3-7-2024 (SINGAPORE) The nation’s authorities have revealed that six single family office (SFO) funds previously granted tax benefits were found to be linked to the 10 foreigners arrested and convicted in the country’s largest money laundering case to date.
The revelation came to light when Nominated Member of Parliament Usha Chandradas posed a question to Prime Minister Lawrence Wong and Minister of Finance, inquiring about the number of family offices linked to the convicted individuals that had been granted tax benefits.
Responding on behalf of the Prime Minister, Deputy Prime Minister Gan Kim Yong disclosed that a total of six SFOs, including those owned by the 10 convicted foreigners or their spouses, had been identified as beneficiaries of tax incentives.
Family offices are specialized entities established to manage the wealth of affluent families or a collective of families. In Singapore, SFOs are not required to be registered or licensed by the Monetary Authority of Singapore (MAS) as they do not manage third-party funds.
DPM Gan assured that the tax benefits granted to these SFOs were promptly withdrawn at the start of the financial year in which their owners or spouses were charged or convicted. This measure is understood to have taken effect as early as the 2022 financial year.
“Tax benefits accorded prior to that will not be clawed back, unless there were breaches of the conditions of the tax incentive awards then,” DPM Gan stated, emphasizing the government’s commitment to upholding the rule of law and ensuring accountability.
He further highlighted that as part of the enforcement actions in this high-profile case, assets have been forfeited from the convicted individuals. “The total value of assets forfeited from convicted individuals with links to SFO funds that were awarded tax incentives far exceeds any tax benefits accorded to the SFO funds,” DPM Gan added.
The scale of the crackdown on the money laundering syndicate has been unprecedented. Since the arrests in August 2023, more than $1 billion in cash and assets linked to the 10 foreigners were seized and issued with prohibition of disposal orders. Approximately $944 million worth of those assets and cash were subsequently forfeited to the State.
However, the authorities’ efforts are far from over, as the remaining $3 billion in cash and assets still seized belong to 17 others who remain at large, and are part of ongoing investigations.
The revelation of the six SFOs linked to the convicted individuals has prompted the MAS to tighten its scrutiny and review its internal incentive administration processes for SFOs. In October 2023, Minister of State for Trade and Industry Alvin Tan had acknowledged in Parliament that at least one of the convicted individuals was found to be linked to an SFO that had been awarded tax incentives, underscoring the need for enhanced due diligence.
To receive tax incentives at the time, SFOs had to meet specific criteria, including employing at least two investment professionals, incurring business expenditure between $200,000 and $1 million, and investing a minimum of 10 percent of their assets under management in local equities, bonds, funds, or Singapore-operating firms.
According to Prime Minister Lawrence Wong’s written reply in Parliament on March 6, there were around 1,400 SFOs awarded tax incentives in Singapore, a significant increase from 1,100 in 2022 and 700 in 2021. These SFOs managed approximately $90 billion in assets in 2021.
