Column Introduction

"Wealth Management · Shiye" has been officially launched since today. Every half month, we summarize important policies, regulations, and regulatory information on wealth management, finance, and related industries at home and abroad. We are willing to share industry information and cutting-edge trends with you, enhance the professional level of our departments through in-depth research, create a unique service platform in the wealth management field of Gaopeng Law Firm, and contribute to the development of the financial field. Sincerely invite and thank you for your attention!

Domestic information

1. The State Council: Establish the State Administration of Financial Supervision and Regulation, cancel the Banking and Insurance Regulatory Commission, and adjust the Securities Regulatory Commission to a directly affiliated institution of the State Council

On March 10th, the first session of the 14th National People's Congress voted to adopt a decision on the State Council's institutional reform plan. The plan involves a total of 13 issues related to institutional reform, mainly clarifying the establishment of the State Financial Supervision and Administration, which will transfer the daily regulatory responsibilities of the central bank for financial holding companies and other financial groups, the relevant financial consumer protection responsibilities, and the investor protection responsibilities of the CSRC to the General Administration for unified exercise, without retaining the CBRC; The CSRC and the State Intellectual Property Administration will be adjusted to be directly affiliated with the State Council; The National Data Bureau will be established to coordinate and promote the construction of data infrastructure, coordinate the integration, sharing, development, and utilization of data resources, and coordinate the planning and construction of digital China, digital economy, and digital society, which will be managed by the National Development and Reform Commission; The staffing of various departments of the central state organs will be reduced at a uniform rate of 5%. (Source: Xinhua News Agency)

● Recommendation: Six of the 13 reforms in the reform plan involve the financial sector, which is undoubtedly the top priority of the reform. After the reform, the problems of overlapping functions and weak overall supervision caused by separate operation and supervision will be greatly improved, which can maximize the use of regulatory resources and straighten out the relationship between supervision and the market. 

2. Bankruptcy of Silicon Valley Bank: US Government Takes "Unconventional Measures" to Beware of the Recurrence of "Lehman Incident" 

On March 10th, the Bank of Silicon Valley was taken over by the Federal Deposit Insurance Corporation of the United States, and went bankrupt only 48 hours after falling into crisis. According to reports and analysis, the bankruptcy of Silicon Valley banks is related to the rapid and significant interest rate hikes by the Federal Reserve. On March 12, the United States Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) issued a joint statement announcing "unconventional measures" to prevent potential banking crises and ensure that depositors of failed banks can quickly withdraw all their deposits. (Source: China News Network)

● Recommendation: According to analysis, the bankruptcy of a Silicon Valley bank is directly related to the high interest rate environment brought about by the Federal Reserve's interest rate hike. This bankruptcy of a Silicon Valley bank may trigger a chain reaction and ultimately trigger systemic risks in the US banking industry. Up to now, more than 20 Chinese listed companies have issued relevant responses on exchanges and interactive platforms. From the perspective of disclosure, the Hong Kong stock market has affected a large number of listed companies, and the impact of the bankruptcy of Silicon Valley banks on Chinese enterprises still needs further observation. 

3. The CBRC issued the Notice on Further Improving the Pilot Work of Joint Credit Granting

On March 3, the China Banking and Insurance Regulatory Commission issued the "Notice on Further Improving the Pilot Work of Joint Credit Granting", guiding banking financial institutions to further strengthen credit management, improve the relationship between banks and enterprises, and optimize the allocation of credit resources. The Notice specifically includes 12 parts, starting from fully understanding the importance of joint credit extension, promptly determining the list of enterprises, actively participating in joint credit extension by institutions in different regions, strengthening joint risk prevention and control, compacting the responsibility of the lead bank, strengthening accountability for performance of duties, deepening cooperation between banks and enterprises, further exerting the role of self-discipline organizations, and exerting the synergy with the Debt CommitteePut forward specific requirements in connection with the work of combating debt evasion and abolishment, increasing policy publicity, and standardizing information submission. In the next step, the CBRC will continue to guide banking financial institutions to deepen the pilot work of joint credit extension, strive to build medium - and long-term bank enterprise relationships, and continuously improve the quality and efficiency of serving the real economy. (Source: official website of China Banking and Insurance Regulatory Commission)

● Recommendation: Improving the joint credit mechanism and promoting bank information sharing can help reduce information asymmetry between banks and enterprises, and curb the behavior of banking institutions such as long financing, excessive financing, and "large investors". 

