Wealthy Chinese families prefer Hong Kong over Singapore for family offices amid increased scrutiny

Professionals who help rich Chinese set up private offices told Nikkei Asia that some of their clients are thinking of managing their wealth in Hong Kong as establishing an office in Singapore is now slowed and can take more than a year.

One of the professionals said that three of their clients in the last six months have gone ahead to establish family offices in Hong Kong as a backup after applying to do the same in the city-state.

"Many just want to move on quick, and in Hong Kong you can just have [family offices] set up in a couple of weeks," the person noted. "That's the main reason why they either shift to Hong Kong, or they just bypass Singapore and directly go to Hong Kong."

A family office is a private wealth management entity that provides a comprehensive suite of services to high-net-worth families and individuals, according to fund management firm Ocorian.

Singapore authorities have been demanding more information from family offices and hedge funds following the city-state’s recent historic S$3 billion (US$2.2 billion) laundering case involving a group of Chinese criminals, according to The Straits Times.

At least one individual implicated in the case was linked to family offices that had received tax exemptions, while some were from China’s Fujian Province but held other passports.

Last month, these family offices were given new forms asking for greater details that they must submit to the Monetary Authority of Singapore, the country’s central bank, by the end of June.

According to the forms, they must confirm that their beneficial owners, directors, representatives, and shareholders have never committed, been convicted of, or even charged with money laundering or terrorist financing offenses.

It has also become harder for wealthy Chinese to obtain permanent residency in the city-state as authorities there are screening applicants more carefully, Novia Lu, director of business development for the Asia-Pacific at Ocorian, told Nikkei Asia.

Thus, some of them now have doubts about whether they should put their money in Singapore, she noted.