Articles and Events Summary

Outsourcing by Fund Management Companies in Singapore

This article sets out the perks and perils of outsourcing arrangements, where we look at the most common business model in Singapore amongst financial institutions outside of banks – the Fund Management Company.

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Singapore’s Government Agencies to know

If you are looking to incorporate a company in Singapore, you will need to become familiar with a few government agencies with which you are sure to cross paths. These agencies are the Accounting and Corporate Regulatory Authority (ACRA), Inland Revenue Authority of Singapore (IRAS), Ministry of Manpower (MOM), Central Provident Fund Board (CPF), Singapore Economic Development Board (EDB), Skillsfuture Singapore (SSG), Enterprise Singapore and the Monetary Authority of Singapore (MAS), to name a few.

For more information, click here.

Industry News

Ex-Goldman Banker charged in Malaysian fund scandal

Goldman Sachs is being probed by the US Justice Department for its role as underwriter and arranger for some $6.5 billion worth of 1Malaysia Development Bhd (1MDB) bond offerings, in the governmental fund scandal shaking Malaysia and the bank for the last few months.

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MAS considering Virtual Banking License for FinTech firms

The Monetary Authority of Singapore (MAS) said on May 8, 2019, it is reviewing whether to offer digital-only banks that have emerged out of FinTech firms a virtual banking license.

Since 2000, Singapore-incorporated banks have been allowed to establish banking subsidiaries to pursue digital-only business models. Both local and foreign banks have been actively developing their online offerings in cooperation with FinTech companies. Following that, these non-bank firms have started setting up digital-only banks.

An MAS spokesman said “MAS is studying whether to admit such digital-only banks with non-bank parentage. We have been engaging relevant stakeholders to ascertain the unique value that such entrants could bring to our banking landscape, and understand how potential risks will be managed and contained.”

For more information, click here.

MAS releases Consultation Paper on Final Basel III Reforms in Singapore

The Monetary Authority of Singapore (MAS) released on May 7, 2019 a new Consultation Paper on the proposed implementation of Final Basel III Reforms concerning base capital requirements and leverage ratio requirements for Singapore-incorporated banks.

The proposed revisions consider the final Basel III reforms published by the Basel Committee on Banking Supervision (BCBS): “Basel III: Finalising post-crisis reforms” published in December 2017 and “Minimum capital requirements for market risk” published in January 2019. The Basel III reforms increase the robustness and comparability of risk-based capital requirements across banks.

For more information, click here.

Nordic banks pool resources to centralize KYC checks

The six major banks of the Nordic region are joining forces to set up a customer checking center to centralize KYC process (Know-Your-Customer) and fight money laundering more effectively.

This comes after a money laundering scandal involving both Swedbank and Danske Bank and more particularly their businesses in the Baltic. To rectify their shortcomings, the banks have planned a joint venture with Handelsbanken, Nordea, SEB and DNB to perform common KYC checks.

For more information, click here.

MAS releases Prohibition Orders against three individuals for dishonest conduct

The Monetary Authority of Singapore (MAS) issued Prohibition Orders (POs) taking effect on 8 May 2019 against three individuals for dishonest conduct.

Mr. Jeremy Lee Seow Poh was Managing Director and Head of Sales for Jefferies Singapore (JSL) while Mr. Ong Eng Keong was Senior Vice President, Credit Trading.  They both colluded to trade against JSL using privileged information which they obtained in the course of their work. Between May 2011 and December 2012, Mr. Lee also traded in bonds using his private banking account that was intentionally not disclosed to JSL.

For more information, click here.

European Commission fines five global banks over FX market misconduct

The European Commission fined Citigroup, Barclays, JP Morgan, MUFG and Royal Bank of Scotland (RBS) for a total amount of USD 1.2 billion for forex trading market misconduct.

Nine individual traders from the banks were exchanging information on online chat rooms about current or planned trading activities. This allowed the traders to identify opportunities for coordination, including temporarily refraining from trading activity to avoid interfering with one another.

For more information, click here.

New Industry Steering Group to Elevate Culture and Conduct Standards for Banks

The Monetary Authority of Singapore (MAS) announced the creation of a new Culture and Conduct Steering Group (CCSG) in collaboration with the Association of Banks in Singapore (ABS) to raise conduct standards in the banking industry.

This follows the will of MAS to reinforce ethical business practices which protect customers’ interests and solid risk management which support the banks’ safety and soundness.

For more information, click here.

