢迎的选择），许多客户已经开始在多家族办公室结构下建立家族办公室。在良好的MFO中，专业团队可以对客户的投资资产进行长期规划，并确保对经营业务资产和金融资产进行适当的继承规划。

总的来说，MAS对于代表独立家族办公室提出的S13和S13U税收申请所花费的时间较长，为多家族办公室为企业家家族建立家族办公室结构提供了良好的机会

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http://www.SingaporeLegalPractice.com is a corporate law and commercial law educational website headquartered in Singapore which aims to demystify business law and 新加坡商业法 for SME Company Owners, Startup Founders and 新加坡新移民老板。The information provided on this website does not constitute legal advice.  Please obtain specific legal advice from a lawyer before taking any legal action.  Although we try our best to ensure the accuracy of the information on this website, you rely on it at your own risk.  Click here to signup for our newsletter today to be kept updated on the latest legal developments in Singapore.

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[1]              https://www.ft.com/content/6df7c15d-2733-4178-8207-1ccc11b84018