MAS eases family office tax rules, widens AML checks as Singapore vies for global wealth

The Monetary Authority of Singapore (MAS) has made it simpler for family offices to qualify for tax incentives, easing hiring and investment requirements even as it tightens scrutiny over the sources of their wealth.

Industry watchers told The Business Times that the changes reflect Singapore’s efforts to remain competitive as a family-office hub, without compromising its reputation as a well-regulated financial centre.

In a circular dated Jul 31 addressed to fund managers, trust companies and banks, MAS detailed changes to the tax incentive schemes for single-family office (SFO) funds, with the new conditions taking effect from Aug 1.

Among the changes, SFOs will have more time to hire investment professionals, face less onerous monitoring of minimum assets under management (AUM) in designated investments, and have more flexibility in meeting local spending and capital-deployment requirements.

The revisions follow MAS’ announcement in September last year to simplify its SFO tax incentive framework, providing a more streamlined process to reduce documentation and expanding the types of investments eligible.

Kylie Luo, executive director tax advisory leader, asset and wealth management, from accountancy firm BDO, said that while competitiveness was a consideration, the broader objective was to ensure that Singapore remains an attractive and credible family-office hub and keeps pace with evolving global standards on transparency, governance and regulation.

Ryan Lin, director at Bayfront Law, noted: “Clients do not choose jurisdictions on tax incentives alone. They also weigh regulatory certainty, political and economic stability, banking infrastructure, professional services, succession planning, and access to investment opportunities.”

The changes come as Singapore continues to expand its role as a regional wealth hub, with a growing number of family offices establishing a presence here.

As at end-2025, the Republic had more than 2,000 SFOs here that receive tax incentives, managing the wealth of families originating predominantly from the Asia-Pacific region, followed by Europe and the Americas.

Singapore’s broader asset management industry grew 10.1 per cent on the year in 2025, to record total AUM of S$6.7 trillion.

More flexibility for family offices 

One significant change gives new SFO applicants more time to meet their investment professional headcount requirements.

For those applying under the S13O or S13OA schemes, they can start with just one qualifying investment professional, down from two. Those applying under S13U can start with two, instead of three.

The remaining hires – including at least one non-family member – must be completed within the first year of the award of the scheme.

Lin noted that this could benefit smaller family offices that may not find it cost-efficient to employ a non-family investment professional when most of the wealth can be managed by the family with the help of external financial advisers.

MAS has also scrapped continuous tracking of AUM in designated investments.

Funds will now only need to report compliance at the point of application and at the end of each basis period – a change the regulator said was designed “to reduce the compliance burden associated with continuous AUM tracking”.

Analysts noted that this, in particular, reflects a more practical approach to regulation, and is important for a more balanced way of monitoring.

Continuous AUM monitoring can create a significant administrative burden, but, with the change, there could be reduced visibility over what happens between those testing points, said Lin.

Family offices are still expected to maintain proper internal records and governance, rather than treat the year-end test as the only compliance requirement, he noted.

The circular also stated that SFO funds will have greater flexibility in meeting their local spending requirements.

Eligible charitable donations and grants to blended finance instruments can be counted towards local spending, with eligible grants recognised at twice their actual value. This is to “take into account market norms and encourage SFO funds to continue growing their assets in Singapore”, said MAS.

Certain capital-deployment options, including investments in Singapore-listed equities and non-listed local operating companies, will similarly be considered at double their value for the minimum deployment requirement.

Separately, the 5 per cent cap on physical investment precious metals qualifying as designated investments has been removed entirely from Aug 1.

The regulator noted that the move was intended to give funds greater flexibility in portfolio diversification and support greater capital deployment into such investments in Singapore.

That said, PwC wrote in a report that this should not be viewed as a blanket opening for structures that lack genuine fund characteristics and objectives.

MAS added that the circular was released to increase transparency for industry players.

Tighter scrutiny of sources of wealth

While easing some of the economic requirements, the circular however, has tightened safeguards governing SFO funds.

The definition of “relevant persons” subject to anti-money laundering (AML) screening has been widened to explicitly include anyone who contributed to the source of funds, going beyond beneficial owners, shareholders or those with ultimate control.

Notably, this condition includes the period before the condition took effect, where even long-approved family offices must now demonstrate a clean record retroactively.

The new standard terms and conditions will also override existing letters of award where their terms differ, meaning family offices with awards issued before Aug 1 are not shielded from the revised requirements.

Funds without an existing bank account in Singapore will also be given a three-month grace period to open a private banking account with an MAS-licensed institution, failing which their awards may be revoked.

Lin welcomed the change, as he does not believe that the answer for Singapore is to move towards a lighter-touch, self-certifying model like that in Hong Kong.

“That would cut against the direction MAS has been taking since the 2023 money-laundering case, and against what gives Singapore’s family-office ecosystem its credibility with banks and counterparties in the first place,” he added.

Bryan Low, head of international wealth management for Singapore at KGI, noted that this is being seen as codification rather than change.

“It spells out clearly what good practice already looks like. The firms that were doing this properly will not feel it.”

Strong focus on transparency and governance

Analysts point out that the recent changes reflect a stronger focus on transparency and governance.

Bayfront’s Lin said: “That may mean additional compliance requirements for family offices, but it also gives clients greater certainty around what is expected of them.”

Ultimately, families willingly accept a rigorous approval process in exchange for the credibility it confers, provided the procedures remain transparent and efficient, he noted.

BDO’s Luo pointed out that Singapore should focus on strengthening the broader family-office ecosystem, particularly its talent pool, professional and advisory services, regulatory clarity, investment opportunities and philanthropic infrastructure.

“Tax incentives remain useful, but long-term competitiveness should depend on Singapore’s overall value proposition rather than tax benefits alone,” she added. 

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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