Tharman Shanmugaratnam
Singapore
“EDB conducts regular reviews to GIP to ensure its effectiveness in attracting only top-tier business leaders who are interested to drive the growth of their businesses and investments from Singapore.”
“MAS may vary the size of the additional capital requirement imposed on the bank and take other regulatory actions depending on the outcome of ongoing reviews. MAS requires all retail banks in Singapore to ensure that their mission critical systems supporting digital banking are resilient.”
“This question will be answered in the reply to Dr Tan Wu Meng's Parliamentary Question filed for tomorrow's Sitting. [Please refer to "Probe into Recent Disruptions of DBS' Digital Bank and Physical ATM Services and Preventive Measures Implemented", Official Report, 5 July 2023, Vol 95, Issue 107, Written Answers to Questions for Oral Ans…”
“Borrowing from the banks is one of the ways in which MAS carries out MMOs to soak up such excess liquidity. Like other central banks, MAS does this daily through an auction system, enabling MAS to withdraw liquidity through the Primary Dealers that submit the most competitive prices.”
“To mitigate consumer over-indebtedness, the Monetary Authority of Singapore (MAS) requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit.”
“The Monetary Authority of Singapore imposes on external asset managers the same stringent regulatory standards for anti-money laundering and countering the financing of terrorism that it imposes on banks.”
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“EDB conducts regular reviews to GIP to ensure its effectiveness in attracting only top-tier business leaders who are interested to drive the growth of their businesses and investments from Singapore. In March this year, the Ministry of Trade and Industry and EDB announced changes to the GIP which includes the requirement for SFO applicants to deploy S$50 million of their Asset-Under-Management into four investment categories that would benefit and support the growth of businesses based in Singapore. Having high net worth and setting up SFOs in Singapore do not guarantee Singapore citizenship (SC) and PR. Each SC and PR application is assessed based on a range of factors. These include the ability to contribute to Singapore, the number of jobs that the applicant and his/her businesses may be able to create in Singapore, special skills/education the applicant may possess, the applicant’s family ties to Singaporeans, the ability to integrate and the commitment to sink roots in Singapore. Different criteria may apply to different applicants, depending on background and circumstances.”
“Two-thirds of the Singaporeans and PRs employed by SFOs under the sections 13O and 13U tax incentive schemes earned more than S$5,000 per month. More than 400 earned between S$2,000 and S$5,000 per month, and fewer than 50 earned less than S$2,000 per month. As for SFOs’ contributions in the form of revenue generation in other businesses and being a source of capital, MAS currently does not have the data but intends to conduct surveys to obtain a better understanding of these contributions. We understand that Ms Mariam Jaafar is also interested in a comparison between (a) contributions of foreigners who have set up SFOs who have attained PR or citizenship status through programmes, such as the Global Investor Programme (GIP), and (b) the contributions by other citizens and foreigners who have not set up SFOs in Singapore. I should first clarify that the sections 13O and 13U tax incentive schemes do not accord PR or citizenship status to the foreign owners setting up SFOs here. The conditions that award recipients are subject to do not differ by the residency status of the SFO owners. Accordingly, MAS does not collect such data. What MAS will do is to continue to review the sections 13O and 13U tax incentive schemes for SFOs to ensure they continue to make meaningful contributions to Singapore. To Ms Mariam’s interest on the GIP, it is a scheme administered by the Economic Development Board (EDB). The programme accords PR status to eligible global investors who intend to drive their businesses and investment growth from Singapore. Since 2020, a small number of about 30 SFO owners have been supported under the GIP based on their investment track record, investment mandate in Singapore, as well as the projected size and experience of their Singapore team.”
“My response will cover the questions raised by both Mr Gan Thiam Poh and Ms Mariam Jaafar in today’s Order Paper. I take Ms Mariam and Mr Gan’s interest to be in Single Family Offices (SFOs) rather than Multi Family Offices. As previously explained in this House1, SFOs are set up by individual investors to manage the assets of their own families and are not required to be licensed by the Monetary Authority of Singapore (MAS) as they do not manage third party assets. MAS, therefore, does not have data on all SFOs. However, MAS has better data on SFOs that have applied for and been awarded the section 13O and 13U tax incentives. As previously explained in this House2, SFOs contribute in two key ways. One, they create jobs directly when they hire individuals, such as investment professionals, as their employees. Two, they generate revenue and help create jobs for external service providers, such as private banks and legal, custody, fund administration and tax firms. Moreover, MAS has, yesterday, just announced changes to the tax incentives for SFOs. These changes are intended to encourage SFOs to channel more of the wealth they manage towards local enterprises, blended finance structures aimed at supporting sustainable development, climate-related investments and charitable contributions, for the benefit of Singapore, Singaporeans and the region. SFOs also create well-paying jobs locally. As at June 2022, SFOs that have applied for and been awarded the tax incentives employ about 1,400 Singaporeans and Permanent Residents (PRs). About 900 of these jobs were created in just the last three years. These are generally well-paying jobs.”
“This will enhance FIs’ ability to detect and report to the authorities suspicious activities earlier and with greater accuracy.”
“The Monetary Authority of Singapore (MAS) has strict requirements on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), in line with international standards. MAS also actively supervises financial institutions (FIs) for adherence with our requirements and expectations. In the past five years, that is, from 1 June 2018 to 23 June 2023, a total of 20 investigations were opened against FIs for suspected breaches of MAS’ AML/CFT requirements. Enforcement actions were taken against 17 FIs. The licence of one FI was revoked. Composition penalties were imposed on 14 FIs, including the four recent cases related to the Wirecard scandal. Reprimands were issued to two FIs. Even prior to the Wirecard scandal, MAS’ inspections had covered FIs’ controls against the misuse of legal persons, which was a risk that arose in the Wirecard-related cases. Arising from these supervisory interventions, FIs were already in the process of strengthening their controls. Active collaboration among FIs, the regulator and law enforcement is essential in the fight against financial crime. MAS and the Commercial Affairs Department (CAD) work closely with key FIs to share analyses of emerging Money Laundering/Terrorism Financing (ML/TF) risks and information on specific cases. This partnership has helped identify suspicious accounts and activities and resulted in investigations. We will be able to do more under this partnership when the Collaborative Sharing of ML/TF Information and Cases (COSMIC) platform is implemented in the second half of 2024. COSMIC will allow participant FIs to securely share information on customers who exhibit suspicious behaviours that signal potential illegal financial activities.”
“Members of the public are strongly encouraged to monitor their card transactions regularly, and immediately notify their card issuers if they notice any fraudulent or suspicious transactions and also report such transactions to the Police.”
“A Bank Identification Number (BIN) attack is a type of card fraud, using software to generate possible credit and debit card number combinations, expiration dates and card verification values. Low value transactions are systematically attempted in order to test for valid card details and higher value transactions are subsequently made using those valid card information. The statistics requested by the Member are not readily available. Unauthorised credit card transactions, in particular, arising from BIN attacks, are not specifically tracked. Banks, however, track credit card dispute cases, which may comprise disputes over goods purchased or services rendered, card fraud, lost or stolen cards or scams. Of these, scams continue to be the main driver of losses suffered by consumers. In BIN attacks, the fraudster typically targets merchants that do not require one-time password (OTP) authentication, as the fraudster would not ordinarily have access to the OTP. In such a case, a card user will not be liable for an unauthorised transaction. Rather, the merchant involved will be liable for the loss, as long as the card user reports the case on a timely basis. The Monetary Authority of Singapore (MAS) expects that card issuers in Singapore and card scheme operators, such as Visa and Mastercard, have strong card security measures to protect customers from card fraud, including BIN attacks. Measures implemented include real-time card fraud monitoring, providing transaction alerts to customers, implementing OTP to authenticate customers before approval of online transactions at merchants, and chargeback mechanisms to reverse unauthorised transactions. Card issuers also work quickly to replace cards whose BIN numbers have been compromised.”
“MAS may vary the size of the additional capital requirement imposed on the bank and take other regulatory actions depending on the outcome of ongoing reviews. MAS requires all retail banks in Singapore to ensure that their mission critical systems supporting digital banking are resilient. This includes having the ability to recover quickly from any system disruptions. Banks are subject to regular inspections and off-site reviews by MAS to ensure their adherence to regulatory requirements and expectations. Further details on MAS’ supervisory approach have been explained to this House on 21 April 2023. [Please refer to "Banking Disruptions That Have Lasted More Than an Hour in Last Five Years", Official Report, 21 April 2023, Vol 95, Issue 101, Written Answers to Questions for Oral Answer not Answered by End of Question Time section.]”
“My response will cover the questions raised by both Dr Tan Wu Meng in today’s Order Paper and by Mr Desmond Choo filed for 4 July 2023’s Sitting. The disruption of DBS Bank’s digital banking services on 5 May 2023 intermittently affected customers’ access to Internet and mobile banking, electronic payment and automated teller machine (ATM) services. DBS fully restored affected services after 6.5 hours. The Monetary Authority of Singapore (MAS) has stated publicly that it regards this second disruption within a period of two months as unacceptable and that DBS had fallen short of MAS’ expectation for banks to deliver reliable services to their customers. DBS’ preliminary investigations showed that the disruption was due to human error in coding the programme that was used for system maintenance. The error led to a significant reduction in system capacity which, in turn, affected the system’s ability to process Internet and mobile banking, electronic payment and ATM transactions. According to DBS, the cause of the incident was unrelated to the earlier March 2023 disruption, which was caused by inherent software bugs. Following the March 2023 incident, DBS convened a Special Board Committee to oversee the root cause investigation and a comprehensive review of the bank’s IT resilience. Following the May 2023 disruption, MAS has required the Special Board Committee to extend its review to cover the latest incident and to use qualified independent third parties for the review. More details on the disruptions will be provided by the bank publicly when the review is completed. The imposition of capital requirements on DBS reflects the seriousness with which MAS views the recent disruptions and the impact that they have had on customers.”
“Banks must consider whether they have fulfilled their obligations and whether customers have done their part in protecting their accounts. Customers can ask banks to reassess their cases should new information relevant to their disputes surface.”
“In such cases, the customer may not be aware that SMS OTPs had been delivered to his mobile device, or that unauthorised transactions had been performed, as the scammer who has obtained control over the mobile device has deleted both the SMS OTPs and transaction notifications. Such cases are concerning. The Cyber Security Agency of Singapore has published an advisory on an ongoing malware campaign targeting Android devices in May 2023. Members of the public are strongly reminded and urged to take these necessary measures, which have also been amplified by the banks, to protect themselves against malware: (a) Pay attention to the security permissions requested by the application and be wary of applications that ask for unnecessary permissions on mobile devices. (b) Install applications only from the official Google Play Store. (c) Uninstall any unknown applications that are found in mobile devices immediately. (d) Perform anti-virus scans and keep regular backups of important data. (e) Ensure that mobile devices’ operating systems and applications are updated regularly to be protected by the latest security patches. When customers discover any unauthorised transactions in their accounts or suspect that their mobile device may have been compromised by malware, they should immediately contact the bank or activate the “kill switch” that the banks provide to freeze their accounts. They should work in cooperation with the bank to establish the facts surrounding the transaction. They should also report fraudulent activities to the Police. For malware cases, the Police may request that customers submit their mobile devices for investigation. MAS expects banks to treat customers fairly in all cases of dispute over unauthorised transactions.”