The number of TOFs established in April increased by 132.99% month on month!

According to incomplete public statistics, in February 2023, a total of 2143 collective trust products were issued, an increase of 19.79% compared to the previous month; The issuance scale was RMB 80.062 billion, a year-on-year increase of 10.08%; In February, a total of 2064 collective trust products were established, with a month-on-month increase of 23.97%. The establishment scale was 58.036 billion yuan, with a month-on-month increase of 2.12%. The performance of TOF products was particularly eye-catching, with 226 standard trust products with TOF structure established in February, an increase of 132.99% compared to the previous month. Among them, the establishment scale of trust products invested in the three major areas of the real economy in non-standard trust business has declined to varying degrees, and the increase in the establishment scale of standard trust products is the main driving force for the market to recover. (Source: Securities Times)

● Recommendation: With the stock market rising this year, the establishment of standard trust products in February has significantly improved. The trend of replacing non-standard products with standard trust products has become evident. In the future, the investment and research direction of standard trust products can focus on business differentiation and specialization, thereby attracting the attention of investors. 

5. Zhejiang Financial Trust Successfully Launched Its First Corporate Wealth Management Trust

Recently, Zhejin Trust and Xincaidao Wealth Management Co., Ltd. established a wealth management service trust for a family business aimed at salary and welfare management. The trust relies on institutional advantages such as independence, profitability, and flexibility of the trust, and through the independent operation, earmarking, and efficient management of the trust property, it provides basic livelihood security and welfare support for employees of the family business. (Source: Usufruct Trust Network)

Recommendation: In the "Notice on Regulating the Classification of Trust Business by Trust Companies (Draft for Public Consultation)", "wealth management trusts organized by legal persons and non legal persons" belong to asset service trusts. The establishment of corporate wealth management trusts by Zhejin Trust is an important measure to implement the new regulations of the CBRC on the classification of trust business, reflecting the return to the origin of trustIndustry orientation for transformation and development. 

6. The CSRC guides stock exchanges in issuing guidelines to support insurance asset management companies in carrying out asset securitization and REITs businesses

On March 3, the CSRC guided stock exchanges to formulate and issue the "Guidelines for Insurance Asset Management Companies to Conduct Asset Securitization Business". The "Business Guidelines" adhere to the principles of systematic thinking, market concepts, and pilot first, clarify the institutional arrangements for insurance asset management companies to apply for ABS and REITs business, and support sound corporate governance, standardized internal control managementHigh quality insurance asset management companies with rich asset management experience have participated in asset securitization (ABS) and real estate investment trust funds (REITs) businesses, further enriching the forms of participating institutions. (Source: official website of China Securities Regulatory Commission)

● Recommendation: The issuance of the Business Guidelines has expanded the scope of asset securitization managers to insurance asset management, expanding the business entities of asset securitization, and continuously empowering the high-quality development of the REITs market. In the future, the volume of public REITs will be further expanded with the expansion of the pilot scope. In addition, after the implementation of the Business Guidelines, ABS products issued by insurance asset management on exchanges will be recognized as standardized creditor's rights assets, reflecting the transformation of China's financial regulatory system from institutional supervision to functional supervision. 

