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.

Hong Kong

HKMA Chief Executive publishes inSight piece on balanced regulatory approach to asset and wealth management

The HKMA's Chief Executive, Mr Eddie Yue, has published an inSight piece discussing the key takeaways from his recent trip to Switzerland. In addition to meetings at the Bank for International Settlements, Mr Yue also had discussions with private banks and industry associations on market developments.

The three areas on which Mr Yue received the most comment from the industry are:

  • Sophisticated high net-worth investors – The HKMA and SFC note from their ongoing dialogues with the asset and wealth management industry that some seasoned investors would like the process of product suitability and risk disclosure to be streamlined or waived, like in various other major financial centres. An industry consultation is underway on measures to streamline product due diligence, transactional suitability assessment and product disclosure for sophisticated high-net worth investors, to enhance customer experience while providing proportionate investor protection. The HKMA will finalise the measures as soon as possible after the consultation closes later in March 2023.
  • Account opening and customer due diligence – The HKMA has received feedback on the challenges faced by private banks, especially in three key areas relating to anti-money laundering (AML) and counter-financing of terrorism: (a) establishing source of wealth and source of funds; (b) ongoing monitoring and (c) adopting regtech in AML work. The HKMA has provided guidance to assist banks with balanced and proportional application of the risk-based approach, such as a set of do's and don's and good industry practices, and guidance on source of wealth requirements (see our previous update).
  • Selling of investment products – In recent years, the HKMA has streamlined various investor protection measures and provided guidance to banks on what flexibility is allowed to enhance customer experience while providing investor protection. Its recent thematic review of investment product selling processes identified some practices or possible misunderstandings by banks in relation to regulatory standards, which might have made the selling process unnecessarily long. Key observations were shared with the industry in February 2023 (see our previous update).

The HKMA will continue to engage with industry and stakeholders to gather feedback and provide further practical guidance where warranted.

SFC Interim Head of Intermediaries gives keynote speech on securities regulation in Web3 era, discussing SFC's stance in relation to DeFi and centralised VATPs

The SFC has made available a keynote speech delivered by its Interim Head of Intermediaries, Mr Keith Choy, at the Hong Kong Web3 Festival 2023 regarding securities regulation in the Web3 era.

Mr Choy reiterated that the SFC recognises the opportunities presented by Web3 and fully supports the use of novel technologies to deliver financial services and products in Hong Kong. He discussed the SFC's regulatory stance and policy initiatives in relation to decentralised finance (DeFi) and centralised virtual asset trading platforms (VATPs).


  • Potential challenges with regulating DeFi include identifying who should be accountable when things go wrong, in particular in light of the pseudonymous nature of DeFi and the cross-border nature of DeFi products.
  • The SFC's view is that as long as a DeFi activity falls within the scope of the Securities and Futures Ordinance, it will subject to the same regulatory requirements applicable to a traditional finance activity. The person operating or performing the DeFi activity would therefore be subject to the SFC's licensing requirements and regulations.
  • To understand who to hold to account, the SFC will look at the substance of the DeFi arrangements (on a case-by-case basis after understanding the inner workings of the DeFi protocol) rather than how they are labelled, as some DeFi protocols may be decentralised in name only.

Proposed new VATP regime

  • The SFC looking to implement a new licensing regime for centralised VATP platforms which enable trading in non-security tokens. When the regime comes into force on 1 June 2023, all centralised VATPs operating in Hong Kong, regardless of whether they offer trading in security tokens or non-security tokens, must be licensed by the SFC. The SFC will review responses received on its consultation paper on the proposed regulatory requirements for VATP operators, which closed on 31 March 2023, with a view to implementing a robust regime which is fit for purpose and strikes a balance between investor protection and support for innovation.
  • The proposed regime incorporated the existing regulatory requirements under the current opt-in regime, with certain amendments to account for market developments (including the recent crypto-related failures) and lessons learnt from operating the existing regime. The SFC proposes to relax the professional investor licence condition to allow VATPs to serve retail investors subject to additional guardrails.

SFC concludes consultation on proposed legislative and code amendments for new regulatory regime for depositaries of collective investment schemes, expected to come into effect on 2 October 2024

The SFC has released its consultation conclusions on proposed legislative and code amendments to introduce Type 13 regulated activity, a new regime to regulate depositaries (top-level trustees and custodians) of SFC-authorised collective investment schemes. The present consultation was launched in February 2022 (see our previous update), following an initial consultation on proposals to introduce the new regulated activity. Respondents generally supported the proposed legislative and code amendments and most of the comments sought clarification of technical issues. Key comments related to the scope of the oversight function under the proposed approach to defining Type 13 regulated activity, the interpretation of terms such as "client assets" and "associated entities" under the subsidiary legislation and requests for exemptions from certain subsidiary legislation and the level of responsibility under Schedule 11 to the SFC's main code of conduct for different activities.

