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A new Singapore bill would consolidate a number of existing financial service regulations into one omnibus act and enhance the country’s agility in addressing sector-wide risks.
The Financial Services and Markets Bill 2022 (FSM bill), posted on the parliament website on February 14, would grant new powers to the Monetary Authority of Singapore (MAS) while consolidating existing legislation into one overarching act.
The bill comes as a response to an increasing need for a “financial sector-wide regulatory approach” that would complement the MAS’ existing entity and activity-based regulation, the central bank said in an explanatory brief.
Current provisions that impose requirements on various types of financial institutions or regulated activities will therefore be moved from the MAS Act to the FSM Bill.
Meanwhile, the bill would give the MAS new powers to “address emerging risks and challenges that impact institutions across the financial sector”.
The FSM Bill will “enhance MAS’ agility and effectiveness in addressing financial sector-wide risks in a rapidly changing and increasingly integrated environment”, the authority said.
Crypto firms must live up to enhanced standards
Just one month after the MAS imposed an outright ban on crypto advertisement, the country is now looking at crypto again.
The FSM Bill strengthens the existing crypto regulatory framework to make sure it is compliant with the enhanced standards of the Financial Action Task Force (FATF) in relation to virtual asset service providers (VASPs).
Current legislation regulates entities that offer virtual asset services in Singapore. However, it does not impose registration or licensing requirements on VASPs that are created in Singapore but provide virtual asset services outside Singapore.
The bill will now change that.
VASPs that provide digital token services outside Singapore, will be regulated as a new class of financial institutions, with licensing and ongoing requirements to ensure that the MAS has adequate supervisory oversight over them.
“MAS considers all transactions relating to [digital token] services to carry higher inherent ML/TF risks due to their anonymity and speed,” the authority said.
Focusing on the money laundering aspects of crypto, the bill gives the MAS general powers over VASPs, including licensing requirements and powers to conduct anti-money laundering/counter-terrorism financing (AML/CTF) inspections.
“AML/CFT requirements imposed on VASPs will be aligned with the requirements imposed on digital payment token service providers regulated under the [Payment Services Act 2019],” the MAS stressed.
Expanding oversight of individuals
The FSM Bill will also broaden the MAS’ powers that enable the authority to hold individuals accountable for serious misconduct in the financial sector.
Although current legislation limits the MAS' ability to issue prohibition orders against a certain category of persons under specific acts, the bill introduces a consistent sector-wide approach that would allow the agency to prohibit “any person who is not fit and proper” from engaging in any activity regulated by the MAS and filling key roles in the financial sector.
The bill would also harmonise the MAS' powers to impose requirements on technology risk management at financial institutions when delivering financial services.
The bill was introduced by Alvin Tan, minister of state for the ministries of culture, community and youth, and trade and industry, on behalf of the MAS. It had its first reading on February 14 and can proceed to a second reading during the April sitting at the earliest.
