Enhancing MAS’ investigative, reprimand, supervisory and inspection powers

On 10 January 2024, the Financial Institutions (Miscellaneous Amendments) Bill 2024 (the “FIMA Bill”) was moved for First Reading in Parliament.

The FIMA Bill enhances and rationalises the Monetary Authority of Singapore’s (“MAS”) investigative, reprimand, supervisory and inspection powers across various Acts under MAS’ purview. It also introduces other consequential and clarification amendments to these Acts. 

The Acts that would be amended by the FIMA Bill include the (a) Financial Advisers Act 2001 (“FAA”), (b) Financial Services and Markets Act 2022 (“FSMA”), (c) Insurance Act 1966 (“IA”), (d) Payment Services Act 2019 (“PS Act”), (e) Securities and Futures Act 2001 (“SFA”), and (f) Trust Companies Act 2005 (“TCA”). The amendments to these Acts will come into force at a later date which will be notified through the Gazette.

For some context, MAS had in July 2021 conducted a public consultation on the key amendments in the FIMA Bill. Where appropriate, the MAS has incorporated the feedback received into the FIMA Bill.

Key amendments to the FIMA Bill

Enhance MAS’ investigation powers

The FIMA Bill seeks to strengthen MAS’ evidence-gathering powers and facilitate greater inter-agency coordination, by introducing enhancements to its investigative powers under the SFA and the FAA. Additionally, the IA, PS Act, TCA and FSMA (collectively, the “other Acts”) will be amended to broadly align MAS’ investigative powers with those under the SFA and FAA. The main changes to the various Acts are as follows: 

1. Power to compel individuals to attend interviews and record written statements: MAS will extend its existing powers under the SFA and FAA to compel individuals to attend interviews and record written statements, to the other Acts. 
2. Entering premises without warrant: MAS will (1) enhance its existing power to enter premises without a warrant under the SFA and FAA to allow it do to so without giving prior notice, where there are reasonable grounds for suspecting that the premises are or have been occupied by a person who is being investigated in relation to a contravention under the SFA and FAA, and (2) extend such enhanced power to the other Acts.
3. Obtaining court warrant to seize evidence: MAS will extend its existing power under the SFA, FAA and TCA to obtain a Court warrant to enter premises and seize evidence when a person has failed to comply with an order to product information, or evidence may be destroyed or tampered with, to the IA, PS Act and FSMA.
4. Transfer of evidence between MAS and other agencies: MAS will expand and extend its existing power under the SFA and FAA which enable evidence to be transferred between MAS and the Commercial Affairs Department (“CAD”) or the Attorney-General’s Chambers (“AGC”), to the other Acts. Under the expanded powers, (i) MAS will be able to use evidence obtained by other agencies under the Criminal Procedure Code 2010 for MAS’ investigations, regulatory actions, as well as in appeals against the latter, and (ii) CAD and AGC will be able to use evidence gathered via MAS’ exercise of statutory investigative powers for criminal proceedings.

Clarify applicability of MAS’ reprimand powers

The MAS currently has powers under the SFA, FAA and TCA to reprimand a “relevant person”, whom MAS is satisfied to be guilty of misconduct. A “relevant person” refers to financial institutions regulated by MAS under those Acts or employees, officers, partners or representatives of such regulated financial institutions. 

The FIMA Bill clarifies that MAS’ powers to reprimand such “relevant persons” under those Acts would also include persons who were a “relevant person” at the time of the misconduct, even if the person has ceased to be a “relevant person” since the misconduct i.e. the person is no longer regulated by MAS or has left the employ of a regulated financial institution. 

Expand MAS’ powers to issue directions to capital markets services licence (“CMSL”) holders that conduct unregulated business

MAS recognises that unregulated businesses that CMSL holders may carry out may pose contagion risks to their regulated activities. These unregulated businesses include offering products that are not regulated by MAS such as bitcoin futures and other payment token derivatives traded on overseas exchanges.

While MAS has issued guidance to CMSL holders to adopt risk-mitigating measures if CMSL holders conduct unregulated businesses with retail investors, the FIMA Bill will now allow MAS to issue written directions on the minimum standards and safeguards that should be in place when CMSL holders and their representatives conduct unregulated businesses. 

Enhance supervisory and inspection powers

MAS will enhance its supervisory and inspection powers under the SFA, FAA, and TCA, to ensure that it has consistent powers across these Acts and to align with the Banking Act 1970. The key amendments in the FIMA Bill to these Acts are:

Appointment and removal of key persons

• The SFA will set out approval requirements for the appointment of chief executive officers and directors of Singapore-incorporated recognised market operators (“RMOs”), Singapore-incorporated recognised clearing houses (“RCHs’”) and approved trustees (“ATs”). 
• The provisions in the FAA and TCA on the appointment of key persons (e.g. chief executive officers, resident managers or directors) of licensed financial advisers (“LFAs”) and licensed trust companies, will be amended to align with provisions in the SFA.
• The grounds for removal of key persons in the SFA, FAA and TCA will be aligned to a single fit and proper test.

Obtaining effective control: 

• Existing approval requirements in the SFA and FAA for controllers of CMSL holders and LFAs will be refined to only require MAS’ approval prior to a person obtaining effective control. 
• The approval requirements will be extended to controllers of RMOs, RCHs and ATs.

Appointment of agents by foreign regulators

MAS powers will be expanded to enable MAS to approve the appointment of agents by foreign regulators to conduct inspection of specified financial institutions under the SFA.

Appointment of external auditors

New requirements and powers will be introduced in the SFA, relating to the appointment of external auditors of approved exchanges, approved clearing houses, licensed trade repositories, and approved holding companies.

Failure to exercise reasonable care in submission of information

A new offence will be introduced in the SFA, FAA and TCA which applies to a person, other than an individual, who fails to exercise reasonable care in ensuring the accuracy of information submitted to MAS, even if the information is not false or misleading in any material particular.

Service of documents

There will be similar and consistent provisions in the SFA, TCA and FAA, for service of notices, orders or documents by registered post and electronic service.