MAS’s Thematic Review of VCCs and the Fintech Nation Policy POV

Singapore’s financial sector continues to thrive as a global hub for innovation, trust, and transparency. The recent circular from the Monetary Authority of Singapore (MAS) on the Governance and Management of Variable Capital Companies (VCCs), dated 26 June 2025, is a testament to the regulator’s commitment to upholding the highest standards of integrity and resilience in the fund management industry.

MAS Source Link - https://www.mas.gov.sg/-/media/mas-media-library/regulation/circulars/cmi/iid-04-2025-governance-and-management-of-vcc/iid-04-2025-governance-and-management-of-variable-capital-companies-vccs.pdf

Appreciating MAS’s Observations and Concerns

MAS’s thematic review of VCCs and their managers, based on data and surveys from 2024, provides a transparent and data-driven assessment of the sector. The review highlights both the strengths and areas for improvement among VCCs, which have grown to approximately 1,200 entities managed by about 600 financial institutions as of March 2025.

Key Observations Worth Applauding

• Robust Compliance, with Room for Growth: The majority of VCCs and their managers are meeting key regulatory requirements, demonstrating the effectiveness of Singapore’s regulatory framework. However, MAS’s identification of gaps—such as incomplete custody arrangements, lack of substantive fund management activity, and potential AML/CFT vulnerabilities—shows a keen eye for detail and a commitment to continuous improvement.

• Focus on Substantive Activity: MAS rightly emphasizes that VCCs must serve as genuine collective investment schemes, not merely as conduits for asset transfers or marketing vehicles. This ensures the integrity of the VCC framework and protects the interests of investors.

• Strengthening AML/CFT Controls: The call for robust anti-money laundering and countering the financing of terrorism (AML/CFT) measures, including regular training for directors and effective oversight of eligible financial institutions, is both timely and critical in a rapidly evolving risk landscape.

Supervisory Expectations: A Forward-Looking Approach

MAS’s supervisory expectations are clear, actionable, and aligned with international best practices:

• Formalize custody arrangements for eligible assets.

• Ensure all individuals conducting regulated activities are properly appointed.

• Wind down dormant or unviable VCCs.

• Maintain robust oversight of AML/CFT frameworks and controls.

These expectations not only address current gaps but also future-proof Singapore’s fund management ecosystem against emerging risks.

How Fintech Nation Policy Welcomes Proactive and Progressive Regulation

At Fintech Nation, we believe that progressive regulation is the bedrock of sustainable innovation. MAS’s approach exemplifies the “trust through transparency” ethos that has made Singapore a magnet for global capital and talent.

Why We Welcome MAS’s Proactivity

1. Enhancing Investor Confidence: By holding VCC managers to high standards, MAS reinforces Singapore’s reputation as a safe and reliable jurisdiction for fund management. This attracts sophisticated investors and encourages long-term capital formation.

2. Fostering Responsible Innovation: Clear guidelines and supervisory expectations give fintechs and fund managers the clarity they need to innovate responsibly, without fear of regulatory ambiguity.

3. Level Playing Field: By addressing issues such as shell VCCs and ensuring substantive fund management activity, MAS prevents regulatory arbitrage and maintains a level playing field for all market participants.

4. Global Leadership: Singapore’s proactive stance on AML/CFT and governance sets a benchmark for other jurisdictions, reinforcing its leadership in the global fintech and asset management space.