• Obtaining court warrant to seize evidence. MAS’ power under the SFA, FAA and TCA to obtain a court warrant to enter premises and seize evidence under specified circumstances will be extended to the IA, PS Act and FSM Act.
• Transfer of evidence between MAS and other agencies. The current provisions in the SFA and FAA that allow for evidence to be transferred between MAS and the Commercial Affairs Department (CAD) or the Attorney-General’s Chambers (AGC) will be expanded and extended to the FSM Act, IA, PS Act and TCA.

Enhanced supervisory and inspection powers

The FIMA Bill also enhances MAS’ supervisory and inspection powers under the SFA, FAA and TCA to ensure consistency across those Acts and to align with the Banking Act 1970. Key amendments are as follows:

• Appointment and removal of key persons. Singapore-incorporated RMOs, RCHs and ATs will require MAS’ approval, premised on satisfaction of the fit and proper test, to appoint chief executive officers and directors. The provisions in the FAA and TCA on appointment of key persons such as CEOs, directors and resident managers will also be amended to align with the position under the SFA.
• Control requirements. Existing requirements in the SFA and FAA which require MAS’ approval to be obtained whenever a person obtains a 20% or more stake in a CMSL holder will be refined so that MAS’ approval is only required prior to the obtainment of effective control. The approval requirement will also be extended to controllers of RMOs, RCHs and ATs.
• Appointment of agents by foreign regulators. MAS will have the power to approve the appointment of agents by foreign regulators to conduct inspection of specified financial institutions under the SFA.
• Appointment of external auditors. Existing provisions in the SFA will be amended to require approved exchanges, licensed trade repositories, approved clearing houses and approved holding companies to appoint an auditor on an annual basis subject to MAS’ approval.
• Failure to exercise reasonable care in submission of information. The FAA, SFA and TCA will be amended to make it an offence for a person who is not an individual to fail to take due care to ensure that information provided to MAS under those Acts is not false or misleading.
• Service of documents. The provisions in the SFA, TCA and FAA on service of notices, orders or documents by registered post and electronic service will be aligned to achieve consistency between those Acts.

Clarify applicability of MAS’ reprimand powers

The FAA, SFA and TCA will be amended to clarify that a person previously regulated under one of those Acts, and who has ceased to be regulated under the relevant Act, can be reprimanded by MAS for misconduct, so long as the person was a regulated person at the time of the misconduct.

Expand MAS’ powers for CMSL holders conducting unregulated business

The SFA will be amended to empower MAS to issue written directions in respect of unregulated businesses carried on by CMSL holders. Accordingly, CMSL holders that offer unregulated products such as bitcoin futures and other payment token derivatives may be directed by MAS to implement minimum standards and safeguards in respect of these unregulated activities. In issuing such directions, MAS will be guided by the need to ensure that the CMSL holder’s regulated business is not affected by risks stemming from its unregulated businesses.

Conclusion

The FIMA Bill reflects MAS’ continued efforts to update and harmonise its regulatory and supervisory framework across different sectors and activities, and to enhance its enforcement capabilities and inter-agency coordination. The FIMA Bill also introduces new powers for MAS to address emerging risks and challenges in the financial landscape, such as the conduct of unregulated businesses by CMSL holders.

Clients who are regulated by MAS under the FAA, FSM Act, IA, PS Act, SFA or TCA should familiarise themselves with the key amendments and their implications, and prepare for the changes accordingly. Clients should also ensure that they comply with MAS’ directions, orders, requests and notices, and exercise reasonable care in submitting information to MAS. Clients who conduct unregulated businesses should further review their risk management and customer protection measures, and be prepared to comply with MAS’ written directions on the minimum standards and safeguards that should be in place.  

Reed Smith LLP is licensed to operate as a foreign law practice in Singapore under the name and style Reed Smith Pte Ltd (hereafter collectively, "Reed Smith"). Where advice on Singapore law is required, we will refer the matter to and work with Reed Smith's Formal Law Alliance partner in Singapore, Resource Law LLC, where necessary.

Client Alert 2024-025