MAS IMPOSES COMPOSITION AMOUNT OF $25,000 ON IFAST FINANCIAL PTE LTD FOR BREACHING TRUST ACCOUNT REQUIREMENTS

1 iFast Financial Pte Ltd ["IFF"] paid a composition amount of $25,000 for contravening section 104(1)(b) of the Securities and Futures Act ["SFA"] read with regulation 16(1)(b) and 21 of the Securities and Futures (Licensing and Conduct of Business) Regulations [“LCBR”]. 

2 Regulation 16(1)(b) of the LCBR, read together with regulation 17 of the LCBR, requires a licensee to deposit all customers’ moneys in a trust account maintained in its own name with specified financial institutions.  In 2006, IFF set up a wholly-owned subsidiary iFast Nominees Pte Ltd [“IFN”] – an entity not regulated by the MAS – to provide nominee services for unit trusts [“UTs”] of IFF’s customers.   IFF thought that having IFN as a separate legal entity would more clearly separate customers’ assets from IFF’s own assets.  IFF instructed fund managers to transfer trust moneys from UT redemptions directly into bank accounts of IFN. 

3 Regulation 21 of the LCBR prohibits a licensee from withdrawing any money from a customer’s trust account except for the purposes specified in that regulation.  By transferring the end-of-day balances of clients’ redemption moneys to the bank accounts maintained in the name of IFN, IFF had withdrawn money from IFF’s trust accounts for a purpose not specified in regulation 21.

4 The contraventions were uncovered by MAS during its inspection of IFF from 18 June 2008 to 25 July 2008.  MAS is not aware of any losses suffered directly by IFF’s customers as a result of these contraventions.  IFF has cooperated fully with MAS and rectified the contraventions by 10 November 2008.

Unless directed otherwise by a customer, a licensee is required to deposit all moneys received on account of its customer in a trust account maintained in the licensee’s own name with a licensed bank (or other institution specified in regulation 17) to ensure that a customer’s moneys are protected under the SFA.