(MENAFN) The application process for global investors seeking to establish family offices in Singapore is experiencing significant delays, stretching up to 18 months, as the affluent investors grapple with more stringent legal regulations in the Asian financial hub.
While family offices thrived during the pandemic, becoming a symbol of Singapore's ambitions as an investment destination, the surge in applications is now met with heightened scrutiny following the largest money laundering investigation the city-state has ever witnessed.
According to the Monetary Authority of Singapore, the number of registered family offices managing tens of billions of dollars in private wealth skyrocketed from 50 in 2018 to 1,100 by the end of 2022. However, lawyers and consultants specializing in family office setups note a slowdown in new registrations. The demand has decreased as the application procedures, once taking less than six months, now extend to cases that can sometimes last up to 18 months. The prolonged waiting time is attributed to a backlog of applications and increased scrutiny under new, stricter legal regulations from Singaporean authorities, dissuading some potential clients from applying.
Kia Ming Loh, co-head of Dentons Rodyk's private wealth and family offices practice, commented, "Family offices are still popular, but we are seeing a slowdown." He highlighted a decrease in inquiries from wealthy families and individuals, dropping from two to three inquiries per week to "two to three inquiries per month."
The delay periods vary, with some applicants from last year still awaiting approval, while others who submitted applications in January of this year received the green light in August. Lawyers point out that this disparity indicates growing regulatory concerns about potential misuse by criminal networks. Private bank clients are also facing longer waiting times to open accounts due to heightened vetting, according to the Financial Times.
In August, Singapore was rocked by a SUSD2.8 billion (USUSD2 billion) money laundering scandal. Police confiscated assets, including luxury real estate, cars, designer handbags, gold bullion, cash, and cryptocurrencies in raids across the country. Ten individuals, all from mainland China, were arrested and charged. Investigators are probing whether part of this money reached family offices and whether they benefited from the tax advantages of this mechanism.
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