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In parallel with the FIMA Bill being read in parliament last month, the MAS has issued a detailed response to its initial consultation, outlining enhancements to investigative powers, clarification of reprimand powers and expansion of powers related to licence holders conducting unregulated activities.
The ‘Proposed Amendments to MAS’ Investigative and Other Powers under the Various Acts’ was issued on the 16th February in response to the MAS July 2021 consultation paper.
On the 10th January, the Financial Institutions (Miscellaneous Amendments) Bill (FIMA Bill) was read in Parliament. The FIMA Bill introduced the amendments to these various pieces of legislation proposed in the consultation paper. The FIMA Bill also enhances and harmonises certain investigative, reprimand, supervisory and inspection powers of the MAS across the various Acts under its purview.
Enhancements to MAS Investigative powers
Power to require information from any person for the purposes of investigation: This is necessary for MAS to carry out effective investigations, and it expands the current scope to persons who are outside the reach of MAS’ existing powers, such as entities that do not fall within the scope of the powers (vendors), or employees and ex-employees of Financial Institutions (FIs).
Power to require any person to appear for examination and to take statements: The MAS already has power to require any person to appear for examination and the recording of statements under the Securities and Futures Act (SFA) and the Financial Advisers Act (FAA). The purpose of the proposed amendment is to ensure that MAS is effective at pursuing offences under the other relevant Acts such as Insurance Act (IA), Payment Services (PS Act), Trust Companies Act (TCA) and Financial Services and Markets Act 2022 (FSMA).
Power to enter premises without a warrant: The existing power to enter premises without a warrant under the SFA and FAA will be enhanced to allow MAS to do so without giving prior notice where the MAS investigator or authorised officer has reasonable grounds to suspect that the premises are or have been used by a person who is being investigated in relation to a contravention under the SFA and FAA. This power will also be extended to the other Acts. For avoidance of doubt, MAS no longer needs to provide two days’ notice to the occupier of the premises before entry can be made without a warrant.
Power to obtain a court warrant to seize evidence: MAS has powers 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 produce information, or evidence may be destroyed or tampered with. This power has been extended to the IA, PS Act and FSMA.
Transfer of evidence between MAS and other agencies: The SFA and FAA that enable evidence to be transferred between MAS and the Commercial Affairs Department (CAD) or the Attorney-General’s Chambers (AGC) have been expanded and extended to the other Acts. This will enable MAS 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. It will also enable CAD and AGC to use evidence gathered via MAS’ exercise of statutory investigative powers for criminal proceedings.
Applicability of MAS reprimand powers
The MAS has made it clear that it may reprimand any person who was a “relevant person” at the time of the misconduct, even if the person has left the FI or is not longer licensed by the MAS when the misconduct is discovered or when the reprimand is issued.
A “relevant person” includes any FI that is licensed, registered, authorised, approved, recognised or exempted (as applicable) under the SFA, FAA or TCA, as well as any employee, officer, partner or representative (as applicable) of each FI.
Issue directions to capital markets services licence holders that conduct unregulated business
Capital Market Services Licence (CMSL) holder’s unregulated business is a concern for the MAS. Such unregulated businesses include (i) payment token derivatives that are not traded on an organised market of an Approved Exchange, and (ii) spot foreign exchange contracts for a purpose other than leveraged foreign exchange trading. For example, losses from unregulated businesses could adversely affect a CMSL holder’s ability to meet its obligations to customers in its regulated activities.
MAS will have powers now to issue written directions on the minimum standards and safeguards that should be in place when CMSL holders and their representatives conduct unregulated businesses. MAS will also prescribe a list of unregulated financial products.
Enhancements to MAS’ supervisory and inspection powers
Appointment of key persons: The SFA will have 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). This will be similar to the approval framework in place for CMSL holders such as brokers and fund managers.
Obtaining effective control: Existing approval requirements in the SFA and FAA for change in control of CMSL holders and licenced financial advisors will be updated to reflect that MAS’ approval is only required prior to a person obtaining effective control. This will also apply to change in control of RMOs, RCHs and ATs.
Duty not to provide false information to MAS: MAS makes it clear that both individuals and entity will be culpable if there is no due care to ensure that the information provided to MAS is not false or misleading.
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: There will be new requirements and powers in the SFA pertaining to the appointment of external auditors of approved exchanges, approved clearing houses, licensed trade repositories, and approved holding companies;
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