The finalised legislative amendments have been published in a legal supplement to the Government Gazette. The subsidiary legislation under the Securities and Futures Ordinance (SFO) to be amended concern client securities, client money, financial resources, keeping of records, accounts and audit, contract notes, statement of account and receipts, insurance, and reporting and record keeping obligations for over-the-counter derivative transactions. Schedule 5 of the SFO will also be amended. Subject to completion of the legislative process, the new regime will come into effect on 2 October 2024. To help depositaries transition to the new regime, the SFC plans to provide specific guidance on the licensing process and to launch electronic licensing forms for Type 13 regulated activity in the third quarter of 2023.

Secretary for Financial Services and the Treasury responds to questions in LegCo on repercussions of SVB collapse

The Secretary for Financial Services and the Treasury, Mr Christopher Hui, has provided a reply to the questions posed by the Hon Edmund Wong in the Legislative Council (LegCo) on 29 March 2023 in relation to the collapse of Silicon Valley Bank (SVB).

  • The Government and the financial regulators have assessed the possible subsequent risks and collateral impact and concluded that the SVB incident has brought minimal impact to Hong Kong's banking system, monetary stability and financial market.
  • SVB only maintains a local representative office in Hong Kong and is not permitted to carry on any business of taking deposits in Hong Kong. The HKMA considers that the exposure of banks in Hong Kong to SVB is very limited and that the incident has not posed a significant risk to Hong Kong's banking system and monetary stability.
  • The SFC and the Insurance Authority also consider that the direct and indirect exposures of the securities and insurance sectors to the SVB incident are limited.
  • The collapse of SVB has led to a confidence crisis affecting several other small to mid-sized banks in the US. The HKMA and the SFC will continue to require banks and licensed corporations in Hong Kong to adopt prudent risk management practices to manage and control risks stemming from volatilities in the financial market and uncertainties in the external environment.
  • The Insurance Authority has also strengthened the monitoring of insurers' solvency and asset-liability matching, and conducts regular stress tests on parameters such as interest rates, stock markets and credit spreads under different scenarios with a view to protecting the interest of policy holders.
  • The HKEX will continue to closely monitor the development of the incident, monitor the situation of listed companies, and take corresponding risk management measures. Although some listed companies have business connections with SVB, all of them have confirmed that the related exposures will not affect their operations.
  • Currently, the majority of debt securities holdings of Hong Kong's banking sector are measured at market values. Any changes in the market values of these securities have already been reflected in the financial accounts of the banks. Only about a quarter of the debt securities investments are intended to be held to maturity and measured at cost, which represents just around 5% of the total assets of the banking sector at the end of 2022. The HKMA regularly monitors the financial performance and risk appetites of banks, including conducting stress testing exercises. [29 Mar 2023]

SFC publishes quick reference guides for family offices, private equity firms, hedge fund managers and overseas and Mainland industry professionals on licensing requirements

The SFC has published quick reference guides to help family offices, private equity firms, hedge fund managers and overseas and Mainland industry professionals better understand the SFC's licensing regime. The guides address frequently asked questions about licensing topics and provide specific information about licensing carve-outs for family offices, recognition of overseas industry experience and qualifications and the availability of exemptions from examination requirements.

In the press release accompanying the guides, the SFC notes that it is constantly working to enhance the efficiency and transparency of its gatekeeping function. The guides are expected to encourage more family offices and private equity businesses to operate in Hong Kong. In addition, since the SFC moved to an all-digital environment in 2022, the average processing time for corporate licence applications from private fund managers has been shortened to about 14 weeks. [22 Mar 2023]


MAS: Revised guidelines on Licensing, Registration and Conduct of Business for FMCs

The Monetary Authority of Singapore (MAS) has published revised Guidelines on Licensing, Registration and Conduct of Business for Fund Management Companies (FMCs). The guidelines set out the eligibility criteria and application procedures for licensed fund management companies (LFMCs), venture capital fund managers (VCFMs), and registered fund management companies (RFMCs). They also set out the ongoing business conduct requirements for LFMCs, VCFMs and RFMCs, including requirements relating to custody, valuation and reporting, conflicts of interest mitigation, disclosure and submission of periodic returns.

