Consultation on MAS’ Enhanced Investigative and Other Powers
This update provides an overview and brief commentary on the potential implications of the proposed amendments.
On 2 July 2021, the Monetary Authority of Singapore (MAS) issued a public consultation paper (P008-2021) entitled "Proposed Amendments to MAS' Investigative and Other Powers under the Various Acts", inviting comments and feedback on several proposed amendments to various pieces of legislation1. These proposed amendments are:
Proposed enhancements to MAS' investigative powers
Clarification of MAS' reprimand powers under the SFA, FAA and TCA
Expansion of MAS' powers to issue written directions under the SFA to regulated financial institutions conducting unregulated business.
The deadline for comments and feedback to be submitted to the MAS is Sunday 1 August 2021.
This update provides an overview and brief commentary on the potential implications of the proposed amendments.
Summary of the proposed amendments
First, MAS proposes to amend various statutes to introduce new powers or provisions and/or to amend existing powers or provisions that relate to the following investigative powers2:
Requiring any person to provide information for the purposes of investigation;
Requiring any person to appear for examination;
Recording statement from person at examination;
Obtaining a court warrant if a person fails to appear for examination with no reasonable excuse;
Entering premises without a warrant;
Obtaining warrants to seize evidence;
Transferring evidence between MAS and other agencies.
Second, MAS proposes to change its power to reprimand a relevant person that it is satisfied is guilty of misconduct to make clear that MAS may reprimand any person who was a "relevant person" at the time of the misconduct3.
Third, MAS proposes to extend its power to issue legally binding directions to regulated financial institutions and their representatives in respect of business that the regulated institution and/or representative conducts that is not regulated by MAS (e.g. offering bitcoin futures and other payment token derivatives traded on overseas exchanges)4.
Comments
The general theme underlying MAS' proposed enhancements to its investigative powers is to increase the reach of its existing powers to ensure the effectiveness and efficacy of all investigations conducted by MAS under any of the relevant statutes. The proposed amendments will also align MAS' investigatory powers across the various statutes (which currently vary). Such alignment will remove any confusion and uncertainty that may arise as a result of MAS having varying powers of investigation under the different Acts.
One noteworthy enhancement allows any MAS investigator or authorised officer to enter any premises without a warrant if the investigator has reasonable grounds to suspect that the premises are, or have been, used by a person being investigated by MAS. The consultation paper states that generally, MAS intends to exercise this power where it assesses that there is a real risk of evidence being destroyed or tampered with if a production order is issued in advance of entry.
Such powers to enter premises without a warrant for the purposes of an investigation are not new; they already exist in the Securities and Futures Act ("SFA") and Financial Advisers Act ("FAA") (subject to among other things a requirement to provide 2 days' notice to the occupier before entry can be made5, which MAS has also separately proposed to remove). In fact, the 2 day notice requirement already does not apply to an alleged or suspected contravention of any provision of Part XII of the SFA and Part III of the FAA or if the investigator has taken all such steps as are reasonably practicable to give notice.
Another example of such a power is contained under section 63 of the Competition Act (Cap. 50B), which empowers the Competition and Consumer Commission of Singapore ("CCCS") to enter premises without a warrant and exercise the same sort of powers that MAS is proposing it exercises.
But there are differences between MAS' proposed powers and the CCCS' proposed powers and examining these differences gives an indication as to the areas of uncertainty that may arise regarding the implementation and exercise of these powers. For instance, under the Competition Act, the CCCS may without a warrant generally enter only business premises. This does not include domestic premises unless (a) they are used in connection with the affairs of an undertaking or (b) documents relating to the affairs of an undertaking are kept there6. This restriction does not apply to the proposed power to be exercised by the MAS.
Further, the CCCS Guidelines on the Powers of Investigation in Competition Cases 20167 contemplate the possibility of allowing a reasonable time for the occupier's legal adviser to arrive at the premises before the investigation continues. In this connection, the investigating officer or authorised person may impose conditions he or she considers appropriate which could include sealing of cabinets and keeping business records in the same state and places as when entry into the premises was effected8. On the other hand, the consultation paper does not address this possibility in the context of MAS' investigation (which will take on an additional degree of importance given the enhancements already described above).
In relation to MAS' proposal to issue legally binding directions in respect of unregulated business, such written directions may be issued with respect to (a) the scale of the operation of the unregulated business; (b) the standards to be maintained by the person concerned in the conduct of his unregulated business; (c) the activities of the person concerned with respect to the unregulated business, including the manner, method and place of soliciting business by the person and their business representatives and the conduct of such solicitation; (d) the manner in which the person concerned conducts unregulated business, conflicts of interest involving the person concerned and the unregulated business customers, and the duties of the person concerned and their business representatives when making recommendations in respect of the unregulated business; (e) the type and frequency of submission of financial returns and other information to be submitted to the Authority; and (f) the qualifications, experience and training of business representatives9.
The ambit of this proposal shows MAS' seriousness to step up its efforts to deal with and manage the risks associated from carrying out these unregulated businesses. From the examples provided in the consultation paper, it is clear that MAS is interested in and is proposing to monitor businesses that relate to cryptoassets where such businesses are carried out by regulated institutions and/or their representatives. This is an emerging area that has already seen numerous developments both in Singapore and internationally this year.
Please refer to the consultation paper at the following link for full details on the proposed amendments to MAS' investigative and other powers.
Please contact us if you have any questions or would like to discuss the potential implications of the proposals in the consultation paper.
1 These are the Banking Act (Cap. 19), Credit Bureau Act 2016, Financial Advisers Act (Cap. 110), Insurance Act (Cap. 142), Payment Services Act 2019, Securities and Futures Act (Cap. 289), Trust Companies Act (Cap. 336) and the upcoming new Omnibus Act for the financial sector.
2 Consultation Paper, Part A
3 Consultation Paper, Part B
4 Consultation Paper, Part C
5 Section 163A(2)(a) of the SFA; Section 72A(2)(a) of the FAA
6 Section 2 of the Competition Act (Cap. 50B); includes any vehicle.
8 At [5.11]
9 Consultation Paper, page 52
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