Welcome to Herbert Smith Freehills’ monthly private wealth industry updates in Asia.
Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format. The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.
Mainland, Hong Kong and Macao regulators sign MOU on cross-boundary wealth management connect
The SFC and the HKMA have announced that they have entered into a Memorandum of Understanding (English translation) (MoU) on a Cross-boundary Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area with the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and the Monetary Authority of Macao. The intention to implement such pilot scheme was announced in June 2020.
The MOU provides a framework for the exchange of supervisory information and enforcement cooperation as well as a liaison mechanism for investor protection issues among the regulatory authorities in the three jurisdictions. The SFC and the HKMA will continue to work with the relevant authorities to prepare for an early launch.
MAS publishes PSN01AA on AML/CFT
The Monetary Authority of Singapore (MAS) has published Notice PSN01AA, which concerns anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements to facilitate the transition of existing stored value facility holders.
The Notice is a transitional arrangement and is intended substantially to apply the requirements of PSOA-N02 to persons providing account issuance services who are exempted under the Payment Services (Exemption for Specified Period) Regulations 2019 during the transition period. The Notice takes effect on 11 February 2021.
1. Budget promotes concessions for non-residents
India’s 2021-22 federal budget includes some tax concessions for non-resident Indians, amending the term ‘liable to tax’ in provisions of the previous year’s budget that brought stateless income of Indian citizens into the tax net. It also provides reduced withholding tax rates on dividends paid to foreign institutional investors; a legal regime for limited liability partnerships; a one-year capital gains tax exemption for start-up companies and a reduction in the time limit for tax enforcement proceedings.
2. SEBI Master Circular for Depositories
SEBI has issued a Master Circular for Depositories. The Master Circular is a compilation of the relevant circulars and communications pertaining to Depositories issued by SEBI up to 31 October 2020.
The Master Circular consists of 4 sections covering:
- Beneficial Owner (BO) Accounts;
- Depository Participants (DP) Related;
- Issuer Related; and
- Depositories Related.
3. RBI expands the RBIA to certain NBFCs and UCBs
The Reserve Bank of India (RBI) has announced the expansion of the Risk-Based Internal Audit (RBIA) system to certain Non-Banking Financial Companies (NBFCs) and Primary (Urban) Co-operative Banks (UCBs). These are:
- all deposit taking NBFCs, irrespective of their size;
- all Non-deposit taking NBFCs (including Core Investment Companies) with asset size of ₹5,000 crore and above; and
- all UCBs having asset size of ₹500 crore and above.
The entities must implement the RBIA framework by 31 March 2022 in accordance with the Guidelines on Risk-Based Internal Audit annexed to the announcement.
BNM issues statement on SRR
Bank Negara Malaysia (BNM) has announced the extension of the flexibility permitted for banking institutions to use Malaysian Government Securities (MGS) and Malaysian Government Investment Issues (MGII) to meet Statutory Reserve Requirement (SRR) compliance until 31 December 2022. The SRR ratio remains unchanged at 2.00%.
The decision to extend this flexibility is part of BNM’s continuous efforts to ensure sufficient liquidity to support financial intermediation activity. Since March 2020, the reduction in the SRR ratio by 100 basis points and flexibility to recognise MGS and MGII as part of SRR compliance have released approximately RM46 billion worth of liquidity into the banking system.
SECT announces MoU on MRF with Hong Kong and Thailand regulators
The Securities and Exchange Commission, Thailand (SECT) has announced that it and the Securities and Futures Commission (SFC) have entered into a Memorandum of Understanding (MoU) on Mutual Recognition of Funds (MRF) to allow eligible Hong Kong and Thai public funds to be distributed in each other’s market through a streamlined process.
The MoU establishes a framework for exchange of information, regular dialogue as well as regulatory cooperation in relation to the cross-border offering of eligible Hong Kong and Thai funds.
In addition, the two regulators have agreed to expedite the approval process of a local feeder fund investing in an MRF-eligible Thai or Hong Kong master fund and to clarify how they may be operated in a streamlined manner.
1. AML law amended in time for FATF deadline
The Philippines’ President, Rodrigo Duterte, has signed a law strengthening the country’s anti-money laundering (AML) regime in order to meet the 1 February deadline set by the global Financial Action Task Force (FATF) in its October 2019 mutual evaluation report. The law allows authorities to impose financial sanctions and to apply for court summonses and search warrants.
2. SECP announces new BO Transparency Guidelines
The Securities and Exchange Commission Philippines (SECP) has announced the introduction of new measures that further promote transparency in the ownership of corporations to combat money laundering (ML) and terrorist financing (TF) in the Philippines, and keep the country off the gray list of the Financial Action Task Force (FATF). The announcement refers to the SECP’s Memorandum Circular No. 1, Series of 2021 issued on 27 January 2021, which sets out Guidelines in Preventing the Misuse of Corporations for Illicit Activities through Measures Designed to Promote Transparency of Beneficial Ownership (BO Transparency Guidelines).
The new measures include a prohibition on the issuance of bearer shares and a requirement for the mandatory disclosure of the identity of the beneficial owners, or persons who ultimately own or effectively control corporations.
The contents of this document are for reference purposes only. Some of the information comes from public sources and this may not be comprehensive, accurate or up to date; where we have relied on third party information and sources, this has not been verified by us. The document does not constitute legal advice, and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication, and any facts in this document should be checked for your specific circumstances at the time you wish to use or refer to them.