7. Issuance of guidelines for fund investment advisors to strengthen business norms and investor rights protection

On March 3, the China Foundation Association developed and released business specification documents such as the "Guidelines for the Content and Format of Investment Advisory Service Agreement for Publicly Offered Securities Investment Funds" and the "Guidelines for the Content and Format of Risk Disclosure Statement for Investment Advisory Service for Publicly Offered Securities Investment Funds". The "Service Agreement" explains and stipulates the relevant definitions and requirements of fund investment advisory business, while the "Risk Disclosure Statement" provides examples of standardized formats and supplements appropriate explanations. The issuance of both regulatory documents aims to guide the standardized development of the fund investment advisory business and effectively safeguard the legitimate rights and interests of investors. After 20 working days from the date of issuance, those who provide fund investment advisory services to new clients or provide new fund investment portfolio strategies to old clients should conduct business in accordance with the Service Agreement and the Risk Disclosure Statement. If there are changes in the relevant rules involved, the corresponding content should be adjusted in a timely manner. (Source: China Securities Association official website, Securities Daily)

● Recommendation: The issuance of the "Service Agreement" and "Risk Disclosure Statement" is a positive signal that regulators support the continued standardized development of the fund investment advisory business. The expression of "fiduciary obligations" is particularly noteworthy. Both Article 11 of the Service Agreement and Article 1 of the Risk Disclosure Statement explicitly require investment advisory institutions to assume fiduciary obligations, which puts forward higher requirements than the principle of investor appropriateness. 

China Foundation Association: As of the end of the fourth quarter of 2022, the total scale of institutional asset management business is about 66.74 trillion yuan

On March 3, the China Foundation Association released statistical data on asset management business for the fourth quarter of 2022. As of the end of the fourth quarter of 2022, the total size of asset management business for fund management companies and their subsidiaries, securities companies, futures companies, and private fund management institutions was approximately 66.74 trillion yuan. Among them, the scale of public funds is 26.03 trillion yuan, the scale of private asset management business of securities companies and their subsidiaries is 6.87 trillion yuan, the scale of private asset management business of fund management companies and their subsidiaries is 7.12 trillion yuan, the scale of pension funds managed by fund companies is 4.27 trillion yuan, and the scale of private asset management business of futures companies and their subsidiaries is about 314.7 billion yuan, The scale of private equity funds is 20.28 trillion yuan, and the scale of special asset support plans is 1.95 trillion yuan. (Source: official website of China Foundation Association)

● Recommendation: 2022 is the first year of the formal implementation of the "New Regulations on Asset Management". The structure of securities firms' asset management business continues to be optimized, with significant de channel effects, and their active management capabilities continue to improve. Overall, the development trend of "reducing quantity and increasing quality" is presented. 

9. The approval of two new energy public REITs will boost the market's further expansion and expansion

On the evening of March 2, the first two new energy public REITs, including AVIC Jingneng Photovoltaic Closed Infrastructure Securities Investment Fund and China CITIC Construction Investment National Power Investment New Energy Closed Infrastructure Securities Investment Fund, were approved. Among them, AVIC Jingneng Photovoltaic REIT is the first publicly offered REITs for photovoltaic power generation in China, and CITIC Construction Investment National Power Investment New Energy REIT is the first publicly offered REITs for central enterprises in China, as well as the first publicly offered REITs for offshore wind power in China. (Source: Securities Daily)

Recommendation: Li Chao, Vice Chairman of the Securities Regulatory Commission, previously stated, "We will further expand the scope of REITs pilot projects to cover infrastructure fields such as new energy, water conservancy, and new infrastructure as soon as possible." The implementation of two new energy REITs projects has further enriched the types of REITs assets, and will also promote the expansion of the REITs market into more new asset fields. 

10. Research report on "Global Practice and China Outlook of Investment Advisory Business": 54 fund investment advisory pilot institutions have developed their businesses, with a management scale of nearly 120 billion yuan

On March 3, the National Finance and Development Laboratory of the Chinese Academy of Social Sciences held a "Seminar on Investment Advisory Business Innovation and Compliance Development", and jointly released the research report "Global Practice and China Outlook of Investment Advisory Business" with the Ant Group Research Institute. The report points out that most pilot institutions that have developed industries have launched corresponding investment advisory brands to provide low threshold products and services to individual customers through online channels, reflecting the trend of inclusive wealth management. Since the issuance of the relevant pilot notice by the Securities Regulatory Commission in 2019, a total of 60 institutions have obtained pilot qualifications, of which 54 have been operating, involving 4.4 million accounts, 95% of which are small and micro accounts (less than 100000 yuan), with a management scale of nearly 120 billion yuan. From the perspective of global investment advisory business development, the report analyzes and draws on the development experience of foreign investment advisory business, and puts forward corresponding suggestions for the future development of China's investment advisory business. (Source: Securities Times)

● Recommendation: China's fund investment advisory business is still in the initial stage of development, and still faces the prominent issue of transforming from a seller's model to a buyer's model. How to implement fiduciary obligations in this process is crucial to achieving high-quality development of the fund investment advisory business. 

11. Shanghai Financial Court Releases the "Legal Risk Prevention Report on Bond Disputes" 

On March 2, the Shanghai Financial Court held a press conference to release the "Legal Risk Prevention Report on Bond Disputes". The Report is divided into four parts: current situation and risk analysis of the bond industry, bond disputes, dispute types and risk disclosure, and legal risk prevention suggestions. It comprehensively summarizes the risk factors in the bond market, summarizes and sorts out the risk prone and multiple links in the process of bond issuance, trading, and repayment, and analyzes and reveals the risk causes, including the continuous release of default risk in the bond marketIllegal and illegal behaviors such as information disclosure occur from time to time, the risks of private placement bonds and private enterprise bonds are relatively prominent, structured issuance leads to market risks, and the risk linkage between domestic and foreign bond markets is further manifested. (Source: Securities Daily)

● Recommendation: Due to the impact of the pandemic and the economic downturn, bond default events have occurred frequently in recent years, and the number of bond disputes has continued to rise. False statements, information disclosure, and other issues have become key issues for investors to pursue, potentially affecting the entire social credit system and investment confidence. In this context, the Shanghai Financial Court has issued the "Legal Risk Prevention Report on Bond Disputes", which is of positive significance for resolving the risk of bond default and preventing the continuous fermentation of risks. 

The government work report of the State Council in 2023: The annual VAT deduction and refund exceeded 2.4 trillion yuan

On March 5, the first session of the 14th National People's Congress opened in Beijing. Premier Li Keqiang delivers a government work report. Li Keqiang pointed out that in the past year, many enterprises and individual businesses have encountered special difficulties due to factors such as the epidemic. Throughout the year, value-added tax deductions and refunds exceeded 2.4 trillion yuan, new tax reductions and fee reductions exceeded 1 trillion yuan, and tax deferral and fee deferral exceeded 750 billion yuan. Over the past five years, the country has implemented a large-scale tax and fee reduction policy, with a cumulative tax reduction of 5.4 trillion yuan and fee reduction of 2.8 trillion yuan. This has not only helped enterprises overcome difficulties and retain green mountains, but also released water to raise fish and conserve tax resources. On average, more than 11 million tax-related enterprises and individual businesses have been added annually. In the past five years, we have also severely punished illegal construction of buildings and halls, as well as tax evasion and other acts. In his government work report, Li Keqiang proposed that this year's development should adhere to the principle of stability as the first priority, seek progress while maintaining stability, maintain policy continuity and pertinence, strengthen coordination and coordination of various policies, and form a joint force to jointly promote high-quality development. Improve tax and fee preferential policies, and optimize the continuation and optimization of existing measures such as tax reduction and fee reduction, tax refund and tax postponement. (Source: Xinhua News Agency, SAT WeChat official account)

● Recommendation: In the past year, many enterprises and individual businesses have encountered special difficulties due to factors such as the epidemic. Throughout the year, value-added tax deductions and refunds exceeded 2.4 trillion yuan, new tax reductions and fee reductions exceeded 1 trillion yuan, and tax deferral and fee deferral exceeded 750 billion yuan. This year, we will continue to continue and optimize the tax and fee reduction policies to provide timely assistance and benefit enterprises. However, at the same time, we will also severely crack down on illegal acts of defrauding value-added tax rebates with a zero tolerance attitude. While enjoying tax benefits, market entities also need to pay attention to compliance operations and stay away from tax related illegal activities. 

