Knowledge Highlights 27 January 2025
Provisions of Financial Institutions (Miscellaneous Amendments) Act 2024 enhancing and rationalising MAS’ powers in relation to financial institutions in force
The Financial Institutions (Miscellaneous Amendments) Act 2024 (“FIMA Act”) enhances and rationalises the investigative, reprimand, supervisory, and inspection powers of the Monetary Authority of Singapore (“MAS”) across six Acts, namely the Financial Advisers Act 2001 (“FAA”), Financial Services and Markets Act 2022 (“FSMA”), Insurance Act 1966 (“IA”), Payment Services Act 2019 (“PSA”), Securities and Futures Act 2001 (“SFA”), and Trust Companies Act 2005 (“TCA”) (each of them a “relevant Act”).
On 24 January 2025, the provisions in the FIMA Act relating to, among other things, the investigative powers of MAS, the duty under the FAA, SFA, and TCA not to provide false information, and the powers of MAS in relation to the appointment, disqualification, and removal of certain officers of various financial institutions (“FIs”) took effect.
This follows from the implementation of the first phase of the FIMA Act on 30 August 2024, which concerned provisions relating to the powers of MAS to issue directions to capital markets services licence holders conducting unregulated business and amendments to clarify MAS’ reprimand powers, among other things. For more, please read our article “Financial Institutions (Miscellaneous Amendments) Act 2024 to harmonise and enhance MAS’ investigative and supervisory powers partially in force”.
The following are some of the changes that came into force on 24 January 2025.
Investigative powers of MAS
The FIMA Act enhances and widens the investigative powers of MAS under the FAA, IA, PSA, SFA, and TCA and provides for investigative powers of MAS under the FSMA. Among other things:
- MAS may conduct such investigation as it considers necessary or expedient to perform any of its functions and duties under the relevant Act, to ensure compliance with the relevant Act or any written direction issued under the relevant Act, and to investigate an alleged or suspected contravention of any provision of the relevant Act or any written direction issued under the relevant Act;
- a person is not excused from disclosing information when required to do so during an investigation under the relevant Act on the ground that the disclosure might tend to incriminate himself or herself;
- new provisions have been introduced to provide for the examination of persons by MAS for its investigations; and
- new provisions have been introduced to empower MAS to obtain documents and information and access data in computers for its investigations.
Powers in relation to FIs
Appointment, disqualification, and removal of officers
Amendments have been made to enhance, widen, and clarify the powers of MAS under the FAA, SFA, and TCA relating to the appointment, disqualification, and removal of certain officers of various FIs. For instance, provisions in the FAA and SFA that provide for the disqualification or removal of directors or executive officers of specified regulated entities have been amended to standardise the provisions across the different regulated entities.
The SFA has been amended to provide for the approval of the appointment of chief executive officers, directors, and key management of recognised market operators incorporated in Singapore, recognised clearing houses incorporated in Singapore, and approved trustees.
The TCA has been amended to provide for the disqualification or removal of officers, executive officers, and resident managers of licensed trust companies, and of directors of licensed trust companies incorporated in Singapore.
Appointment of external auditors
The SFA has been amended in relation to the auditors of approved exchanges, licensed trade repositories, approved clearing houses, and approved holding companies. Each such FI must appoint an auditor on an annual basis with the approval of MAS. MAS may appoint an auditor for the FI if the FI fails to appoint an auditor or if MAS considers that another auditor ought to be appointed. The primary duty of the auditor is to audit the accounts of the FI and to make a report on its financial statements. MAS may direct the FI to remove its auditor or to appoint a new auditor. Auditors of these FIs must also report certain matters to MAS. Separately, MAS is empowered, at any time, to appoint an auditor to examine and audit the books of an FI mentioned above.
Control of FIs
The SFA and FAA have been amended to provide that:
- a person must not obtain effective control of a licensed financial adviser or holder of a capital markets services licence without MAS’ approval. The definition of “effective control” has also been amended;
- MAS may serve a written notice of objection on a person who has effective control of a licensed financial adviser or a holder of a capital markets services licence;
- MAS approval is required for a person to obtain effective control of an approved trustee, and to confer on MAS the power to object to controllers of approved trustees on certain grounds; and
- MAS approval is required for a person to hold 20% of the shares of, or control 20% of the voting power of, a recognised market operator incorporated in Singapore, or a recognised clearing house incorporated in Singapore.
Service of documents
The FAA and TCA have been amended to provide for service of documents by email, in addition to existing modes of service of documents, and for an electronic service provided by MAS for service of documents. The provisions contemplate that certain documents may be served by email sent to the last email address of the intended recipient.
Amendments have also been made to the SFA to provide generally for the service of documents (other than documents relating to a collective investment scheme (“CIS”)), and to provide for an electronic service provided by MAS for the service of documents required or authorised by the SFA to be given to or served on any person. In relation to CIS, the SFA has been amended to provide for service of documents relating to a CIS by additional modes of service, including email and registered post. Further, it is now set out in the SFA how written notice of a proposed meeting under section 295(3) of the SFA for an authorised CIS constituted as a unit trust may be given to participants of that scheme if it is in liquidation, ceases to carry on business, or fails to comply with the trust deed in respect of the scheme.
Duty not to provide false information
The FAA, SFA, and TCA have been 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 the FAA, SFA, and TCA is not false or misleading. Further, it is clarified that the duty to use due care in providing information applies to any person who provides information to MAS under the relevant Act, or who provides information to MAS that is relevant to its exercise of powers under the relevant Act (whether or not the information is required by MAS under that relevant Act).
Other provisions
- The FAA and SFA have been amended to provide that MAS may administratively specify the time and manner for the payment of certain fees.
- The FAA, SFA, and TCA have been amended to remove references to the return or surrender of a licence as it will no longer be possible to return or surrender a licence that is issued electronically.
- The FAA has been amended to set out the types of financial advisory services in respect of which the various exempt financial advisers are exempt from holding a financial adviser’s licence.
- The FAA has been amended to provide that regulations may be made for MAS to be notified of adverse developments that have or are likely to have a material impact on a licensed financial adviser, or of matters affecting the fitness and propriety of substantial shareholders, directors, or executive officers of the licensed financial adviser, or persons having effective control of the licensed financial adviser, to be in such positions.
Reference materials
The following materials are available from Singapore Statutes Online sso.agc.gov.sg:
