The Financial Institutions (Miscellaneous Amendments) Bill, or FIMA Bill, aims to enhance the abilities of the Monetary Authority of Singapore (MAS) to enforce its regulatory regime and supervise capital markets Financial Institutions (FIs).
The FIMA Bill received its second reading in Parliament on 07 March 2024. In this reading by Mr Alvin Tan, Minister of State, on behalf of Mr Lawrence Wong, Deputy Prime Minister, Mr Tan outlined the need for MAS to continually review and enhance its regulatory powers to ensure effective supervision of FIs, and investigate and punish serious misconduct in Singapore’s financial sector. The FIMA Bill is expected to be passed by Parliament and come into force in the second half of 2024.
Key Takeaways
- The Bill will enhance MAS’ investigative powers across 6 Acts.
- The regulator will also gain augmented supervisory powers.
- MAS will also have greater regulation of Financial Institutions (FIs) in the capital markets space.
- The Bill is expected to pass Parliament and come into effect in the second half of 2024.
Recommended Next Steps
- Revisit your current Know Your Employee (KYE) policies, procedures, and systems to ensure robust monitoring of conflicts of interest and identification of potential misconduct.
- Consider using tools such as the MyComplianceOffice (MCO) Regulatory Change Manager module, which includes comprehensive horizon-scanning tools, to help compliance teams stay current with regulatory changes.
- Ensure all required persons meet the requirements to be deemed “Fit and Proper” within their roles. Tools such as MCO’s Authorisations, Registrations, and Licensing (ARL) module can assist in streamlining compliance management in this respect.
In the second reading, Mr Tan stated that the FIMA Bill will “harmonise and enhance MAS’ investigative powers” across 6 Acts (collectively, the “MAS-administered Acts” ):
- The Financial Advisers Act 2001 (or “FAA”)
- The Financial Services and Markets Act 2022 (or “FSMA”)
- The Insurance Act 1966 (or “IA”)
- The Payment Services Act 2019 (or “PS Act”)
- The Securities and Futures Act 2001 (or “SFA”)
- The Trust Companies Act 2005 (or “TCA”)
- (collectively, the “MAS-administered Acts”)
Mr Tan also detailed key changes the FIMA Bill would bring to MAS’ investigative powers.
Enhancement of MAS’ Investigative Powers
The Bill seeks to enhance MAS’ existing programs under the SFA and FAA. It will also increase MAS’ effectiveness in pursuing offences under other relevant Acts such as the IA, the PS Act, the TCA and the FSMA.
New and extended powers detailed in the Bill include:
Power to require individuals to attend interviews and record written statements. The existing powers under the SFA and FAA to compel individuals to attend interviews and record written statements are effective in enabling investigators to obtain information about suspected misconduct. The Bill will extend these powers to Other MAS-administered Acts.
“MAS is proposing to introduce in the other MAS-administered acts, the power to require persons to appear before an MAS officer for examination and statement-recording for the purpose of investigations under the relevant acts,” said Mr Tan.
Power for MAS to enter premises without a warrant. The FIMA Bill will remove the requirements in the SFA and FAA for MAS to issue orders to a suspect and wait for a failure to comply before entering a premises believed to be occupied by that suspect. Similar powers will be extended by the Bill to the Other MAS-administered Acts.
“This will enable MAS to enter premises without tipping off the suspect, and hence reduce the risk of the suspect destroying evidence relevant to the investigation,” Mr Tan explained.
Extension of MAS’ powers to obtain a Court warrant to search premises and seize evidence. MAS already has such powers within the SFA, FAA, and TCA. The change will extend these powers into the Other MAS-administered Acts.
This enhancement of powers “allows MAS to obtain evidence that is in the possession of uncooperative subjects, before it is concealed, removed, tampered with, or destroyed,” according to Mr Tan.
Amendments to facilitate the transfer of evidence. In cases where MAS’ investigations reveal serious misconduct that warrants criminal prosecution, MAS’ ability to transfer evidence reduces the need to duplicate investigations and enhances the efficiency of Singapore’s law enforcement agencies.
The Bill will extend the transfer of evidence provisions in the SFA and FAA for the purpose of criminal investigations or proceedings to any offence under the MAS-administered Acts, and better facilitate information exchange between MAS and the Police, Public Prosecutor or other law enforcement agencies.
