The Monetary Authority of Singapore (MAS) today issued a consultation paper proposing enhanced powers to deal with risks that can undermine the financial sector. The proposed new Act for financial services and markets will consolidate similar provisions for various classes of financial institutions [1] in the MAS Act into a single legislation. In addition, the new Act will include additional powers to prohibit unsuitable individuals from working in the financial industry, expand the scope of anti-money laundering and countering the financing of terrorism (AML/CFT) requirements to persons in Singapore who provide digital token services overseas, strengthen the framework for technology risk management, and enhance the effectiveness of dispute resolution.
The details of the proposed new provisions are as follows:
a) To preserve trust and deter misconduct in Singapore’s financial sector, MAS proposes to expand its power to issue prohibition orders (POs). This proposal will broaden the categories of persons who may be subject to POs, rationalise the grounds for issuing POs (from a list of specific criteria into a single fit and proper test) and widen the scope of prohibition.
The new powers will enable MAS to holistically assess whether a person’s misconduct renders him unsuitable to perform one or more roles or activities within the financial sector and the appropriate action that should be taken under the PO powers. In exercising this power, MAS will adopt a risk-proportionate approach, taking into account the nature, severity and impact of the misconduct.
b) MAS also proposes to license and regulate, for AML/CFT purposes, any person in Singapore [2] who provides digital token services overseas. The provisions in the new Act will expand the scope of existing legislation [3] , which already regulates most of the digital token services provided in Singapore. The provisions will align Singapore’s regulatory regime with the enhanced standards adopted by the Financial Action Task Force (FATF) for virtual asset (“digital token” in Singapore’s context) service providers [4] .
c) Recognising the pervasive use of technology and the growing sophistication of cyber threats, MAS proposes to harmonise and expand its existing powers to impose requirements pertaining to technology risk management, including cyber security risks and data protection, on all regulated financial institutions [5] . MAS also proposes to increase the maximum penalty to $1 million for any contravention of these requirements.
d) MAS also proposes to provide statutory protection to persons performing the duties of an approved dispute resolution scheme operator (e.g. mediators, adjudicators and employees of the Financial Industry Disputes Resolution Centre (FIDReC)). This will strengthen their confidence to act independently in resolving consumers’ disputes with financial institutions.
Please click here to view the consultation paper . MAS invites interested parties to submit their comments on the proposed new Act to legal_dept@mas.gov.sg by 20 August 2020.
- [1] This includes provisions relating to the prevention of money laundering and terrorism financing, and the resolution of financial institutions.
- [2] This refers to (a) any individual operating from a permanent place of business in Singapore; (b) any corporation incorporated in Singapore; and (c) any partnership or limited liability partnership formed in Singapore.
- [3] Specifically the Payment Services Act 2019 (Act 2 of 2019), Securities and Futures Act (Cap 289) and Financial Advisers Act (Cap 110).
- [4] The FATF is the international body tasked with setting standards for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. Under the enhanced FATF standards that was adopted by the FATF in June 2019, virtual asset service providers must be licensed or registered in the jurisdiction(s) where they are created in order to mitigate the risk of regulatory arbitrage and regulatory circumvention.
- [5] Existing requirements that are imposed under various MAS-administered Acts will be issued under the new power.