13. Work Report of the Supreme People's Procuratorate: 58000 people were prosecuted for tax related crimes, up 29.3% from the previous five years

On March 7, the Procurator General of the Supreme People's Procuratorate, Zhang Jun, presented a report on the work of the Supreme People's Procuratorate to the first session of the 14th National People's Congress. In reviewing the work of the past five years, Zhang Jun pointed out in his work report that tax related crimes such as defrauding export tax rebates and falsely issuing special invoices for value-added tax were punished according to law, and 58000 people were prosecuted, an increase of 29.3% compared to the previous five years. Some illegal gas stations and black gas stations purchase and sell "non-standard oil", concealing income, evading taxes, and harming the ecological environment. In public interest litigation investigations, procuratorial organs in Zhejiang and Beijing used big data to screen information such as the driving trajectory and loading and unloading time of oil tankers involved in the case, and found clues of illegal crimes and transferred them to the competent authorities for disposal, with a tax recovery of 360 million yuan. The Supreme People's Procuratorate collaborated with the State Administration of Taxation to promote the supervision model and jointly solve regulatory difficulties. (Source: Xinhua News Agency, official account of the Supreme People's Procuratorate)

● Recommendation: Over the past five years, China's judicial authorities have maintained a high-pressure crackdown on tax related violations and crimes, focusing on combating fraudulent tax practices. In terms of working methods, procuratorial organs and tax authorities use big data to conduct tax collection and management, and crack down on tax related crimes. In 2022, the tax authorities will basically achieve the "one household" intelligent collection of tax information for legal persons and "one person" intelligent collection of tax information for natural persons. This year, we will achieve a shift from "managing tax by bill" to "managing tax by number" classified and precise regulation. In the future, enterprises need to pay attention to tax compliance, pay taxes in full and on time, and stay away from illegal activities such as concealing income and evading taxes. 

14. Starting to handle the final settlement and payment of comprehensive income of individual income tax in 2022

On March 1, 2023, the final settlement and payment of comprehensive income of individual income tax in 2022 began, and the final settlement and payment process lasted until June 30. Overall, this settlement continues the framework and content of the previous three settlement announcements. The main changes include: First, in the "pre tax deductions available" section, in accordance with the provisions of the "Notice of the State Council on the Establishment of Special Additional Deductions for Individual Income Tax for the Care of Infants and Young Children under the Age of 3" (Guo Fa [2022] No. 8) and the "Notice of the Ministry of Finance and the State Administration of Taxation on Individual Income Tax Policies Related to Individual Pensions" (2022 No. 34), Provisions have been added that special additional deductions for the care of infants and young children under the age of 3 and personal pensions can be deducted in the final calculation. The second is to further improve the appointment tax system in the "final settlement service" section, and extend the appointment end time to March 20 on the basis of maintaining the appointment start time (February 16) to provide taxpayers with a better handling experience. Third, in the "final settlement service" section, a new provision has been added to prioritize tax refunds for taxpayers with heavy living burdens. (Source: General Office of the State Administration of Taxation)

● Recommendation: In order to effectively safeguard the legitimate rights and interests of taxpayers, help taxpayers successfully and normatively complete the settlement and payment of comprehensive personal income tax, and improve tax efficiency and reporting experience, the State Administration of Taxation has continued its experience in the previous three individual income tax settlements and introduced a series of convenient measures, such as expanding the scope of taxpayers who make appointments to handle tax, and extending the time for making appointments to handle tax. While enjoying convenience services, taxpayers should also pay attention to whether there are situations where the final settlement and payment should be handled but not handled, the declaration and payment of taxes are not standardized, and the taxable income obtained is not reported, and timely make corrections. 

Overseas information

Singapore comprehensively raises the investment threshold of the Global Investor Program

The Singapore Economic Development Board (EDB) announced changes to the three investment plans under the Global Investor Plan (GIP). Applicants for Scheme A will be required to invest at least S $10 million in new business entities or existing business operations in Singapore; Scheme B applicants are required to invest at least S $25 million in the GIP Select Fund; Scheme C applicants who establish a Single Family Office (SFO) have an Asset Management Scale (AUM) of at least S $200 million, of which at least S $50 million must be invested in the four specified local investment categories. Persons who start businesses or invest in Singapore can apply for permanent resident status in Singapore through GIP. 

