Corporate Governance Standards for Family Offices that Seek Tax Incentives

Assoc Prof Jamus Jerome Lim asked the Prime Minister and Minister for Finance (a) what specific standards of corporate governance are imposed on Family Offices (FOs) seeking tax incentives under the fund tax incentive schemes for FOs; (b) whether MAS requires such entities to implement robust fraud prevention mechanisms, third-party audits, and whistleblower protections; (c) what percentage of these FOs have been subjected to intensive supervision or compliance review in the past three years; and (d) why are these FOs not required to undertake mandatory risk assessments for fraud vulnerabilities.

Mr Gan Kim Yong (for the Prime Minister): Single Family Offices (SFO) manage only the family's own private wealth and do not handle third-party funds. It is for the family to establish the governance and controls needed and to hire the right people to manage their private wealth vehicle. They do not need to be regulated nor be subject to specific corporate governance standards beyond those which apply to all corporate entities, whether they receive tax incentives or otherwise. This approach is consistent with major financial centres worldwide. Our approach towards SFOs is focused on addressing money laundering risks. Imposing unnecessary regulations will increase compliance costs and undermine Singapore's position as a business and financial centre.

On the recent case of alleged misappropriation of funds by former employees of a Chinese family office, misappropriation of funds is a risk faced by all businesses and not unique to SFOs. All businesses should institute appropriate controls to guard against such risks. Where misappropriation of funds occur, Singapore's legal regime allows for recourse against such misconduct.