How to start the RFMC (Registered Fund Management Company)?
Singapore is expected to surpass Switzerland as the world’s leading wealth management center in the coming two years*, owing to expansion in neighboring developing markets, a welcoming regulator, and a predictable political environment.
This is great news for Singapore’s asset management sector. It creates an ecosystem that allows investment managers to pursue great possibilities as more pension funds, insurance firms, and other institutional investors pursue greater exposure to Asian development.
Representatives will be needed to buy technical indemnity policies as part of their Capital Market Services (CMS) licensing criteria in Singapore. This would not refer to “Registered Fund Management Companies” (RFMCs) or those with a minimum of S$250 million in the assets under management and less than 30 eligible investors.
Investors have been increasingly aware of ambiguity as a result of the current market uncertainty. Institutional investors, who demand better executive oversight and risk management, account for about 60% of assets invested in hedge funds. Many investors need professional indemnity insurance as a requirement of investment.
Before a company may start operating as a Registered Fund Management Company, it must meet the following requirements:
Fit and Proper Criteria
Integrity, honesty, and reputation, as well as capability and competence, and financial soundness, are all conditions for determining if a relevant individual is fit and proper. Rather than MAS proving otherwise, it is up to each relevant individual to prove that they are a fit and proper individual. In compliance with the MAS’s Guidelines on Fit and Proper Criteria, a Singapore Registered Fund Management Company must demonstrate to MAS that its directors, representatives, shareholders, and staff, as well as the Fund Management Company itself, are fit and proper.
Fund Administration
Fund management firms must have fund administration handled independently or have sufficient division of duties, mainly when performing functions like valuation or fund accounting, serving as a fund ledger, as well as client reporting (e.g., sending of the monthly account statements)
Audit
The periodic independent audit of a fund management company must be performed by an impartial auditor. One of the required criteria for all Fund Management Companies is that auditors send a report to MAS with their view on the financial results as well as their compliance with main licensing and corporate behavior requirements.
Anti-Money Laundering (AML) Framework
Companies who manage money ought to have strong Know Your Customer (KYC) strategies in effect. All Fund Management Companies must have these measures in effect, as well as an anti-money laundering policy, to define, analyze, consider, and fix their money laundering and terrorist funding threats.
Custody Arrangement
Customers’ funds and assets must be entrusted to a custodian who is authorized, registered, or permitted (to exercise the custodial function) in the jurisdiction in which the funds or assets are located. Despite the fact that Singapore Fund Management Company will not be directly responsible for selecting the custodian, it must be able to show that it has taken appropriate measures to ensure that the funds are protected by proper protections, including separate custody.