MAS: Speech at the AIMA Singapore Forum

MAS has published a speech delivered by Mr Lim Cheng Khai, Executive Director of the Financial Markets Development Department, at the Alternatives Investment Management Association (AIMA) Singapore Forum. Mr Lim spoke about the alternative investment industry in Singapore and positioning the asset management industry for growth. He highlighted key initiatives in MAS' Industry Transformation Map 2025 that were relevant to the asset management industry.

MAS: Reply to Parliamentary question on cryptocurrency and stablecoins consultations

MAS has published a written reply to a Parliamentary question on MAS' cryptocurrency and stablecoins consultations. The question asked "what is the outcome of the consultation on proposals to reduce the risk of consumer harm from cryptocurrency trading and to support the development of stablecoins; and what are the salient insights from the consultation". In its reply, MAS explains that it received substantial feedback from a wide range of respondents and is currently reviewing the feedback. It intends to publish a response to the consultation feedback by mid-2023.

MAS: Reply to Parliamentary Question on family office applications

MAS has published a written reply to a Parliamentary question on how family office applications are progressing. The response explains that family offices can be either multi-family offices (MFOs) or single-family offices (SFOs). MFOs manage third party assets of two or more families and are therefore regulated by MAS like other fund managers under the Securities and Futures Act (SFA); there is only one pending MFO licence application. SFOs manage assets belonging to only the family and are not subject to licensing. However, the majority of SFOs apply to MAS for tax incentives on income derived from their investments managed in Singapore, and are in fact subject to requirements with regard to money laundering (ML) and terrorism financing (TF) risks. There are currently about 200 SFO tax incentive applicants pending approval.

MAS launches Finance for Net Zero Action Plan

MAS has announced the launch of the Finance for Net Zero (FiNZ) Action Plan at the opening of SGFIN. The FiNZ Action Plan sets out MAS' strategies to mobilise financing to catalyse Asia's net zero transition and decarbonisation activities in Singapore and the region. It expands the scope of MAS' Green Finance Action Plan launched in 2019 to include transition finance.

MAS: Reply to Parliamentary question on the sale of sophisticated investment products to retail investors

MAS has published a written reply to a Parliamentary question on the sale of sophisticated investment products to retail investors. The question asked "what requirements does MAS impose in terms of disclosure and pre-purchase counselling before non-accredited investors are allowed to purchase sophisticated investment products". In its reply, MAS sets out the relevant disclosure requirements and notes that financial institutions must also assess a client's investment knowledge or experience when selling more complex products. It also reminds retail investors to ensure that they understand a product's risks and returns before committing to a purchase.


Singapore and China establish Green Finance Taskforce to strengthen collaboration in green and transition finance

The Monetary Authority of Singapore (MAS) and the People's Bank of China (PBC) have announced the establishment of the China-Singapore Green Finance Taskforce (GFTF). The GFTF will deepen bilateral cooperation in green and transition finance between Singapore and China and facilitate greater public-private sector collaboration to better meet Asia's needs as it transitions to a low carbon future. The GFTF will establish three initial workstreams to focus on the following priority areas:

  • Taxonomies and Definitions: MAS and PBC will work together under the International Platform on Sustainable Finance (IPSF) to achieve interoperability between the Singapore and China taxonomies, and will collaborate subsequently to enhance the use of the IPSF's Common Ground Taxonomy, as well as deepen understanding of transition activities defined by China and Singapore.
  • Products and Instruments: Singapore Exchange and China International Capital Corporation will establish a workstream to strengthen sustainability bond market connectivity between China and Singapore, including the issuances of and mutual access to green and transition bond products in China and Singapore.
  • Technology: Metaverse Green Exchange and Beijing Green Exchange will establish a workstream that leverages technology to facilitate sustainable finance adoption, including piloting of digital green bonds with carbon credits.


FSC and New York State Department of Financial Services sign MoU on information sharing

The Financial Supervisory Commission (FSC) and the New York State Department of Financial Services (NYDFS) have signed a memorandum of understanding (MoU) on information sharing; the MoU was arranged with the assistance of the Taipei Economic and Cultural Office in New York. The MoU includes provisions governing information sharing and confidentiality that both parties will abide by in fulfilling their respective examination, enforcement, licensing, regulatory, and/or supervisory responsibilities.


RBI Circular: Framework for acceptance of Green Deposits

The RBI has issued a circular setting out its framework for acceptance of green deposits by regulated entities (REs). The framework which comes into effect from 1 June 2023 covers:

  • definitions, including for "greenwashing";
  • the denomination, interest rate and tenor of deposits;
  • requirements for REs to have Board-approved policies covering their financing framework and use of proceeds based on the official Indian green taxonomy;
  • arrangements for third-party verification or assurance and impact assessment; and
  • reporting and disclosures.

SEBI circulars – AIFs

SEBI has published the following circulars relevant to alternative investment funds (AIFs):

SEBI circular: Cyber security and cyber resilience for portfolio managers

SEBI has published a circular regarding cyber security and cyber resilience for portfolio managers. The circular explains that all portfolio managers with assets under management (AUM) of INR 3000 crore are required to comply with SEBI's provisions on cyber security and resilience as set out in an annex to the circular. The guidelines annexed with the circular are effective from 1 October 2023.


BNM: Policy document on management of customer information and permitted disclosures

BNM has released a policy document setting out requirements regarding financial service providers' measures and controls in handling customer information throughout the information lifecycle. Revisions made to this policy document are:

  • Paragraph 5.2 on definitions of 'customer information' and 'outsourcing arrangement'; and
  • Paragraph 13 under Part C on conditions in relation to permitted disclosure: enhanced condition for item 1 under subparagraph (d)(iii); and new conditions under item 8 for the disclosure of customer information that is permitted in writing by the customer, the executor or administrator of the customer, or in the case of a customer who is incapacitated, any other legal personal representative.

The policy document supersedes the policy document on the management of customer information and permitted disclosures issued on 12 October 2021.

BNM: ASEAN Taxonomy for Sustainable Finance Version 2

The BNM has announced that the ASEAN Taxonomy Board (ATB), representing ASEAN finance sectoral bodies, has taken the next step towards meeting the Paris Agreement commitments, with the release of the ASEAN Taxonomy for Sustainable Finance Version 2 (Version 2). While the first version laid out the broad framework of the ASEAN Taxonomy, Version 2 consists of (a) a complete foundation framework comprising detailed methodologies for assessing economic activities; and (b) a technical screening criteria (TSC) for the first focus sector (the energy sector). TSCs for other focus sectors will be published in the subsequent versions of the ASEAN Taxonomy. The framework is intended to facilitate transition of ASEAN Member States recognising the diversity in economic development, financial sector, and infrastructure maturity.


New omnibus law: SPVs and trustees for securitisations and trust funds

Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (Law 4/2023, in Indonesian language only) introduces the concept of SPVs and trustees for securitisations and trust funds, respectively.

The use of SPVs in securitisations in Indonesia is an existing practice. However, Law 4/2023 provides clear regulatory guidelines on, among others, how such SPVs should be established and managed. Notably, the SPVs must be limited liability companies (perseroan terbatas) established with prior approval from the Indonesian Financial Service Authority (OJK). The SPVs can also be owned by a single shareholder, deviating from the requirement of multi-shareholders under the Indonesian limited liability company law. The shares of an SPV cannot be transferred without prior approval from the OJK.Trustees of trust funds may be individuals or legal entities (the latter indicates that forms of legal entities other than limited liability companies are acceptable). Trustees must obtain a licence from the OJK before operating as a trustee. A settlor of a trust fund can appoint more than one trustees to manage the same trust fund.

The OJK is mandated by Law 4/2023 to issue implementing regulation(s) on SPVs and trustees by 12 January 2025. It is expected that the implementing regulation(s) will touch upon, among others, licensing requirements, minimum capitalisation and board composition of SPVs, as well as SPVs and trustees' tax treatments.


BSP: New rules on customer due diligence (CDD) and electronic know-your-customer (e-KYC)

The BSP has issued new customer due diligence (CDD) regulations, which include guidelines on electronic Know-Your-Customer (e-KYC) using digital identity (ID) system. The new rules set out the requirements for the use of digital identification and verification as part of the customer onboarding process of BSFIs.

BSFIs with existing e-KYC systems are given one year to comply with the prescribed e-KYC requirements. BSFIs that intend to shift to an e-KYC system are expected to comply with the provisions of the new Circular before the implementation of the system.

BSP: Rules of Procedure on handling of financial consumer complaints

The Bangko Sentral ng Pilipinas (BSP) has issued Circular No. 1169 setting out the Rules of Procedure for the Consumer Assistance Mechanism (CAM), mediation and adjudication of cases. The Rules of Procedure will govern the handling of complaints filed with the BSP by financial consumers against BSP-Supervised Institutions (BSIs). The Rules of Procedure provide several remedies that may be availed of by the financial consumers (ie BSP's CAM, mediation, and adjudication) in seeking resolution of their complaints. The Rules of Procedure provide the definition, scope, nature, and requirements of the BSP CAM, mediation and adjudication.

The Rules of Procedure will take effect on 1 May 2023.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.