Singapore Tightens Oversight of Hedge Funds and Family Offices Amid Growing Scandals

Authorities in Singapore are significantly ramping up their oversight of hedge funds and family offices, driven by a series of scandals that have highlighted gaps in the regulatory framework for the financial sector, according to a report by Bloomberg. As part of their efforts, the government has introduced more stringent information requirements for firms and is increasing the closure of inactive entities.

Since March, the pace of regulatory changes has accelerated, with the Monetary Authority of Singapore (MAS) announcing the discontinuation of the Registered Fund Management Company (RFMC) license category for hedge funds managing assets up to $250 million. This change, effective by 1 August, moves hedge funds to a stricter regulatory regime under the Licensed Fund Management Companies (LFMC). Many hedge funds had been operating under the RFMC license since its introduction in 2012.

In addition, family offices benefiting from tax exemptions received new forms in May requesting more detailed information, with a submission deadline of 30 June. This is in response to recent criminal investigations, including a high-profile money laundering case involving family offices that had been granted tax exemptions. The new regulations require family offices to confirm that key personnel have no history of involvement in money laundering or terrorism financing and ensure they comply with domestic capital control regulations. They must also maintain accounts with Singapore-based private banks.

The MAS has clarified that these measures aim to detect and mitigate illicit activities, while tightening tax incentive processes. Moreover, the Accounting and Corporate Regulatory Authority (ACRA) is intensifying efforts to strike off dormant firms, addressing concerns that inactive companies could be exploited for illegal activities.

While these measures may increase operational costs for smaller firms, they are expected to enhance the quality of data provided to authorities and close regulatory loopholes, ultimately reinforcing Singapore’s position as a leading financial hub.