In terms of investment conditions, the investment limit for new or expanded businesses in Scheme A has increased from S $2.5 million to S $10 million (including existing paid-in capital). The investment limit of the GIP Select Fund for Option B has increased from S $2.5 million to S $25 million. Option C now requires investors to invest S $2.5 million in a single family office (SFO) with an asset management scale (AUM) of at least S $200 million (of which at least S $50 million must be held in Singapore). This requirement will be lifted, and the new policy will be adjusted to allow investors to establish an SFO with an AUM of at least S $200 million, Of this, at least S $50 million must be invested in the four specified local investment categories. These changes will take effect on March 15, 2023. (Source: edb. gov.sg)

● Recommendation: GIP's target investors include mature entrepreneurs, next-generation entrepreneurs, founders of fast-growing companies, and heads of family offices. Singapore's adjustment of the investment threshold for GIP is intended to attract ultra high net worth investors willing to take root in Singapore and invest a large amount of their wealth in local businesses or investment portfolios in Singapore, thereby promoting the development of the Singapore economy. 

Ultra high net worth customers can choose the following two options based on their own immigration needs: 

(1) Investors who do not consider applying for permanent resident status in Singapore can establish a family office in Singapore. The funds managed by the family office are eligible for tax incentives under the supervision of the Monetary Authority of Singapore (MAS). Specifically, it includes the Onshore Fund Tax Exemption Plan (13O) and the Progressive Fund Tax Exemption Plan (13U). Certain income earned by funds managed by family offices from designated investments will be eligible for tax breaks in Singapore. 

(2) Investors who want to obtain permanent residency should meet the relevant requirements of EDB's new GIP policy. 

The United States Supreme Court ruled that FBAR penalties should be collected according to the report

On February 28, 2023, the United States Supreme Court ruled by a 5-4 ruling in the Bittner v. United States case that taxpayers who unintentionally failed to submit annual foreign bank and financial account reports (FBARs) to the Internal Revenue Service (IRS) should be punished once for each report. Even in cases where multiple accounts are held, the FBAR penalty should only apply to each report, not to each foreign account that the IRS believes is not timely or accurately reported. (Source: step)

● Recommendation: According to the Bank Secrecy Act of the United States, the FBAR (Financial Crime Enforcement Network (FinCEN) Form 114, Foreign Bank and Financial Account Report) must be submitted annually. Any intentional violation of the FBAR reporting requirements (unless for reasonable reasons) can be subject to a civil penalty of up to $10000. 

Compared to the above legal provisions, the court in Bittner case held that those involving unintentional violations should also be punished. The court's position is somewhere between the Bank Secrecy Act and the Internal Revenue Service (IRS). The IRS believes that this penalty should apply to every foreign account that is not reported promptly or accurately. 

Therefore, U.S. taxpayers must pay attention to reporting foreign financial accounts annually. Although this report is not part of the U.S. tax return, it is filed separately online at the U.S. Treasury Department. However, if taxpayers fail to report (intentionally or unintentionally), they will face significant fines. (Source: step)

Singapore Launches Family Office Charity Tax Incentive Plan

Singapore will introduce a tax incentive scheme for eligible donors who have family offices locally. The applicant's home office must hold funds under Section 13O or 13U of the Monetary Authority of Singapore and meet the criteria for incremental business expenditure of at least $200000. 

Under the incentive plan, eligible donors can apply for 100% tax relief for overseas donations, which must be made through qualified local intermediaries. However, the upper limit of the deduction shall not exceed 40% of the donor's statutory income. The Monetary Authority of Singapore will issue further detailed regulations by June 30, 2023. (Source: iras. gov.sg)

● Recommendation: In order to attract the establishment of family offices, the Singapore government allows funds managed by family offices to enjoy certain tax relief policies. Now, on this basis, Singapore's upcoming charity tax incentive plan for family offices is another good policy. Ultra high net worth clients who set up family offices in Singapore are generally enthusiastic about developing philanthropy and hope to make outstanding contributions in the field of philanthropy. The new charitable tax incentives will help realize the charitable vision of these ultra-high net worth clients, while making Singapore a more attractive destination for wealth management. 

4. The Monetary Authority of Singapore issues a new circular on strengthening anti money laundering/anti terrorist financing controls in wealth management departments

On March 3, 2023, the Monetary Authority of Singapore (MAS) issued a circular on money laundering and terrorist financing (ML/TF) in the wealth management industry. The guidance was issued following the launch of the Financial Services Industry Transformation Map 2025 (ITM) by the Monetary Authority of Singapore, which emphasizes the goal of MAS working with the wealth management departments of financial institutions to "deepen their capabilities" and become an "Asian charity center.". In order to mitigate ML/TF risks, Singapore regulators urge financial institutions to remain vigilant and implement strong risk controls to ensure that wealth management funds flowing into Singapore are legitimate. In its guidance, the Monetary Authority of Singapore highlighted the three pillars of an effective anti money laundering and anti terrorist financing (AML/CTF) plan for wealth management companies, including strengthening the oversight and risk and control functions of the board of directors and senior management (BSM), conducting additional audits and quality assurance testing, and continuing to be vigilant against high-risk clients and transactions. (Source: ifcreview)

● Recommendation: For ultra high net worth clients, if they are offshore entities and have a large number of accounts in multiple jurisdictions, BSM has sufficient supervisory authority and the right to fully understand the ML/TF risks associated with their industry. When conducting reviews and quality assurance tests, the review of customer due diligence (CDD) measures will receive special attention, and the CDD measures should be consistent with the customer's risk appetite and risk score, The control areas related to identifying high-risk customers and verifying their sources of wealth (SOW) and funds (SOF) are highlighted as areas where enhanced quality assurance testing should be conducted. When these controls are deemed inadequate, high-risk clients will be subject to more careful scrutiny by wealth management companies. 

In addition, the Monetary Authority of Singapore recommends that wealth management companies pay attention to the increased ML/TF risk when dealing with legal structures established for the benefit of beneficial owners, such as trust arrangements, insurance structures, and family offices; Note that potential customers withdraw their applications because they are unable or unwilling to provide the required CDD information; During periods of continuous monitoring of abnormal trading peaks and unexpected fund flows with third parties, especially when entering or exiting high-risk jurisdictions, vigilance must be maintained. 

The Financial Action Task Force issued a report on money laundering in the art and antiques markets

On February 27, 2023, the Financial Action Task Force (FATF) issued a new report, which includes a list of risk indicators that can help public and private sector entities identify suspicious activities in the art and antiques market, emphasizing the importance of quickly identifying and tracking artifacts involved in money laundering or financing terrorism. The report includes some good practices adopted by countries to address the challenges they face, including the establishment of specialized units and access to relevant databases, as well as cooperation with art experts and archaeologists to help identify, trace, investigate, and repatriate cultural relics. (Source: fatf gafi. org)

● Recommendation: The art and antiques market has attracted criminals, organized criminal groups, and terrorists to engage in money laundering activities. Criminals attempt to use the industry's privacy protection and various third-party intermediaries to facilitate money laundering, while terrorist organizations can use local cultural relics to fund their terrorist activities. The vast majority of market participants are not associated with illegal activities, but there are still risks associated with these markets, which many jurisdictions do not have sufficient awareness and understanding. This has led to a lack of investigation resources and expertise, as well as difficulties in conducting cross-border investigations. For example, during the industry consultation conducted by the Hong Kong government between March and April 2022 on the proposed family office tax relief system in Hong Kong, the industry had proposed to expand the scope of eligible asset classes to the art and antiques fields, but the "Tax (Amendment) (Tax Relief for Family Investment Control Instruments) Bill 2022" officially published in December did not adopt the aforementioned relevant recommendations, It is difficult for the government to effectively identify and prevent suspicious activities due to the risk of money laundering in the field of art and antiques. 

The FATF's report on money laundering in the art and antiques market provides a guide for jurisdictions to improve the identification and tracking of vulnerabilities in cultural relics involved in money laundering or terrorist financing.