SINGAPORE: An Introduction to Banking & Finance: Regulatory

Singapore is ranked the fourth leading financial centre in the world, according to the latest edition of the Global Financial Centres Index. As Singapore’s integrated financial regulator, the Monetary Authority of Singapore (MAS) is responsible both for the prudential oversight of all banks and financial institutions (FIs) and for building a dynamic and progressive financial centre. In 2024‒25, the key focus areas on the regulatory agenda include:

• enhancing the regulatory regime for Single Family Offices (SFOs);
• maintaining Singapore at the forefront of fintech innovation;
• strengthening defences against money laundering/terrorism financing (ML/TF) threats; and
• advancing sustainability and climate resilience.

Enhancing the Regulatory Regime for SFOs

The number of SFOs (which manage assets belonging to one family) in Singapore continued to grow in 2024. The number of SFOs that have been awarded tax incentives by the MAS increased from around 400 in 2020 to 1,650 as of the end of August 2024.

To address the increasing ML/TF-related risks arising from such wealth inflows to Singapore, the MAS proposed a new regulatory framework for SFOs in 2023. This proposed framework revolved around a new structure-agnostic class licensing exemption that would apply to every SFO as long as it is wholly owned by members of the same family and only conducts fund management for such family members ‒ including trusts and corporations owned by such persons, as well as charitable organisations funded exclusively by the family. Under the initial proposals, SFOs would be required to establish and maintain business relations with a MAS-regulated financial institution (although this has since been limited to MAS-regulated banks). SFOs would also be required to lodge notifications with the MAS, which would need to include (among other prescribed details/documents) a legal opinion confirming that the SFO meets certain prescribed criteria, as well as file a prescribed return with the MAS annually.

Following the consultation, in November 2024 the MAS published its response to feedback received, along with certain tweaks to be made to its initial proposals. By way of example, the “key employees” of the SFO who would be permitted to invest alongside the SFO have been expanded to include the SFO's executive directors, CEO, Chief Financial Officer and investment professionals. The requirement to maintain an account with a MAS-regulated bank has also been extended to fund vehicles managed by the SFO (or, in the case of foreign fund vehicles, with a regulated bank in a jurisdiction compliant with Financial Action Task Force (FATF) standards). More time has also been provided for existing SFOs to transition to the new regime, with the transitional period being extended to 12 months (from the initially proposed six months).

The timeline for implementation of the proposed regime will be announced in due course.

Maintaining Singapore at the Forefront of Fintech Innovation

On the fintech regulatory front, 2024 witnessed an expansion in the scope of regulated digital payment token services, as well as the introduction of consumer protection measures for such services. In October 2024, the MAS published a consultation paper detailing a new licensing framework for digital token service providers under the Financial Services and Markets Act 2022. This framework aims to align Singapore’s regulations with international standards set by FATF. In December 2024, the MAS published an information paper on AI Model Risk Management, which is part of the MAS’ broader initiative to address the risks associated with AI in the financial sector.

Looking ahead, it is anticipated that the new single-currency stablecoin regulatory regime might be implemented in 2025.

On top of providing a supportive regulatory framework, the MAS is also actively collaborating with international partners and the financial industry in order to lay the foundations for the safe and innovative use of emerging technologies such as AI, blockchain, and quantum computing.

In this regard, the MAS recently announced the creation of the Global Finance and Technology Network (GFTN), which represents the next phase of Singapore’s fintech journey. The GFTN’s mission is to harness technology and foster innovation through global partnerships to promote more efficient, resilient and inclusive financial ecosystems.

Strengthening Defences Against ML/TF Threats

AML/CFT continues to be a key enforcement priority for the MAS (and law enforcement authorities), with Singapore’s AML/CFT regime coming under the spotlight as its fifth round of evaluations by FATF approaches in 2025. In this connection, separate updated Money Laundering and Terrorism Financing National Risk Assessments were released by the authorities in mid-2024 to highlight ML/TF threats and risk areas and to guide stakeholders in their implementation of AML/CFT measures. A separate Environmental Crimes Money Laundering National Risk Assessment was also published in May 2024 to highlight ML risks arising from the laundering of proceeds from environmental crimes.

Various amendments to Singapore’s AML/CFT-related laws intended to facilitate prosecution of AML/CFT-related offences and enhance the robustness of the regime also came into force in 2024. By way of example, new “rash” and “negligent” ML-related offences were introduced in the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (CDSA), which now allow persons to be prosecuted for ML offences at lower levels of culpability. The addition of foreign serious environmental crimes (eg, illegal logging) as ML predicate offences will now allow law enforcement authorities to investigate suspected cross-border laundering of proceeds from serious environmental crimes and provide for international co-operation in respect of these environmental crimes that take place in foreign jurisdictions. Lastly, amendments introduced to the CDSA will make the prosecution of ML offences easier, as it will only be necessary to prove that the offender knew or had reasonable grounds to believe that the relevant property(ies) being dealt with were gains from criminal conduct – instead of having to prove that monies allegedly laundered in Singapore were benefits from criminal conduct or show the complete trail of allegedly laundered monies.

Advancing Sustainability and Climate Resilience

Singapore, as a signatory to the Paris Agreement, has committed to achieve net zero emissions by 2050. In 2024, the MAS made significant strides on various fronts in advancing its sustainability and climate resilience agenda.

On 14 November 2024, the Transition Credits Coalition (TRACTION) ‒ launched and convened by the MAS at COP28 in 2023 ‒ released an interim report outlining insights and considerations on the use of transition credits to accelerate the early retirement of coal-fired power plants (CFPPs). The proceeds from the sale of such credits can reduce the costs incurred by CFPP owners and investors from voluntarily decommissioning the CFPPs early.

Further, on 12 November 2024, the MAS announced a collaboration with BlackRock and other partners as part of Financing Asia’s Transition Partnership (FAST-P) initiative. This partnership aims to mobilise up to USD5 billion in blended finance for decarbonisation projects in Southeast Asia.

Gprnt ‒ a key component of the MAS’ Project Greenprint ‒ has launched Gprnt Disclosure, an automated, generative AI-powered tool for measurement of businesses’ Scope 1 and 2 emissions. It also launched the Marketplace, which connects businesses with sustainability solutions providers.

2025 and Beyond

The above-mentioned regulatory enhancements and initiatives clearly underscore the regulator’s continuing policy in 2025 to promote innovation and sustainability while maintaining a safe and resilient Singapore financial centre. FIs in Singapore can expect such policies to continue in 2025 and beyond. It is imperative for FIs to be prepared to seize opportunities arising from the new initiatives but, at same time, proactively manage risks so as to maintain a safe and resilient financial system.