Bill introduced to enhance investigative, supervisory and other powers of MAS across various Acts

19 January 2024

On 10 January 2024, the Financial Institutions (Miscellaneous Amendments) Bill (“FIMA Bill”) was introduced in Parliament. The FIMA Bill seeks to enhance and rationalise the investigative, reprimand, supervisory and inspection powers of the Monetary Authority of Singapore (“MAS”) across various Acts under the purview of MAS. Acts which will be amended by the FIMA Bill include the Financial Advisers Act 2001 (“FAA”), Financial Services and Markets Act 2022 (“FSMA”), Insurance Act 1966 (“IA”), Payment Services Act 2019 (“PS Act”), Securities and Futures Act 2001 (“SFA”), and Trust Companies Act 2005 (“TCA”). Consequential and clarificatory amendments will also be made to other Acts under MAS’ purview. The changes in the FIMA Bill will come into operation on a date to be appointed by notification in the Gazette.

By way of background, from 2 July 2021 to 1 August 2021, MAS conducted a public consultation on the key amendments in the FIMA Bill.

Enhance MAS’ investigative powers

The FIMA Bill seeks to enhance the investigative powers of MAS under the SFA and FAA and amend the IA, PS Act, TCA and FSMA (collectively, “other Acts”) to broadly align the investigative powers under the other Acts with those under the SFA and FAA. This will strengthen the evidence-gathering powers of MAS and facilitate greater inter-agency coordination. The main changes are as follows:

• Power to compel individuals to attend interviews and record written statements: The existing power under the SFA and FAA to compel individuals to attend interviews and record written statements will be extended to the other Acts.
• Entering premises without warrant: The existing power of MAS under the SFA and FAA to enter premises without a warrant will be enhanced to allow MAS to do so without giving prior notice where there are reasonable grounds for suspecting that the premises are or have been occupied 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.
• Obtaining court warrant to seize evidence: The power of MAS under the SFA, FAA and TCA to obtain a court warrant to enter premises and seize evidence where a person has failed to comply with an order to produce information, or evidence may be destroyed or tampered with, will be extended to the IA, PS Act and FSMA.
• Transfer of evidence between MAS and other agencies: The provisions in 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”) will be 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 its investigations, regulatory actions, as well as in appeals against the latter. It will also enable CAD and AGC to use evidence gathered by MAS via its statutory investigative powers for criminal proceedings.

Clarify applicability of MAS’ reprimand powers

The SFA, FAA and TCA currently empower MAS to reprimand a “relevant person” (which refers to financial institutions regulated by MAS under those Acts or employees, officers, partners or representatives of such regulated financial institutions) whom MAS is satisfied to be guilty of misconduct. The FIMA Bill will make it clear that the power of MAS under the SFA, FAA and TCA allow MAS to reprimand a person who was a “relevant person” at the time of the misconduct, even if the person has ceased to be a “relevant person” since the misconduct, i.e. the person is no longer regulated by MAS or has left the employ of a regulated financial institution.

Expand MAS’ powers to issue directions to CMSL holders conducting unregulated business

MAS notes that capital markets services licence holders (“CMSL holders”) may conduct unregulated businesses such as offering products that are not regulated by MAS (e.g. bitcoin futures and other payment token derivatives traded on overseas exchanges) and that these activities may pose contagion risks to their regulated activities. While MAS has issued guidance to CMSL holders to adopt risk-mitigating measures if they conduct unregulated businesses with retail investors, the FIMA Bill will allow MAS to issue written directions on the minimum standards and safeguards that should be in place when CMSL holders and their representatives conduct unregulated businesses.

Enhance supervisory and inspection powers

The FIMA Bill will enhance the supervisory and inspection powers of MAS under the SFA, FAA and TCA to ensure MAS has consistent powers across these Acts and to align with the Banking Act 1970. Brief details are as follows:

• Approval requirements for appointment and removal of key persons: 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”) will be introduced in the SFA. The provisions in the FAA and TCA on the appointment of key persons (e.g. chief executive officers, resident managers or directors) of licensed financial advisers (“LFAs”) and licensed trust companies will be amended to align with provisions in the SFA. Further, the grounds for removal of key persons in these Acts will be aligned to a single fit and proper test.
• Obtaining effective control: The FIMA Bill will refine existing approval requirements in the SFA and FAA for controllers of CMSL holders and LFAs so that MAS approval is only required prior to a person obtaining effective control. Further, the approval requirements will be extended to controllers of RMOs, RCHs and ATs.
• Appointment of agents by foreign regulators: The FIMA Bill will expand the powers of MAS 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: New requirements and powers will be introduced in the SFA pertaining to the appointment of external auditors of approved exchanges, approved clearing houses, licensed trade repositories, and approved holding companies.
• Failure to exercise reasonable care in submission of information: It will be an offence in the SFA, FAA and TCA if a person, other than an individual, fails to exercise reasonable care in ensuring the accuracy of information submitted to MAS, even if the information is not false or misleading in any material particular.
• Service of documents: There will be similar and consistent provisions in the SFA, TCA and FAA for service of notices, orders or documents by registered post and electronic service.

Reference materials

The following materials are available on Singapore Statutes Online sso.agc.gov.sg and the MAS website www.mas.gov.sg:

• Financial Institutions (Miscellaneous Amendments) Bill
• Explanatory Brief: The Financial Institutions (Miscellaneous Amendments) Bill 2024