Singapore's financial regulator has warned fund managers that popular low-tax investment structures could be exploited for money laundering. The Monetary Authority of Singapore cautioned that the variable capital company structure, introduced in 2020 to attract offshore investors, has become a potential conduit for illicit funds.

This warning comes after several high-profile money laundering cases have rocked the financial hub. In 2023, authorities arrested 10 Chinese nationals for laundering S$3bn, while last year they seized hundreds of millions in assets linked to online scams. The regulator's private briefing to industry participants highlighted growing concerns about the misuse of these structures.

The MAS disclosed that over 1,400 VCCs have been established with 3,300 sub-funds operational. While most products are used legitimately, the regulator found evidence of some structures with minimal fund management activity and inadequate custody arrangements. The agency emphasized that this briefing was part of regular industry engagement to share governance best practices.