05/04/22

SINGAPORE: Parliament passes Bill that consolidates and expands MAS' financial regulatory powers.

As published on businesstimes.com.sg, Tuesday 5 April, 2022.

AN omnibus Bill which consolidates and expands on the Monetary Authority of Singapore's (MAS) regulatory powers was passed on Tuesday (Apr 5), with parliamentarians largely supporting it amid the digitalisation of financial services - in particular, the growing prevalence of digital token services such as cryptocurrencies.

Still, Members of Parliament raised concerns, such as the need for more consumer protection and education over the risks of digital assets and "double regulation" of service providers, among other things. Some also cautioned against stifling the industry from over-regulation.

The Financial Markets and Services Bill, first tabled in February, enhances regulation of digital token service providers for money laundering and terrorist financing risks by covering even those who provide digital token services outside Singapore, so long as their businesses are created in or operate from Singapore.

Minister of State for Trade and Industry Alvin Tan noted that the "regulatory lacuna" where such entities are concerned holds reputational risks for Singapore. This is unlike the case for digital token service providers who offer such services in Singapore - they would be subject to current legislation, regardless of where they are established.

Members of Parliament Saktiandi Supaat (Bishan-Toa Payoh GRC) and Janet Ang (Nominated MP) raised the possibility of digital token service providers being subject to different legislations or being "double regulated" - in Singapore and in other overseas jurisdictions. Both also raised concerns over risks to consumers due to the speculative nature of digital tokens.

In response, Tan said entities that are already regulated by under existing legislation, such as the Payment Services Act, will not need to be additionally supervised under the new omnibus bill.

Where consumers are concerned, MAS are monitoring the adoption of digital payment tokens here to decide if user protection measures are needed, Tan said. However, additional laws are not a foolproof protection against investment losses, he cautioned. "Consumer education and awareness remain key as the best defence is a discerning public," he said.

In addition, the new Bill will give MAS more powers to impose requirements in technology risk management and will raise the maximum penalty for a breach to S$1 million. For a serious cyberattack or disruption to essential financial service, a financial institution could be saddled with a fine much higher than S$1 million, as these events often involve multiple breaches of technology risk management requirements.

This new maximum penalty is a "significant increase" from current penalties under various Acts administered by MAS, Tan said.

"The financial penalty, coupled with the flexibility to impose additional supervisory actions strike a balanced approach, which signals the importance of having robust technology risk management, without being overly excessive for smaller financial institutions," he said.

The omnibus Bill will also give MAS more teeth to issue prohibition orders to individuals who have shown themselves to be unfit to perform key roles in the industry, such as in cases of serious misconduct.

Currently, MAS' powers to issue such orders lie only in certain MAS-administered Acts. This means the regulator cannot issue prohibition orders to individuals outside the scope of these acts even if they have committed serious misconduct in the financial sector.

Finally, the new bill will give statutory protection to mediators, adjudicators and employees of approved dispute resolution schemes. This is expected to strengthen the confidence and autonomy of these individuals when they carry out their duties and align their levels of protection more closely with that of other public dispute resolution bodies, Tan said.