Regulatory Updates

30th May 2019 – Notice on Insurer’s Appointment of Custodians (MAS 105)

MAS issued a notice pursuant to section 64(2) of the Insurance Act (“the Act”) which comprises mandatory requirements and guidelines regarding appointment and on-going monitoring of custodians and sub-custodians. As per the notice a licensed insurer must ensure that every custodian and sub custodian, which holds insurance fund assets, is licensed, approved, registered or otherwise regulated for its business or activity of providing custodial services by the relevant authority in the jurisdiction where the respective custody account or sub custody account is maintained. Also MAS expects a licensed insurer to exercise due care and diligence when appointing any custodian or sub custodian to hold its insurance fund assets.

Click here to read the notice.

30th May 2019 – Notice on Asset & Liability Exposures for Insurers (MAS 122)

MAS issued a revised notice on Asset & Liability Exposures for Insurers which is applicable to all licensed insurers except a captive insurer, a foreign insurer carrying on insurance business under a foreign insurer scheme established under section 35B of the Act and a marine mutual insurer. As per the notice, a licensed insurer must lodge its quarterly submissions within 2 months from the last day of the reporting quarter via MASNET and its annual submissions within 3 months from the last day of the reporting accounting period. Quarterly submissions include Breakdown of Equity Securities, Breakdown of Debt Securities, Breakdown of Loans, Breakdown of Cash and Deposits etc. and the annual submissions include Breakdown of Assets Managed by Head Office/ Parent/ Outsourced Entity, Breakdown of Insurance Exposure of Singapore Insurance General Fund etc.

Click here to read the notice.

30th May 2019 – Circular on Review of MAS Notice 105 and Amendments to Mas Notice 122

MAS issued the revised MAS Notice 105, which sets out requirements on insurers’ appointment of custodians and fund managers, and made consequential amendments to MAS Notice 122 on Asset and Liability Exposures for Insurers.

Click here to read the circular.

23rd May 2019 – MAS issued a revised version of Form 2 for the Notice of Change of Particulars of a Licensed Trust Company under Section 9 and Regulation 5 of Trust Companies Act and The Trust Companies Regulations 2005

Click here to access the form.

17th May 2019 – MAS issued a revised version of Form 1V for the Application for a Capital Markets Services Licence for Venture Capital Fund Manager

Click here to access the form.

13th May 2019 – Guidelines on Prevention of Money Laundering and Countering the Financing of Terrorism – Direct General Insurance Business, Reinsurance Business, and Direct Life Insurance Business (Accident & Health Policies)

The guidelines apply to all insurers licensed under section 8 of the Insurance Act (“the Act”) and to all foreign insurers operating in Singapore under a foreign insurer scheme established under Part IIA of the Act. Direct life insurers writing life policies should refer to MAS Notice 314 on “Prevention of Money Laundering and Countering the Financing of Terrorism – Direct Life Insurers” and the accompanying guidelines in relation to direct life insurance business.

An insurer’s board of directors and senior management are responsible for ensuring strong governance and sound risk management and controls in relation to AML/CFT within the insurer. As per the guidelines the insurers must ensure that there are three lines of defense to identify, assess and mitigate the ML/TF risks faced by the insurer.

Click here to read the guidelines.

6th May 2019 – Issuance of Technical Specifications for RBC 2 (Second Consultation Paper on MAS’ review of the Risk Based Capital Framework for Insurers) Parallel Run for Year Ended 31 December 2018 (ID 07/19)

MAS made further refinements to the Risk Based Capital Framework requirements for Insurers by updating the relevant technical specifications, workbooks and questionnaire. This set of technical specifications sets out the updated policy positions on the RBC 2 framework on matching adjustment (MA), illiquidity premium (IP) and recognition of internal credit rating model or process for unrated corporate bonds. MAS is intending to consult with the industry further on few areas, such as the treatment of infrastructure investments and securitized assets and calibration of the general insurance catastrophe risk requirement.

All insurers, with the exception of captives, Lloyd’s insurers and marine mutuals, are required to conduct the parallel run for the year ended 31 December 2018, based on the instructions set out in the technical specifications. The parallel run will allow insurers and MAS to assess the impact of the updated RBC 2 proposals on capital positions and the wider business and strategic implications when RBC 2 becomes effective on 1 January 2020. The results and questionnaire are to be submitted to MAS no later than 2 July 2019.

Click here to read the regulatory update.

Argus Global in Press

Argus Global has fully integrated 2 business acquisitions. The first was Ace Success Pte Ltd, a Singapore based secretarial, accounting and tax practices company. The second was Argus Compliance India Private Limited, a subsidiary company, based in India, offering a multi-disciplinary and comprehensive bouquet of services in Singapore and India.

   

 

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