“Presently, the Police or other law enforcement agencies may only transfer evidence to MAS for the purpose of civil penalty investigations or actions for market misconduct offences under the SFA. The FIMA Bill will replace these provisions with the power for the Police or other law enforcement agencies to transfer evidence to MAS, for the purpose of taking regulatory actions in respect of any misconduct under the MAS-administered Acts, if such transfer is in the public interest,” said Mr Tan.
Enhancement of MAS’ Supervisory Powers
The second set of amendments enhances MAS’ supervisory powers under the SFA, FAA and TCA. Mr Tan said these changes will “harmonise requirements across the Acts, and where relevant, also align MAS’ powers under these Acts with the Banking Act 1970.”
Supervisory amendments in the Bill include:
The appointment and removal of key persons. Regulated FIs are generally required to obtain MAS’ approval before appointing their chief executive officers and directors—with the exception of locally incorporated recognised market operators and recognised clearing houses, and approved trustees.
The Bill will require approvals for appointed persons in all such entities. It will also consolidate the grounds for the removal of a director or key management officer into a single ground of not being “fit and proper” in such cases.
Persons obtaining control of a capital markets FI. Similarly to the appointment of CEOs and Directors, a person must generally obtain approval from MAS before acquiring control in capital markets FIs. This requirement will be extended to locally incorporated recognised market operators and recognised clearing houses, and approved trustees. For other capital markets FIs, the FIMA Bill will also clarify when MAS’ approval must be sought in this respect.
The appointment of external auditors. The Bill will bring new requirements and powers to the SFA involving the appointment of external auditors of Approved Exchanges, Approved Clearing Houses, Approved Holding Companies, and Licensed Trade Repositories. Under the Bill, such entities will be required to obtain MAS’ approval for the appointment of their external auditors on an annual basis.
MAS will also gain powers to direct these entities to remove or replace appointed auditors if they are unable to discharge their duties satisfactorily.
Enhancement of MAS’ Powers in the Capital Markets
Currently, Capital Markets Services License (CMSL) holders may conduct unregulated business activities such as dealing in products that are not regulated by MAS. Examples of such products include digital payment token derivatives that are traded on overseas exchanges.
These unregulated business activities pose certain risks to those CMSL holders’ regulated businesses. As Mr Tan explained, “Losses from a CMSL holder’s unregulated business could adversely impact its ability to meet its obligations to customers in its regulated business.”
MAS has already issued guidance to CMSL holders on risk-mitigating measures and safeguards that they should adopt when they conduct unregulated businesses. However, to further mitigate risk to CMSL holders’ regulated businesses, the Bill will empower MAS to issue legally binding directions to these firms and their representatives in relation to their conduct of unregulated businesses.
Tools to Help Firms Stay Compliant
Tools such as the MyCompliance (MCO) Regulatory Change Manager (RCM) module help firms stay current with regulatory changes. MCO uses Natural Language Processing (NLP) in our offering to read legislation and regulator’s rules to identify the obligations that apply to our clients and enable what is known as “Horizon Scanning”.
The RCM module uses AI to review and categorise critical sources of information, including regulatory news, legal documents and enforcement actions, delivering an automated approach to regulatory insight for our customers. RCM provides firms with:
- Daily regulatory alerts and updates.
- A wide range of global regulatory coverage.
- Access to a regulatory reference library.
- The ability to set custom rules and preferences.
- Links to internal rules and policies.
Regulatory Technology (RegTech) solutions, such as MyComplianceOffice (MCO), equip firms with visibility and oversight of employees’ CPD and examination requirements.
MyComplianceOffice (MCO) also provides a comprehensive regulatory compliance management platform for tracking employee training and certifications, ensuring Fit and Proper statuses for required roles.
The Authorisations, Registrations, and Licensing (ARL) module provides compliance managers with data collection tools, workflows, communications, alerts, approvals, and reporting. As a result, compliance teams can easily track representatives’ progress with Continuing Professional Development (CPD) programs and many other licensing and registration requirements to know they are considered “Fit and Proper” within their roles—and meeting company policy and regulatory compliance requirements.
Learn more about CPD compliance within your firm. See our in-depth article Addressing Compliance Within Financial Firms’ CPD Requirements.
