But never late is better – MAS shows its teeth when it comes to reporting
6 July 2018
The MAS dressing down of TAMPL for repeatedly late reporting should serve as a reminder of the importance of robust compliance frameworks.
Taiyo Asset Management Pte Ltd (TAMPL), a registered fund management company, and its director, Mr Tey Eng Chee Thomas, have been publicly reprimanded by MAS.
TAMPL had been repeatedly late (by up to two years) in submitting its annual declaration and auditor reports for the financial years ending in 2014 to 2016, as well as for being late (by up to more than three years) in notifying MAS on its changes in the appointment and cessation of its director and four of its representatives. This is despite MAS having sent queries and reminders to TAMPL to make its submissions, as well as warnings for its earlier breaches of reporting deadlines.
Mr Tey had failed to discharge his duty as a director to take effective action to ensure TAMPL has adequate processes and controls in place to comply with MAS’ regulations. On top of the public reprimand, MAS has found Mr Tey guilty of misconduct.
MAS’ reprimand also mentions two other directors who were with Mr Tey at the time of the breaches. Although they have since resigned from TAMPL’s board, MAS will take their dereliction of their duties as directors into account if they apply to hold an appointment in a financial institution or carry on regulated activities.
MAS’ last word on this matter is not limited to regulatory reporting expectations, but is extended to all relevant rules and regulations, addressing compliance lapses, and the duty of directors to ensure effective compliance controls.
Looking past the penalty
The reprimand is not so much for the breaches of regulatory reporting deadlines, but for the root causes that gave rise to those breaches. In illustration, two of the three of TAMPL’s breaches involved periodic reports that are due annually; there should be no surprises in their foreseeable preparation and submission. Yet, while we do not know the exact internal circumstances or root causes, TAMPL was repeatedly late and by several years. This suggests systemic issues such as process failure or incapability and, a negligent compliance culture. This, as opposed to late reports, is MAS’ concern.
The reprimand focusses on the directors responsible for the breaches rather than the breaches themselves. Here, we see MAS reinforcing its expectation on individual accountability; the serious view taken of poor oversight and ineffective action on part of senior managers responsible for ensuring compliance, rectifying the breaches and preventing recurrences. Given that MAS consulted on guidelines on individual accountability and conduct earlier this year, it is likely we can expect increased scrutiny on senior management accountability. You can read more about this here.
You don’t need a reprimand to learn from this case
The reprimand to TAMPL also serves as a stern reminder to all financial institutions on the importance of ensuring the robustness of their all-round compliance frameworks. Use this as an opportunity to start a conversation about your compliance risk.
Prevention is better than cure. Review your processes to ensure efficient, accurate and timely regulatory reporting. You may wish to focus on past instances where your regulatory reporting process has been delayed and/or your report was submitted late. Look at root causes for patterns (for example, a certain party or system or process bottleneck is repeatedly holding up the submission.) and assess them for any indication of systemic issues.
Demonstrate your oversight and accountability. Senior managers must ensure their understanding of and proactive oversight on such processes to mitigate a risk of breach. You wouldn’t want to be reprimanded over breaches you could have prevented. Even if there has been a breach, senior managers can still demonstrate their oversight and accountability by ensuring breaches are rectified and that they do not recur.
How we can help
We can help mitigate your compliance risks by identifying gaps in your all-round compliance framework through our internal audit service followed by our practical advice.
We help financial institutions to consolidate and submit their periodic and ad hoc regulatory reports part of our on-going compliance support service.
We can also advise you on which regulatory reporting responsibilities apply to you and help implement or improve your regulatory reporting processes.