Parliament passes Bill to harmonise and enhance MAS’ investigative and supervisory powers across various Acts
On 7 March 2024, Parliament passed the Financial Institutions (Miscellaneous Amendments) Bill (“Bill”), a Bill that will enhance the ability of the Monetary Authority of Singapore (“MAS”) to enforce its regulatory regime and supervise capital markets financial institutions (“FIs”) more effectively. This will further strengthen Singapore’s position as a safe and trusted international financial centre.
The Bill will harmonise and enhance MAS’ investigative powers 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 (“PS Act”), Securities and Futures Act 2001 (“SFA”), and Trust Companies Act 2005 (“TCA”) (collectively, “MAS-administered Acts”). The Bill also makes amendments to empower MAS to issue directions to capital markets services licence holders (“CMSL holders”) that are conducting unregulated businesses, and to enhance MAS’ supervisory and inspection powers. The changes 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 Bill. On 16 February 2024, MAS published its Response to the feedback received.
A summary of the key features of the Bill is set out below.
Enhance MAS’ investigative powers
The Bill seeks to enhance and make consistent MAS’ investigative powers across all the MAS-administered Acts. Currently, some of MAS’ investigation powers under the SFA and FAA are not available in the FSMA, IA, PS Act, and TCA. There is also the need to strengthen or widen some existing powers under the SFA and FAA to ensure their effectiveness. The Bill will also facilitate the transfer of evidence between MAS and other agencies for enforcement to be more efficient and effective. Brief details are as follows:
- Power to require persons to appear before an MAS officer for examination and statement-recording: The power to require persons to appear before an MAS officer for examination and statement-recording for the purpose of investigations will be introduced in the FSMA, IA, PS Act, and TCA. Such powers already exist under the SFA and FAA and enable investigators to obtain information about suspected misconduct.
- Entering premises without warrant: The Bill will remove the requirement in the SFA and FAA for MAS to first issue orders to a suspect to produce information and show that the suspect has failed to do so, before MAS may enter premises believed to be occupied by the suspect without a warrant. This will enable MAS to enter premises without tipping off the suspect and reduce the risk of the suspect destroying relevant evidence. This power will also be extended to the FSMA, IA, PS Act, and TCA.
- Obtaining court warrant to seize evidence: Provisions will be introduced in the FSMA, IA, and PS Act to empower MAS to obtain a court warrant to search premises and seize evidence. This power, which already exists in the SFA, FAA, and TCA, will allow MAS to obtain evidence in the possession of uncooperative subjects, before it is concealed, removed, tampered with, or destroyed.
- Facilitate transfer of evidence between MAS and other agencies: The transfer of evidence provisions in the SFA and FAA will be amended to facilitate exchange of information between MAS and the Police, Public Prosecutor (“PP”), or other law enforcement agencies, thereby reducing duplication of investigations and enhancing efficiency. Currently, under the SFA and FAA, MAS may only transfer evidence to the Police or PP for criminal investigations or proceedings for market misconduct offences under the SFA and offences under the FAA. The Bill will allow the transfer of evidence from MAS to the Police or PP for the purpose of criminal investigations or proceedings for any offence under the MAS-administered Acts. Similarly, the Bill will allow the Police or other law enforcement agencies to transfer evidence to MAS for the purpose of taking regulatory actions in respect of any misconduct under the MAS-administered Acts, if such transfer is in the public interest. Currently, evidence may only be transferred to MAS for civil penalty investigations or actions for market misconduct offences under the SFA.
Expand MAS’ powers to issue directions to CMSL holders conducting unregulated business
The Bill will expand MAS’ powers to issue directions to CMSL holders and their representatives for conducting unregulated businesses, such as dealing in products that are not regulated by MAS (e.g. digital payment token derivatives that are traded on overseas exchanges). These unregulated businesses may pose contagion risks to CMSL holders’ regulated businesses. Further, customers may not be fully aware that regulatory protections do not apply to unregulated businesses carried on by CMSL holders. The Bill will empower MAS to issue legally binding directions to CMSL holders and their representatives in relation to their conduct of unregulated businesses, to mitigate risks posed to their regulated businesses.
Enhancement of MAS’ supervisory powers
The Bill will enhance the supervisory 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 where relevant. Briefly, these are as follows:
- Appointment and removal of key persons: Approval requirements for the appointment of chief executive officers and directors of locally incorporated recognised market operators (“RMOs”), locally incorporated recognised clearing houses (“RCH”), and approved trustees (“AT”) will be introduced in the SFA. The Bill will also consolidate the grounds in the SFA, FAA, and TCA for the removal of a director or key management officer into a single ground of not being “fit and proper”.
- Obtaining control of capital markets FI: The Bill will introduce a requirement for a person acquiring control in locally incorporated RMOs and RCHs, and ATs, to obtain prior MAS approval. For other capital markets FIs, the Bill will make clear that MAS’ approval need only be sought before a person obtains control of the regulated entity, and not at the early stages of negotiations for the acquisition.
- 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, approved holding companies, and licensed trade repositories. Such entities will be required to obtain MAS’ approval for the appointment of their external auditors on an annual basis. MAS will also have powers to direct these entities to remove or replace their appointed auditors, where the appointed auditors are unable to discharge their duties satisfactorily.
Reference materials
The following materials are available from Singapore Statutes Online sso.agc.gov.sg and the MAS website www.mas.gov.sg:
