FAQs
Purpose of these FAQs
1. What is the purpose of these FAQs?
These FAQs are meant to provide guidance on the Prohibition Orders regime under the FSMA. They do not constitute legal advice. MAS expects industry participants to retain their independent legal counsel, as necessary, to advise them on their obligations under the regime, and to advise them on all applicable laws, rules and regulations of Singapore.
These FAQs are meant to provide guidance on the Prohibition Orders regime under the FSMA. They do not constitute legal advice. MAS expects industry participants to retain their independent legal counsel, as necessary, to advise them on their obligations under the regime, and to advise them on all applicable laws, rules and regulations of Singapore.
Commencement of the new PO regime
2. When will the new PO regime in Part 3 of the FSMA be brought into effect?
On 31 July 2024 (“Effective Date”)
3. Can POs under the Financial Advisers Act 2001 (“FAA”), Insurance Act 1966 (“IA”)and/or Securities and Futures Act 2001 (“SFA”), be issued after the Effective Date?
Yes. With respect to misconduct that took place before the Effective Date, MAS may issue POs under the FAA, IA and SFA after the Effective Date, only in the circumstances set out under sections 217(2), 218(2) and 220(3) of the FSMA respectively.
4. Can the new PO regime under the FSMA be applied to misconduct that has taken place before the Effective Date?
Yes. POs can be issued under Part 3 of the FSMA in relation to misconduct which took place before the Effective Date. However, please refer to Q3 for the circumstances in which POs under the FAA, IA and SFA may be issued even after the Effective Date.
5. What will happen to POs made under the FAA, IA and SFA, before the date that the new PO regime takes effect?
Such POs will continue to be in force until the POs expire or are revoked (see sections 217(1), 218(1) and 220(2) of the FSMA).
On 31 July 2024 (“Effective Date”)
3. Can POs under the Financial Advisers Act 2001 (“FAA”), Insurance Act 1966 (“IA”)and/or Securities and Futures Act 2001 (“SFA”), be issued after the Effective Date?
Yes. With respect to misconduct that took place before the Effective Date, MAS may issue POs under the FAA, IA and SFA after the Effective Date, only in the circumstances set out under sections 217(2), 218(2) and 220(3) of the FSMA respectively.
4. Can the new PO regime under the FSMA be applied to misconduct that has taken place before the Effective Date?
Yes. POs can be issued under Part 3 of the FSMA in relation to misconduct which took place before the Effective Date. However, please refer to Q3 for the circumstances in which POs under the FAA, IA and SFA may be issued even after the Effective Date.
5. What will happen to POs made under the FAA, IA and SFA, before the date that the new PO regime takes effect?
Such POs will continue to be in force until the POs expire or are revoked (see sections 217(1), 218(1) and 220(2) of the FSMA).
Persons who may be issued POs under the new PO regime
6. Who may be subject to a PO under the FSMA?
Under section 7(1) of the FSMA, MAS may issue a PO against “any person”.
7. MAS had stated in paragraph 2.7 of the Response to Feedback Received on the New Omnibus Act for the Financial Sector (14 February 2022) that “a PO will generally be issued only if the person has a former, existing or prospective nexus to the financial industry”. When would nexus between a person and the financial industry be established for the purpose of issuing a PO against the person?
MAS’ determination as to whether an individual has any nexus to the financial industry is a factual inquiry and will be assessed on a case-by-case basis. Some common instances are set out below:
8. Can a person who is outside Singapore i.e. based overseas, be issued with a PO?
POs can be issued to persons regardless of whether they are located within or outside Singapore.
9. Are the considerations for issuing a PO to a person outside Singapore the same as the considerations for issuing a PO to a person in Singapore?
Yes, the considerations are the same.
10. If a person has been placed on a watchlist or issued something equivalent to Singapore’s PO by an overseas jurisdiction, would they be issued a PO in Singapore by default?
A PO will not be issued by default against the person. While MAS will take into account this factor when applying the fit and proper test (see next section), MAS will also consider all the circumstances of the case, including the facts surrounding why such a person has been placed on a watchlist or been issued the equivalent of a PO, before deciding whether to issue a PO.
11. Can a PO be issued to an entity, such as a company?
As mentioned above, MAS may issue a PO to “any person”. Under Singapore law, a “person” includes entities such as a company. However, as with POs issued thus far under the FAA, IA and/or SFA, MAS anticipates exercising our power to issue POs under the FSMA mainly against individuals. That said, in an appropriate case, MAS will not hesitate to issue a PO against an errant entity.
Under section 7(1) of the FSMA, MAS may issue a PO against “any person”.
7. MAS had stated in paragraph 2.7 of the Response to Feedback Received on the New Omnibus Act for the Financial Sector (14 February 2022) that “a PO will generally be issued only if the person has a former, existing or prospective nexus to the financial industry”. When would nexus between a person and the financial industry be established for the purpose of issuing a PO against the person?
MAS’ determination as to whether an individual has any nexus to the financial industry is a factual inquiry and will be assessed on a case-by-case basis. Some common instances are set out below:
a. Former or existing nexus: This would cover –
- Persons who were or are conducting any activities regulated by MAS;
- Past and present employees of financial institutions (“FIs”) (whether or not they were or are regulated representatives);
- Persons who were or are substantial shareholders or directors of FIs;
- Persons who were or are engaging in any of the relevant functions defined in section 6 of the FSMA (namely, handling of funds or assets; risk taking; risk management and control; and critical system administration) in relation to any activity regulated by MAS.
b. Prospective nexus: Where, based on information available to MAS, an individual intends or is likely to conduct activities, take up roles or engage in functions that fall within (a) above.
Ultimately, MAS will be guided in its assessment by the overall policy objective of a PO, which is to protect the financial industry, customers and investors from persons who have demonstrated by their misconduct that they are unsuitable to take up the above roles, activities and/or functions in the financial industry.8. Can a person who is outside Singapore i.e. based overseas, be issued with a PO?
POs can be issued to persons regardless of whether they are located within or outside Singapore.
9. Are the considerations for issuing a PO to a person outside Singapore the same as the considerations for issuing a PO to a person in Singapore?
Yes, the considerations are the same.
10. If a person has been placed on a watchlist or issued something equivalent to Singapore’s PO by an overseas jurisdiction, would they be issued a PO in Singapore by default?
A PO will not be issued by default against the person. While MAS will take into account this factor when applying the fit and proper test (see next section), MAS will also consider all the circumstances of the case, including the facts surrounding why such a person has been placed on a watchlist or been issued the equivalent of a PO, before deciding whether to issue a PO.
11. Can a PO be issued to an entity, such as a company?
As mentioned above, MAS may issue a PO to “any person”. Under Singapore law, a “person” includes entities such as a company. However, as with POs issued thus far under the FAA, IA and/or SFA, MAS anticipates exercising our power to issue POs under the FSMA mainly against individuals. That said, in an appropriate case, MAS will not hesitate to issue a PO against an errant entity.
Grounds for Issuance of a PO against a person under the new PO regime
12.What are the grounds for issuing a PO?
Under section 7(1) of the FSMA, a PO may be issued if MAS is satisfied that the person is not a fit and proper person to carry out any one or more of the roles, activities and functions mentioned in section 7(2) of the FSMA (see Q15).
13. How will MAS assess whether or not a person is fit and proper?
Under section 7(1) of the FSMA, MAS must assess whether a person is not fit and proper in accordance with the Guidelines on Fit and Proper Criteria (“F&P Guidelines”) to carry out any one or more of the roles, activities and functions mentioned in section 7(2) of the FSMA (see Q15 below). This is a factual inquiry taking into account a range of factors, including those relating to the person’s (a) honesty, integrity and reputation; (b) competence and capability; and (c) financial soundness. MAS will consider all the circumstances of the case; the failure to meet any one of the said criteria does not lead to an automatic issuance of the PO.
14. What is the standard of proof for determining whether a person is not fit and proper?
Section 7(1) of the FSMA provides that MAS must be “satisfied” that the person is not a fit and proper person in accordance with the F&P Guidelines. To be “satisfied” means that MAS must have a sufficient basis to be convinced that the person is not a fit and proper person. However, MAS need not be convinced “beyond reasonable doubt”, which is standard of proof for criminal cases.
Under section 7(1) of the FSMA, a PO may be issued if MAS is satisfied that the person is not a fit and proper person to carry out any one or more of the roles, activities and functions mentioned in section 7(2) of the FSMA (see Q15).
13. How will MAS assess whether or not a person is fit and proper?
Under section 7(1) of the FSMA, MAS must assess whether a person is not fit and proper in accordance with the Guidelines on Fit and Proper Criteria (“F&P Guidelines”) to carry out any one or more of the roles, activities and functions mentioned in section 7(2) of the FSMA (see Q15 below). This is a factual inquiry taking into account a range of factors, including those relating to the person’s (a) honesty, integrity and reputation; (b) competence and capability; and (c) financial soundness. MAS will consider all the circumstances of the case; the failure to meet any one of the said criteria does not lead to an automatic issuance of the PO.
14. What is the standard of proof for determining whether a person is not fit and proper?
Section 7(1) of the FSMA provides that MAS must be “satisfied” that the person is not a fit and proper person in accordance with the F&P Guidelines. To be “satisfied” means that MAS must have a sufficient basis to be convinced that the person is not a fit and proper person. However, MAS need not be convinced “beyond reasonable doubt”, which is standard of proof for criminal cases.
Scope of a PO under the new PO regime
15. What roles, activities and/or functions would a person subject to a PO be prohibited from performing?
A person may be prohibited from engaging in, whether permanently or for a specified period, any one or more of the roles, activities, and functions in section 7(2) of the FSMA:
A person may be prohibited from engaging in, whether permanently or for a specified period, any one or more of the roles, activities, and functions in section 7(2) of the FSMA:
- Carrying on any activity or business, or providing any service, the carrying on or provision (as the case may be) of which is regulated or authorised by MAS;
- Performing any relevant function;
- Taking part, directly or indirectly, in the management of, or acting as a director, partner or manager of, any FI as defined in section 2 of the FSMA;
- Becoming a substantial shareholder of any FI that is a corporation;
- Where the person is a substantial shareholder of a FI that is a corporation, acquiring any interest in any voting share in the FI other than a voting share in which the person already has an interest.
- Finance
- Treasury
- External service providers engaged by a FI in respect of handling of funds or assets
- Retail banking
- Private banking
- Corporate banking
- Institutional banking
- Investment banking
- Treasury
- Finance
- Underwriting
- Investment
- Functions authorizing release of funds, including transmission of digital payment tokens, to facilitate payments.
- External service providers engaged by a FI in respect of risk taking.
- Risk
- Compliance
- Financial Crime Prevention
- AML/CFT
- Legal
- Regulation
- Internal Audit
- External service providers engaged by a FI in respect of risk management and control.
- Information security
- IT department
- External service providers engaged by a FI to maintain or operate a critical system.
16. What are some examples of jobs or roles that could fall within or involve the relevant functions defined in section 6 of the FSMA?
Some non-exhaustive examples of jobs that could fall within or involve the relevant functions defined under section 6 of the FSMA are set out in Table 1 below. However, bearing in mind that the names or titles of jobs and their precise duties vary within the financial sector, reference should ultimately be made to the definitions of “handling of funds or assets”, “risk taking”, “risk management and control” and “critical system administration” and related terms in section 6 of the FSMA.
Table 1
Some non-exhaustive examples of jobs that could fall within or involve the relevant functions defined under section 6 of the FSMA are set out in Table 1 below. However, bearing in mind that the names or titles of jobs and their precise duties vary within the financial sector, reference should ultimately be made to the definitions of “handling of funds or assets”, “risk taking”, “risk management and control” and “critical system administration” and related terms in section 6 of the FSMA.
Table 1
| Functions | Examples of jobs or roles (non-exhaustive): |
| a. Handling of funds or assets |
|
| b. Risk taking |
|
| c. Risk management and control |
|
| d. Critical system administration |
|
17. How will MAS determine the scope of the PO?
MAS will take into consideration all circumstances of the case in determining the scope of the PO. Generally, the greater the degree of unfitness or impropriety (e.g., the more serious the underlying misconduct), the wider the scope of the PO is likely to be. Ultimately, each case must be assessed on its own facts. Nevertheless, as a broad guide, some factors that MAS will consider include: (a) the circumstances in which the person was found to not be fit and proper; (b) whether the underlying conduct took place in the course of performing any of the roles, activities and/or functions mentioned in section 7(2) of the FSMA (see Q15 above) or otherwise leads to doubt that the person will perform any of the roles, activities and/or functions in a fit and proper manner; and (c) whether prohibiting the person from such roles, activities and functions would be reasonably necessary to fulfil the policy objective of protecting the financial industry, customers and investors from such persons.
Duration of a PO and date of effect
18. How will the duration of a PO be determined?
MAS will take into consideration all the circumstances of the case in determining the length of the PO. Generally, the greater the degree of unfitness or impropriety, the longer the PO is likely to be. Nevertheless, as a broad guide, some factors that MAS will consider include: (a) the culpability of the person; (b) the level of harm caused or risks posed by the person’s conduct; (c) the approach taken in similar /past cases; and (d) policy or public interest considerations. Ultimately, each case will be assessed on its own merits.
19. Will being in senior management automatically mean a longer PO duration?
Being in senior management would not automatically mean a longer PO duration. However, in some cases, the fact that a person was in a senior position and therefore, a position of higher authority and greater responsibility, may increase his culpability. This would consequently mean an increase in the duration of the PO, other things being equal.
20. Can a PO have retrospective effect?
A PO cannot have retrospective effect. Under section 10 of the FSMA, a PO takes effect on the date specified by MAS in the PO or the notice in section 9(1), as the case may be.
MAS will take into consideration all the circumstances of the case in determining the length of the PO. Generally, the greater the degree of unfitness or impropriety, the longer the PO is likely to be. Nevertheless, as a broad guide, some factors that MAS will consider include: (a) the culpability of the person; (b) the level of harm caused or risks posed by the person’s conduct; (c) the approach taken in similar /past cases; and (d) policy or public interest considerations. Ultimately, each case will be assessed on its own merits.
19. Will being in senior management automatically mean a longer PO duration?
Being in senior management would not automatically mean a longer PO duration. However, in some cases, the fact that a person was in a senior position and therefore, a position of higher authority and greater responsibility, may increase his culpability. This would consequently mean an increase in the duration of the PO, other things being equal.
20. Can a PO have retrospective effect?
A PO cannot have retrospective effect. Under section 10 of the FSMA, a PO takes effect on the date specified by MAS in the PO or the notice in section 9(1), as the case may be.
Effect of a PO under the new PO regime
21. What happens when a PO is contravened?
Under section 8(1) of the FSMA, a person against whom a PO is made must comply with the PO and non-compliance is an offence under section 8(3) of the FSMA.
Under section 8(2) of the FSMA, where a PO has been made against a person, an FI must not employ or enter into any arrangement with the said person, or use the person’s services, whether directly or indirectly: (a) to carry on any activity or business, or provide any service, the carrying on or provision (as the case may be) of which is regulated or authorised by MAS; or (b) to perform any relevant function which is prohibited by the PO. Otherwise, the FI commits an offence under section 8(4) of the FSMA.
22. When would an FI be considered to indirectly employ or enter into an arrangement with a prohibited person, or use that person’s services, in contravention of section 8(2) of the FSMA?
Whether there is a contravention of section 8(2) of the FSMA depends on the facts of the case. Nevertheless, one example of when an FI may indirectly enter into an arrangement with a prohibited person, or use that person’s service, in contravention of section 8(2) of the FSMA, is where the FI engages a third-party service provider to perform a relevant function and the service provider employs the prohibited person to perform that function.
23. What defence is available to an FI who may have indirectly engaged or entered into an arrangement with prohibited persons in contravention of section 8(2) of the FSMA?
Pursuant to section 8(5) of the FSMA, in such situations, it will be a defence for the FI to prove:
For an FI to avail itself of the above defence, it must minimally show that it ensured that due diligence checks were performed on the employees of its service providers to see if they were subject to a PO. In practice, FIs can rely on their service providers, or a third party, to conduct such due diligence checks, including checking the Enforcement Actions page on the MAS website to determine if a person has been issued a PO. However, FIs must put in place reasonable measures to ensure that the service providers or third parties have done so, as ultimately the burden is still on the FI to prove that it took all reasonable steps to ensure compliance with section 8(2) of the FSMA and that the defence under section 8(5) of the FSMA is made out.
Under section 8(1) of the FSMA, a person against whom a PO is made must comply with the PO and non-compliance is an offence under section 8(3) of the FSMA.
Under section 8(2) of the FSMA, where a PO has been made against a person, an FI must not employ or enter into any arrangement with the said person, or use the person’s services, whether directly or indirectly: (a) to carry on any activity or business, or provide any service, the carrying on or provision (as the case may be) of which is regulated or authorised by MAS; or (b) to perform any relevant function which is prohibited by the PO. Otherwise, the FI commits an offence under section 8(4) of the FSMA.
22. When would an FI be considered to indirectly employ or enter into an arrangement with a prohibited person, or use that person’s services, in contravention of section 8(2) of the FSMA?
Whether there is a contravention of section 8(2) of the FSMA depends on the facts of the case. Nevertheless, one example of when an FI may indirectly enter into an arrangement with a prohibited person, or use that person’s service, in contravention of section 8(2) of the FSMA, is where the FI engages a third-party service provider to perform a relevant function and the service provider employs the prohibited person to perform that function.
23. What defence is available to an FI who may have indirectly engaged or entered into an arrangement with prohibited persons in contravention of section 8(2) of the FSMA?
Pursuant to section 8(5) of the FSMA, in such situations, it will be a defence for the FI to prove:
- that it took all reasonable steps to ensure compliance with section 8(2) of the FSMA; and
- after doing so, believed on reasonable grounds, that it is not and will not be indirectly employing or entering into an arrangement with, or indirectly using the services of, any person to carry on any activity or business, provide any service, or perform the relevant function, where the person is prohibited by a prohibition order made against the person from carrying on the activity or business, providing the service, or performing the relevant function.
For an FI to avail itself of the above defence, it must minimally show that it ensured that due diligence checks were performed on the employees of its service providers to see if they were subject to a PO. In practice, FIs can rely on their service providers, or a third party, to conduct such due diligence checks, including checking the Enforcement Actions page on the MAS website to determine if a person has been issued a PO. However, FIs must put in place reasonable measures to ensure that the service providers or third parties have done so, as ultimately the burden is still on the FI to prove that it took all reasonable steps to ensure compliance with section 8(2) of the FSMA and that the defence under section 8(5) of the FSMA is made out.
Issuance and notification of PO under the new PO regime
25. What is the procedure for issuance of a PO against the person?
The way a PO will be issued against any person under the new PO regime remains unchanged. Before a PO is issued against any person, MAS will give the person an opportunity to be heard by issuing a “Notice of Intention” (“NOI”) to the said individual, informing him that MAS intends to issue a PO against him under the FSMA.
Once the person has received the NOI, the person will have the opportunity to make written representations to MAS. Finally, if no representations have been submitted within the stipulated deadline, or if MAS has decided to reject the representations, a PO will be issued against the person.
26. Apart from the person subject to the PO, who else will be notified of the PO?
While not a statutory obligation, in practice, MAS will notify the person’s employer as well as all FIs in the relevant sector (i.e. banking, insurance, payment services, etc) if a PO is issued, varied or revoked. MAS will send out the notification concurrently with the issuance, variation or revocation of a PO (as the case may be).
POs that are for a duration of five years or less are published on our Enforcement Actions webpage for a period of five years before they are removed. POs that are of a longer duration than five years remain on the webpage until the PO expires. MAS may also publish details of the POs via a media release in certain circumstances, for example, when there is a need to raise public awareness of the misconduct, or to achieve a stronger deterrent effect.
The way a PO will be issued against any person under the new PO regime remains unchanged. Before a PO is issued against any person, MAS will give the person an opportunity to be heard by issuing a “Notice of Intention” (“NOI”) to the said individual, informing him that MAS intends to issue a PO against him under the FSMA.
Once the person has received the NOI, the person will have the opportunity to make written representations to MAS. Finally, if no representations have been submitted within the stipulated deadline, or if MAS has decided to reject the representations, a PO will be issued against the person.
26. Apart from the person subject to the PO, who else will be notified of the PO?
While not a statutory obligation, in practice, MAS will notify the person’s employer as well as all FIs in the relevant sector (i.e. banking, insurance, payment services, etc) if a PO is issued, varied or revoked. MAS will send out the notification concurrently with the issuance, variation or revocation of a PO (as the case may be).
POs that are for a duration of five years or less are published on our Enforcement Actions webpage for a period of five years before they are removed. POs that are of a longer duration than five years remain on the webpage until the PO expires. MAS may also publish details of the POs via a media release in certain circumstances, for example, when there is a need to raise public awareness of the misconduct, or to achieve a stronger deterrent effect.
Appeals against a PO under the new PO regime
27. Can a person who has been issued with a PO appeal against the decision?
Yes, a person will have 30 days to appeal to the Minister, following the process specified under the FSMA. For further details, please refer to sections 13 and 14 of the FSMA and the Financial Services and Markets (Appeals under Part 3) Regulations 2024 (to come into effect on 31 July 2024).
Yes, a person will have 30 days to appeal to the Minister, following the process specified under the FSMA. For further details, please refer to sections 13 and 14 of the FSMA and the Financial Services and Markets (Appeals under Part 3) Regulations 2024 (to come into effect on 31 July 2024).