“MAS expects the same for high-risk card transactions such as authorising online card payments. The transition has commenced and MAS will set a deadline for all retail banks to complete this. MAS does not currently see the need to require banks to provide customers the ability to opt out of SMS OTPs as this would limit the authentication toolkit that the banks have and dilute the effectiveness of multi-layered security for protecting customers. When used in combination with other authentication factors, such as biometrics or digital tokens, SMS OTP provides an additional layer of security that fraudsters have to overcome. In addition, SMS OTP is an authentication method that is accessible by all customers as it can be received on any type of mobile device. It allows all customers to perform low-risk activities, such as viewing of account balance and paying of bills, conveniently without the need for an additional device. Removing SMS OTPs entirely will exclude a significant number of online banking customers who do not own mobile devices that can install digital tokens. The transition away from sole reliance on SMS OTP for high-risk online banking activities will, however, not deal with other scam types, such as those related to phishing and malware to steal banking credentials, that has been growing recently. Scam cases involving malware infections of customer devices are not new. However, scammers are exploiting newer technologies. In more recent cases, they have acquired the ability to control customers’ devices using malware.”
“My response will cover the questions raised by Mr Gerald Giam and Dr Tan Wu Meng in today’s Order Paper. Globally, and in Singapore, scam cases have been rising. Scammers have been quick to evolve their tactics to trick consumers into divulging their banking credentials as well as to evade detection. As previously explained in this House, Singapore has adopted a multi-layered strategy to combat scams. Agencies are continuing to work closely with the industry to strengthen our anti-scam measures to fight the evolving threats. Before 2021, there were cases reported where malicious actors diverted short message services (SMS) one-time passwords (OTPs) to perform fraudulent bank transactions. These occurred between September and December 2020. The attacks were caused by unauthorised access to the systems of overseas telecommunication operators to divert the SMS OTPs sent by the banks to their customers, which were then used to authenticate fraudulent online card payment transactions. While our local telco networks were secure and not compromised, the telco operators had since implemented additional security safeguards to mitigate the risk. Hence, the risk of SMS OTPs being diverted has now been largely addressed. The Singapore Police Force has also not found any confirmed cases of SMS OTP diversions since January 2021. Nevertheless, given the inherent vulnerability of the SMS channel, the Monetary Authority of Singapore (MAS) has required banks to phase out SMS OTP as a sole factor to authenticate high-risk transactions. Banks in Singapore have already moved away from sole reliance on SMS OTP for high-risk online banking activities, like adding of payees and changing of fund transfer limits.”
“Singapore acts as an intermediary for these fund flows, which typically remain in foreign currencies and, therefore, have little or no effect on the Singapore dollar exchange rate or Official Foreign Reserves (OFR). The capital flows that are more relevant for the demand for Singapore dollars and OFR are the foreign currency inflows associated with inward foreign direct investments as well as Singapore's exports. As I had explained previously, the Monetary Authority of Singapore (MAS) intervenes in the foreign exchange market by purchasing US dollars for Singapore dollars to ensure that the trade-weighted exchange rate stays within MAS’ chosen monetary policy parameters. MAS thus accumulates OFR in the process1. The incipient expansion in base money caused by OFR accumulation is, in turn, sterilised through MAS' money market operations. This ensures there is no excessive growth in money supply. I had also previously explained that inflation in Singapore is being driven by tight labour market conditions and has little to do with foreign fund or capital inflows. Likewise, purchases by foreigners have been a low share of all private residential property transaction volume over the last three years.”
“This Parliamentary Question is related to the Member's earlier question on foreign fund inflows through family offices which was addressed in Parliament on 10 May 2023. [Please refer to "Data on Amounts and Sources of Wealth Inflows into Singapore", Official Report, 10 May 2023, Vol 95, Issue 104, Oral Answers to Questions section.] The Member has now broadened the scope to all foreign fund inflows. I will focus my answer on this broadened scope. But Mr Leong should consider my response in totality with the explanation I had provided previously. I had shared some data from MAS' annual Asset Management Survey pertaining to the category on "non-retail individual clients", which is closest to family offices. Broadening the coverage to all foreign investor types, that is, both non-retail individual and institutional clients, the survey shows that the total stock of Assets Under Management (AUM) of foreign clients managed by financial institutions in Singapore increased by about S$600 billion on average in 2020 and 2021 each. Mr Leong asked for a breakdown by source countries for total foreign fund inflows. Investors come from a wide range of countries. The top-sourced foreign region for the increase in Singapore's AUM in 2020 and 2021 were the Americas, followed by Asia Pacific, then Europe. Mr Leong also asked about the impact of the inflow of foreign funds on Singapore's Official Foreign Reserves, inflation and the private property market. As explained previously, most of the funds managed by Singapore's asset management industry are both sourced from and invested in assets outside of Singapore.”
“This question will be answered in the reply to Dr Tan Wu Meng's Parliamentary Question filed for tomorrow's Sitting. [Please refer to "Probe into Recent Disruptions of DBS' Digital Bank and Physical ATM Services and Preventive Measures Implemented", Official Report, 5 July 2023, Vol 95, Issue 107, Written Answers to Questions for Oral Answer not Answered by End of Question Time section.]”
“Borrowing from the banks is one of the ways in which MAS carries out MMOs to soak up such excess liquidity. Like other central banks, MAS does this daily through an auction system, enabling MAS to withdraw liquidity through the Primary Dealers that submit the most competitive prices. The local banks are part of MAS' network of 13 Primary Dealers and participate in the daily MMO auctions. The banks' participation at MMO auctions also do not constrain their ability to lend to micro, small and medium-sized enterprises and these lending decisions are subject to their own pricing and credit considerations. More information about MAS' MMO in Singapore can be found in the monograph on MAS' website: https://www.mas.gov.sg/-/media/mas/about-mas/monographs-and-information-papers/20130313-monetary-policy-operations-monograph.pdf.”
“Mr Leon Perera is likely referring to the Development Bank of Singapore (DBS) Chief Executive Officer Piyush Gupta's response to a question during the bank's recent financial results conference call that it had lent $30 billion to the Monetary Authority of Singapore (MAS) as DBS was "not finding enough opportunities to put the money to work". Mr Piyush Gupta's comment might have been interpreted to mean that MAS had borrowed from DBS to meet MAS' needs. That is not the case. MAS conducts borrowing or lending transactions with banks continually as part of its money market operations (MMOs), which are essential to the implementation of its monetary policy. MMOs are a core function of central banks, to ensure that there is an appropriate amount of liquidity in the banking system, in other words, sufficient to meet banks' demand for reserve and settlement balances but not excessively so. In Singapore, MMOs are a complement to MAS' foreign exchange intervention operations, which are used to implement Singapore's exchange rate-based monetary policy. Historically, there have tended to be frequent appreciation pressures on the Singapore dollar, in part reflecting investor confidence in Singapore. To keep the exchange rate from appreciating beyond its monetary policy settings, MAS intervenes in the foreign exchange market to sell the Singapore dollar and buy foreign currencies. This results in the accumulation of Official Foreign Reserves and a build-up of Singapore dollar liquidity in the banking system. Consequently, MAS engages in MMOs to withdraw excess liquidity from the banking system, as too much liquidity can lead to a rise in financial vulnerabilities, such as inflated asset prices and excessive credit growth.”
“To mitigate consumer over-indebtedness, the Monetary Authority of Singapore (MAS) requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit. These include the following: (a) For property loans, we have the total debt servicing ratio (TDSR) framework, loan-to-value limits, and loan tenure caps. MAS last adjusted the TDSR framework in September 2022. (b) For unsecured consumer credit, we have minimum income requirements, credit and income checks on customers, and an industry-wide borrowing limit per customer. These safeguards are stricter than in most other jurisdictions. These safeguards have been effective. In the last three years, the proportion of non-performing loans among mortgages taken out with FIs has remained low and, in fact, decreased from 0.5% in 2020 to 0.3% in 2022. Over the same period, total write-offs for credit card-related bad debt have halved, from 7.1% of rollover balances in 2020 to 3.5% in 2022. MAS will continue to monitor the mortgage loan and unsecured consumer credit situation.”
“The Family Office Development Team does not track the amount of contributions family offices make to philanthropic activities. The Monetary Authority of Singapore continually reviews the conditions of the tax incentive schemes for single family offices to ensure that they contribute to Singapore. We are studying whether tax incentives could be used to encourage philanthropic activity or impact investing.”
“The Monetary Authority of Singapore imposes on external asset managers the same stringent regulatory standards for anti-money laundering and countering the financing of terrorism that it imposes on banks. Like banks, external asset managers are required to verify the identity of their customers, establish the sources of wealth and funds of higher-risk customers, and monitor customers' transactions on an ongoing basis, to ensure that these are legitimate. There is, thus, no regulatory arbitrage.”
“This Question has been answered in the reply to Question Nos 12 and 13 for Oral Answer on the Order Paper for 8 May 2023. [Please refer to "Proposal to Review Cap of Coverage Per Depositor under Deposit Insurance", Official Report, 8 May 2023, Vol 95, Issue 102, Oral Answers to Questions section.]”
“These questions have been addressed in the reply to Mr Chua Kheng Wee Louis' Parliamentary Question filed for the Sitting on 10 May 2023. [Please refer to "Data on Amounts and Sources of Wealth Inflows into Singapore", Official Report, 10 May 2023, Vol 95, Issue 104, Oral Answers to Questions section.]”
“MAS has allowed persons with past records of dishonesty to enter the financial industry, having considered the seriousness and circumstances of the person’s past record, the time that has elapsed since the offence, the responsibilities to be assumed and the controls put in place by the FI to monitor the person’s conduct. In each case, MAS carefully weighs the need to protect financial services users against giving reformed individuals a second chance. MAS does not maintain a database of all persons convicted by the Courts of offences involving dishonesty. Criminal records are private and confidential information kept by the Police.”
“The Monetary Authority of Singapore (MAS) expects financial institutions (FIs) to recruit and retain persons who are fit and proper to conduct regulated financial activities and hold key roles in FIs. FIs are required to establish policies and processes to ensure this. This includes doing reference checks and verifying the person’s past employment records, regulatory status and disciplinary and criminal history, if any. MAS has also been issuing prohibition orders (POs) to persons who have been convicted of offences involving dishonesty. MAS notifies all FIs when a person has been issued a PO and publishes such POs on the MAS website. While a PO is in effect, FIs are prohibited from employing the person who has been issued the PO to perform the specified regulated activities. Since July 2017 to the close of 2022, MAS has issued a total of 73 POs. MAS’ current powers to issue POs are generally limited to persons carrying out regulated activities in the financial sector. These powers will be expanded when the Financial Services and Markets Act comes into effect. Under the Act, MAS will also be able to issue a PO to any person who is not fit and proper to perform key roles, activities and functions in the financial sector, including those seeking to join the sector. A person with a past record of dishonesty or with a previous PO is not automatically deemed as not being fit and proper. FIs have to assess a person’s fitness and propriety holistically, in considering if the person is fit for the role.”
“The Monetary Authority of Singapore (MAS)’s restrictions on motor vehicle loans granted by financial institutions are principally to encourage households to borrow prudently. The latest data shows that very few borrowers default on their motor vehicle loans granted by financial institutions, which provide the majority of such loans. The non-performing loan ratio for motor vehicles has remained at less than 0.1% in the fourth quarter of 2022. MAS will, however, continue to work with the Ministry of Transport in monitoring the situation in the Certificate of Entitlement (COE) market.”
“Close to 27,000 home owners with a mortgage from financial institutions (FIs) refinanced their mortgages in the 12 months from March 2022 to February 2023. These refinanced mortgages account for 6% of the total number of outstanding mortgage loans. The Monetary Authority of Singapore (MAS) has estimated that the increase in mortgage payments for these borrowers was approximately $240 on average, or about 2% of their monthly income. The average monthly income of the 27,000 home owners who refinanced their loans had increased by about 10% over the last three years. This would have helped cushion the increase in their mortgage payments. Most borrowers have been generally prudent and, hence, are able to cope with the rise in mortgage payments. MAS’ move in September 2022 to raise the interest rate used to calculate the total debt servicing ratio has also helped to encourage prudent borrowing. MAS, however, encourages the small number of borrowers who face repayment difficulties to approach their lenders early. For Housing and Development Board home owners facing difficulties, Government agencies have implemented various measures to help them service their housing loans. The Member may wish to refer to the written answer by the Minister for National Development to a similar question posed in March this year for more details on these measures, and the recent speech by the Minister for Finance at the Debate on the President’s Address for more information on measures for Singaporeans who need support. [Please refer to "Impact of Higher Interest Rate on HDB Mortgage Rates and Loan Repayments", Official Report, 20 March 2023, Vol 95, Issue 93, Written Answers to Questions section.]”
“The Government has been engaging closely with industry stakeholders on this framework and will continue doing so. We aim to issue a public consultation paper in the third quarter of this year.”
“The Government has been working to develop a clear framework to mitigate losses by victims of phishing scams where customers are deceived into revealing their account credentials to scammers impersonating legitimate entities. This builds on the work done last year by the Payments Council chaired by the Monetary Authority of Singapore on a framework for the equitable sharing of losses due to phishing scams that involve financial institutions (FIs). Our aim is to strengthen the roles and accountabilities of the key parties who can mitigate the risk of phishing scams and to preserve confidence in digital payments in Singapore. This includes making clear the duties of FIs and telecommunications companies (telcos) in particular, and the responsibility of customers themselves to be vigilant against scams. The Government has been in discussion with telcos, who play a key role in the SMS infrastructure, with a view to including them in the framework, besides the FIs. We are also studying the roles of other entities in the digital payments ecosystem and whether they should, eventually, also be brought within the framework. The development of the framework has taken some time. It entails defining clearly the type of scams that should be covered by this shared responsibility framework, as there is otherwise a wide range of scam typologies. It also involves deciding on the specific duties and actions expected of banks and telcos so as to provide adequate safeguards against phishing scams without making digital payments cumbersome for customers, as well as defining the responsibilities of customers. Further, the framework will establish the appropriate mechanisms for sharing losses amongst these parties when scams occur and duties are breached.”
“While the cause of the March 2023 incident appears to be software bugs that are unrelated to the issues leading to the November 2021 disruption, the Special Independent Board Committee is overseeing a thorough investigation to determine if there are common underlying weaknesses that prevented a prompt recovery in both incidents. MAS will take the necessary supervisory actions against DBS following the completion of the independent review. Given the growing scale and complexity of banks' IT systems, we can nevertheless expect brief disruptions from time to time. When these disruptions do occur, banks must quickly identify the problem, swiftly restore access to their services and communicate effectively, clearly and transparently to affected customers. MAS will continue to work closely with the industry to ensure the resilience of banks' IT infrastructure, to maintain stability and trust in the banking system.”
“MAS also assesses the adequacy of banks' compliance with these requirements through regular on-site inspections and off-site reviews and any gaps are conveyed to the banks for immediate rectification. Relevant observations as well as lessons learnt from IT incidents are also shared through MAS advisories, regular dialogues and industry forums. In the case of DBS, there were two major disruptions over a period of 16 months, the first in November 2021 and the latest one in March 2023. Following the November 2021 incident, MAS directed DBS to appoint an independent expert to conduct a comprehensive review of the incident. The expert had conducted a thorough assessment of DBS' digital banking system resilience and the effectiveness and speed of its recovery actions. DBS has since undertaken measures to mitigate the identified gaps. The bank has committed to enhance the resilience of its digital banking system. It is focused on enhancing its access control architecture, by building in more redundancy, monitoring its key system components more closely and improving its system restoration processes. DBS has also committed to strengthen its in-house technical expertise to facilitate faster response to system issues. DBS was to complete the validation of these remediation actions and report its progress to MAS by July 2023. Despite these ongoing efforts, there was another prolonged and widespread disruption to DBS' digital banking services on 29 March 2023. In early April 2023, MAS directed DBS to conduct a fundamental assessment of the effectiveness and adequacy of the people, processes and technology supporting its digital banking services. DBS has since established a Special Independent Board Committee to oversee the investigation by qualified independent experts.”
“Mr Ang Wei Neng asked about major banking disruptions in the last five years and the lessons learned from these disruptions. Mr Desmond Choo1 raised a related question on DBS' recent second major disruption to its digital banking services and asked how the Monetary Authority of Singapore (MAS) has been working with the bank to identify and remedy its problems for the next Sitting. This response will cover the questions raised by both Mr Ang Wei Neng and Mr Desmond Choo. There are seven domestic systemically important banks (D-SIBs) in Singapore serving the bulk of our retail banking customers2. Disruptions to services provided by these banks can cause considerable inconvenience to the public. Since 2018, these seven banks have reported a total of 17 disruptions to their digital banking services that lasted more than one hour. The disruptions were mostly resolved within two to four hours. The root causes of these service disruptions are varied, ranging from lapses in managing system upgrades, to software bugs and misconfigurations, in digital banking systems as well as back-end systems and components. MAS requires banks to make every effort to ensure that customers have a high degree of access to their digital banking services and to maintain business continuity when systems malfunction. This means banks must ensure that their relevant information technology (IT) systems are robust; identify and remove single points of failure in their systems; put in place processes to promptly restore their systems following any IT disruption; and regularly validate the effectiveness of these processes. When banks fall short of MAS' expectations, they are required to identify the root cause of such lapses and take effective remedial actions.”
“We are exploring the potential of distributed ledger technology in promising use cases, particularly in cross-border payment and settlement, trade finance, and pre- and post-trade capital market activities. We are also working with the industry to explore the potential of tokenisation of financial and real economy assets. MAS and the Institute of Banking & Finance will work closely with the industry and tripartite partners to continuously upskill the financial sector workforce and develop deep capabilities for the future of finance. We will build competencies in growth areas, provide training support for finance professionals at different stages of their careers, develop specialist talent in areas, such as sustainability and technology, and groom future leaders in finance through opportunities to gain international exposure and build valuable networks.”
“We will promote the scaling up of blended and transition finance, to facilitate the decarbonisation of key sectors of the economy. We will also enhance sustainability disclosures and develop data utilities which will facilitate corporate disclosures and investors’ access to companies’ Environmental, Social, and Governance data. From the angle of financial stability, MAS will also work with the industry to enhance its resilience to the risks posed by climate change. Together with industry partners, MAS will accelerate efforts to develop new digital infrastructure and platforms to enhance industry efficiency, access new markets, and promote new models in digital finance. In bond markets, we will develop infrastructure to facilitate more seamless end-to-end issuance, listing and settlement for Asian securities transactions. In the funds industry, we will work with industry participants to pilot digital utilities to reduce settlement time, enhance the efficiency and transparency of post-trade funds settlement for fund managers. MAS will continue to enhance cross-border payment connectivity with key partner jurisdictions. We have established bilateral real-time cross-border payment linkages with Thailand and India, and are currently working with Malaysia on a similar linkage. MAS is also working with the Bank for International Settlements Innovation Hub on a multilateral solution to link fast payment systems within ASEAN. Through these linkages, users in Singapore and our partner jurisdictions are now able to transfer funds directly to one another’s bank accounts or e-wallets almost instantly using a mobile number or Quick Response code. Together with the industry, MAS will help evolve an innovative and responsible digital asset ecosystem.”
“MAS stands ready to provide liquidity through a range of facilities to ensure that Singapore’s financial system remains stable and financial markets continue to function in an orderly manner at times of global stress. MAS has partnered the financial industry to develop the Industry Transformation Map (ITM) 2025. It sets out five key growth strategies for the financial sector for 2021 to 2025: enhance asset class strengths, digitalise financial infrastructure, catalyse Asia’s net-zero transition, shape the future of financial networks, and foster a skilled and adaptable workforce. The ITM aims to achieve growth of 4%-5% and net job creation of 3,000 to 4,000 per year for the financial services sector, over the five-year period. The financial sector is on track to achieving these targets, growing by an average 4.8% per year and adding an average 7,300 jobs per year during 2021 to 2022. MAS will catalyse insurance risk advisory and alternative risk transfer solutions for Asia. We will position Singapore as Asia’s centre for philanthropy by building philanthropy advisory competencies and solutions. We will develop private credit to complement private equity and venture capital funding. MAS will anchor promising FinTech start-ups in Web 3.0, artificial intelligence, and green FinTech. We will also continue to work with the financial industry to broaden and deepen the electronic foreign exchange trading ecosystem in Singapore. We will help develop an ecosystem of stakeholders to mobilise capital and support Asia’s transition to a net-zero emissions future. We will develop clear taxonomy criteria to identify green and transition activities for eight key sectors in 2023.”
“The Monetary Authority of Singapore (MAS) seeks to secure sustained non-inflationary economic growth, a robust and resilient financial sector, and Singapore’s position as a leading international financial centre in Asia. Major central banks have increased interest rates at an unprecedented pace amid persistent inflationary pressures. Tighter financial conditions globally are helping to dampen inflation, at the cost of slower economic growth and increased financial market stresses. Downside risks to global growth have increased, even as continuing labour market pressures keep inflation elevated. Against this backdrop, the Singapore economy will expand at a slower pace in 2023. Inflation is expected to moderate during the year but will remain higher than the historical norm. MAS has steadily tightened monetary policy since October 2021. This has helped to dampen inflation and anchor inflation expectations. MAS will continue to focus on ensuring medium-term price stability as the basis for sustained economic growth. Amid volatile international financial markets and stresses in global banking, MAS will seek to safeguard the safety and resilience of Singapore’s financial sector. Through regular risk assessments and close supervisory monitoring, MAS ensures that banks in Singapore are well-capitalised, keep healthy liquidity positions, and are underpinned by a stable and diversified funding base. In addition, MAS reviews banks’ regular internal stress tests against interest rate, credit and other risks. MAS also conducts an annual industry-wide stress test of key financial institutions in Singapore.”
“Family offices can be either multi-family offices (MFOs) or single-family offices (SFOs). MFOs manage third party assets of two or more families and are, therefore, regulated by the Monetary Authority of Singapore (MAS) like other fund managers under the Securities and Futures Act (SFA). There is only one pending MFO licence application. SFOs manage assets belonging to only the family. Similar to other major jurisdictions, such as the US, UK, Europe, Switzerland and Hong Kong, SFOs in Singapore are not subject to licensing. However, the majority of SFOs apply to MAS for tax incentives on income derived from their investments managed in Singapore and are, in fact, subject to our requirements with regard to money laundering and terrorism financing risks. First, MAS screens the individuals and entities involved in the SFO against databases and other information sources for money laundering, terrorism financing and other adverse news, and reviews the business plans of the SFO. Second, an SFO applying for the tax incentive is required to open and maintain an account with a bank licensed by MAS. The bank is, in turn, required to conduct customer due diligence. This includes assessing whether there is a clear and legitimate purpose for the use of the SFO structure, ascertaining the ultimate beneficial owners and corroborating the sources of wealth and funds of both the SFO and any beneficial owner(s). There are, currently, about 200 SFO tax incentive applicants pending approval. To safeguard against money laundering risks and ensure that Singapore reaps the benefits of hosting these SFOs, MAS and banks take care to ensure that these evaluation processes are conducted properly and are not rushed.”
“Sophisticated investment products make up less than 5% of all investment products sold to retail clients. Financial institutions and their representatives must adhere to the Monetary Authority of Singapore's (MAS) conduct requirements when selling investment products to retail clients. They must ensure that the products recommended are suitable for the client, taking into consideration the client’s investment objectives and financial situation. They must disclose and clearly explain to the client all material information on the product, including its risk and return features. They must also explain any option to unwind the purchase decision, which is typically within a seven- to 14-day period. In fact, 85% of transactions involving investment products are sold with such an option. When selling more complex products, financial institutions must take the additional step of assessing the client’s investment knowledge or experience. If the client is assessed not to possess the relevant investment knowledge or experience, the financial institution must advise the client accordingly. However, should the client wish to proceed with the purchase against the advice, it must be escalated for higher approval within the financial institution. The client will be allowed to purchase the product after he has confirmed in writing that he has been properly informed of the risks and implications of proceeding with the transaction and is making the purchase against the advice of the financial institution. MAS reminds retail investors to understand a product’s risks and returns before committing to a purchase.”
“We thank Mr Choo for his interest in the consultation papers that the Monetary Authority of Singapore (MAS) published, which proposed regulatory measures to reduce the risk of consumer harm from cryptocurrency trading and to require stablecoin issuers to maintain a high degree of value stability. The consultation period closed on 21 December 2022 and MAS received substantial feedback from a wide range of respondents. MAS is currently reviewing the feedback received and intends to publish our response to the consultation feedback by mid-2023.”
“SPF is a member of the "Asset-Recovery Interagency Network- Asia Pacific", a network spanning 28 jurisdictions in the Asia-Pacific region which aims to increase members’ effectiveness in depriving criminals of their illicit profits. SPF also shares intelligence on transnational scams with the international policing community through INTERPOL. We aim to reap the real benefits to the public of fast and efficient real-time cross-border payments while mitigating the risks. MAS and the Police will continue to work closely and proactively with industry to review and enhance the suite of anti-scam measures.”
“The Monetary Authority of Singapore (MAS) has launched real-time cross-border retail payment linkages with India and Thailand in the recent past. These will facilitate faster, cheaper, more accessible and more transparent cross-border payments for individuals and businesses. We are keenly aware that criminals can exploit a more efficient and interconnected global payment network. We have seen scammers make use of faster cross-border payments to transfer their criminal proceeds out of Singapore, to where it is difficult to trace, and beyond the jurisdiction of our Police to freeze. The Government is working actively to address this risk, both domestically and in collaboration with our international counterparts. Domestically, MAS has worked with our major retail banks to tighten and implement anti-scam controls. These include lowering the default transaction notification threshold to S$100 or lower, alongside the daily limit of S$1,000 or lower for real-time cross-border transfers. Banks actively monitor changes in scam typologies and will adjust these measures as appropriate. Globally, our agencies work closely with our international counterparts to combat cross-border crimes and scams. For example, (a) MAS proactively exchanges relevant information with its international counterparts to surface suspicious cross-border flows and activities so that the authorities can take the appropriate mitigating measures; and (b) our Singapore Police Force (SPF) works with its overseas counterparts to exchange information and conduct joint operations to dismantle scam syndicates.”
“Financing the progressive decarbonisation of hard-to-abate sectors and energy sources is a key priority globally and in Asia. With regard to coal, we start from a situation where it is the largest source of electricity generation and a significant fuel for industrial use in Asia1. Financing should aim at supporting the progressive phase-out of coal and shift to cleaner fuels without major disruption to the developing economies in the region. The Monetary Authority of Singapore's guidance to banks is that such financing should be on the basis of credible transition plans that mitigate their exposures to environmental risks and are aligned with the Paris Agreement goals.”
“They must also actively monitor their investment portfolios to enable them to respond expediently to adverse and sudden changes in market conditions.”
“Transparency, in the form of accurate, clear and timely communication, is the best defence for a listed company that is the subject of a short-seller report. The Singapore Exchange (SGX) has a set of published guidance on what listed companies should do when faced with adverse reports or rumours.1 Listed companies must provide, as soon as possible, a full response to such reports to enable stakeholders to make informed decisions. If more time is needed to issue a response, the company can request a trading halt of its shares on SGX. The Monetary Authority of Singapore's (MAS) regulatory framework aims to protect the interests of investors and the integrity of our markets, rather than the fund management or investment companies. To this end, SGX RegCo and MAS will closely examine both the short-seller report and the company's response. SGX RegCo may issue public queries to prompt the relevant company to provide all material information to address the issues raised in the short-seller report. It may also order an independent review if there are areas of concern. Where there is evidence of potential breaches of SGX's Listing Rules by the company, SGX RegCo will launch an investigation and take the necessary disciplinary action. The short-seller report will also be reviewed and share trading will be closely monitored for signs of irregularities. MAS and the Commercial Affairs Department will step in to investigate if there are grounds to suspect that market misconduct has occurred. To protect the investments that are managed by fund managers, MAS expects the managers to have robust processes to manage portfolio investment risks. These processes include setting appropriate limits to manage the risks of their portfolios.”
“There is no minimum downpayment for a motorcycle loan required in legislation. However, individual financial institutions (FIs) may require a minimum downpayment as part of their credit risk management. Currently, none of the local banks offers motorcycle loans with zero downpayment. The Government does not collect data on loans which may be used to purchase motorcycles, whether they are granted by FIs, licensed or exempt moneylenders, or unregulated motorcycle dealers.1”
“MAS proactively exchanges relevant information with its international counterparts to surface suspicious cross-border flows and activities so that it can take the appropriate mitigating measures.”
“As with all major financial centres, Singapore intermediates sizeable global fund flows and is exposed to similar risks of cross-border money laundering and terrorist financing (ML/TF). In recent years, ML/TF schemes have also become increasingly complex and difficult to detect globally, as criminal syndicates exploit technology to hide their tracks. Tackling these risks therefore requires close surveillance in partnership with the industry and international partners. The Monetary Authority of Singapore (MAS) taps on information from a wide range of sources to detect suspicious financial activities, including reports filed by financial institutions (FIs) and intelligence from our overseas counterparts. Data analytics techniques such as network link analysis are deployed to sift out unusual patterns of activity, thereby allowing us to more swiftly identify and mitigate emerging risks. An example of active collaboration on anti-money laundering and countering the financing of terrorism (AML/CFT) is the AML/CFT Industry Partnership (ACIP)1. ACIP is co-chaired by MAS and the Singapore Police Force’s Commercial Affairs Department and brings together key FIs to share analyses of emerging ML/TF risks as well as information on specific cases. These proactive efforts have led to the identification and investigation of suspicious accounts and activities. ACIP has issued advisory notes and best practices papers to help improve AML/CFT practices across the industry to strengthen collective defences. MAS also collaborates closely with our international counterparts to combat cross-border crime. Singapore has in place a legal framework and information sharing mechanisms that are in line with international standards set out by the Financial Action Task Force (FATF).”
“The Monetary Authority of Singapore (MAS) requires all banks operating in Singapore to put in place robust controls to detect and deter the flow of illicit funds, including the use of mule accounts for scam activities. These controls include rigorous processes to identify customers, understand the intended purpose of account opening, evaluate the risks posed, and monitor the accounts on an ongoing basis for suspicious activity. Given the rise in the number and severity of scams in recent years, MAS and the Singapore Police Force (SPF) have worked with banks to incorporate an advisory to applicants at account opening. The advisory warns applicants that bank accounts should only be for their own use and that they may be facilitating criminal activities if they allow others to operate their accounts. MAS has encouraged banks to use data analytics to improve their ability to detect mule activities, and has promoted the sharing of emerging mule typologies across the industry. These efforts have led to greater industry awareness and action, and contributed to credible intelligence being shared with law enforcement agencies for their investigations. For example, a collaboration in July 2022 between the SPF's Commercial Affairs Department and a bank led to the detection and investigation of 26 persons who allowed their bank accounts or Singpass credentials to be misused for illicit purposes.”
“Data on the number of individuals who leave financial institutions (FIs) to join Single Family Offices (SFOs) is not available. But the Monetary Authority of Singapore (MAS) estimates that the number of investment professionals employed at SFOs is about 1% of the total number of individuals employed by FIs in 2022. There is no indication of a sizeable outflow of talent from the financial sector to SFOs or adverse impact on the financial sector's hub status. The growth of the SFO industry has also been complementary to Singapore's value proposition as a global wealth management hub. MAS has been working actively with the financial industry over the years to build a strong pipeline of professionals who can take on leadership roles as well as specialised jobs in the financial sector. The various measures that have been put in place and the outcomes achieved have been elaborated on several occasions in this House1. In the specific area of SFOs, MAS and the Institute of Banking and Finance (IBF) launched two skills maps in 2021 that set out the competencies that employees of SFOs and external service providers, including private banks, tax advisory firms and legal firms advising the SFOs, should acquire. These skills maps are used by training providers such as the Wealth Management Institute (WMI) and the SMU Business Families Institute to develop relevant training programmes, with co-funding of training fees provided by schemes administered by MAS. MAS and IBF will continue to work with FIs and tripartite partners to develop and grow the local talent pool to meet the financial sector's needs, including that of SFOs.”
“The Monetary Authority of Singapore (MAS) expects banks to treat customers fairly. When handling cases of suspected scams, the banks must promptly investigate the relevant transactions performed. They must consider whether they have fulfilled their own obligations and whether customers had done their part to protect their own accounts. The Police will also investigate the scam, but they do not determine the culpability of the banks in allowing the scam to succeed. Depending on the outcome of the banks’ investigations, they may offer goodwill payments to customers. In such cases, banks are expected to give customers sufficient time to consider any such offer. A customer may decline an offer if he is not satisfied with it. He may then approach the Financial Industry Disputes Resolution Centre (FIDReC) for mediation and adjudication. FIDReC is an independent and impartial institution that provides a low-cost dispute resolution service for financial institutions and their customers. Any customer who accepts an offer of goodwill payment will be bound by the terms of the offer. Should new information come to light that is materially different from the premise upon which the customer accepted an offer from the bank, it is within the customer’s rights to request the bank to relook the case, or approach FIDReC for assistance. MAS is working with other Government agencies to design a fair and effective framework for shared responsibility amongst relevant parties when a scam occurs, and one which incentivises each party to be vigilant against scams. This will complement the processes mentioned earlier.”