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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“Some media reports might have given the impression that the European Commission (EC) is reducing its market access to financial institutions in Singapore. This is not true. There continues to be no impediment, for financial services provided out of Singapore to customers in the European Union (EU). There has also been no impact on investors’ confidence in Singapore. Let me explain. The EC's decision covers only Credit Rating Agencies (CRAs) and does not extend to any other financial services. Further, the EC recognises CRAs in a third country through two approaches. First, deeming the third country's CRA rules as equivalent to EC rules. This is called the equivalence decision. Second, an endorsement approach, where the CRAs in the third country rely on their related entities in the EU to endorse their ratings. CRAs in Singapore have been using the endorsement approach, and the EC has confirmed that it will continue to recognise Singapore-based CRAs using this approach. Having said that, equivalence is the highest form of market integration, which CRAs in Singapore, like those in several other jurisdictions, no longer enjoy. The reason has to do with the different approaches taken by major regulators internationally. Dr Lim Wee Kiak asked how MAS’ regulations on CRAs compare to those in the EU. Mr Leon Perera also raised a similar question for the next Parliament Sitting. MAS' CRA regulatory regime is based on, and consistent with, standards promulgated by the International Organisation of Securities Commissions, which is the global standard setting body. The EC has assessed MAS' CRA regulatory regime to be less prescriptive than EU rules in certain areas, such as in defining specific situations in which a conflict of interest for the CRA arises.”
“And in the case of fraud, consumers should report to the Police promptly. MAS will continue to work with the industry to raise consumer literacy and awareness on how to minimise wrongful e-payments. As in the case of cheques, the banks' role is to ensure that all properly authenticated payment instructions are processed effectively and efficiently. And as customers, we all know we have to write our cheques accurately and properly.”
“With the growth in electronic funds transfers, there have been some reported cases where monies were transferred by bank customers to unintended recipients. This can happen when a person makes typographical errors while setting out the e-payment instructions, but such instances are rare. When such an erroneous transfer occurs, the bank should help by engaging the recipient's bank, so that the recipient is informed and a refund can be initiated. It is an offence under the Penal Code for the recipient to retain or use the funds when he has been informed that it was sent by mistake. If the wrongful recipient refuses to return the erroneously transferred monies, the sender should make a Police report. Er Dr Lee Bee Wah asked whether banks are required to freeze and automatically return monies to a sender when a sender says the monies were wrongly transferred. It would not be appropriate to impose such an automatic requirement on banks. First, a bank cannot be sure that the sender made a mistake. Second, automatically returning the monies to the sender will run the risk of abuse, and does not encourage more careful use of e-payment and transfers. For example, a person who pays for an online purchase could subsequently ask his bank to reverse the payment upon receipt of the goods, claiming that the transaction was in error, and the banks are none the wiser. To address the concerns relating to erroneous transfers, the Monetary Authority of Singapore (MAS) has issued a set of guidelines to protect e-payment users. Under the guidelines, consumers will need to play their part and be responsible for accurate payments. On the banks' part, they have to make reasonable efforts to assist the sender, as I have mentioned.”
“MAS will continue to manage the S$NEER, as appropriate, with the objective of ensuring medium-term price stability.”
“The United States (US) Treasury produces a semi-annual report on the macroeconomic policies of the major trading partners of the US. In its report published in May, the US Treasury included Singapore in a Monitoring List of trading partners that it deemed merited closer attention on their currency practices and macroeconomic policies. The US Treasury uses a generic set of criteria to determine the countries on its Monitoring List. The criteria include whether a country has a significant bilateral goods trade surplus with the US, a material overall current account surplus, or has, in practice, engaged in persistent one-sided interventions in the foreign exchange market. Singapore was assessed to have met the second and third criteria and was, therefore, included in the Monitoring List. Singapore's inclusion in the Monitoring List does not affect the Monetary Authority of Singapore's (MAS') conduct of monetary policy. The countries in the List are not, by that virtue, deemed to be currency manipulators. The US Treasury has also acknowledged the uniqueness of Singapore's exchange-rate based monetary policy system. Its report points out that MAS manages the Singapore dollar nominal effective exchange rate (S$NEER) within a policy band, just as other central banks conduct monetary policy by targeting interest rates. And similar to other central banks that target the interest rate, MAS manages the exchange rate to ensure low inflation. MAS has made it clear that it does not use the exchange rate to make Singapore's exports more competitive. MAS continues to be in constructive dialogue with the US Treasury to ensure that Singapore’s monetary policy framework, including the role of foreign exchange intervention operations, are well-understood.”
“MAS will continue to engage Facebook on its plans for Libra and consider appropriate regulatory responses once they are clear.”
“Libra is, according to Facebook, a new digital currency aimed at lowering the cost of payments and bringing the unbanked into the financial system. Facebook plans to launch Libra with an association of technology companies, including partners, such as PayPal, Uber and Visa. At this point, however, we do not have details as to how the Libra Association plans to implement its solution. It is in the early stages of development, with a number of issues to be worked out around its features, use cases and governance arrangements. Like other regulators around the world, the Monetary Authority of Singapore (MAS) will make an informed assessment of the potential benefits and risks of Libra once these details become clear. Singapore now has a relatively developed ecosystem of e-wallets and bank apps that allow for secure, convenient and efficient domestic payments and transfers. Even so, we are open to further innovations, particularly if they can bring about additional benefits without undermining the stability and integrity of the financial system. Miss Cheryl Chan asked whether regulatory changes will be considered in response to Libra. The Payment Services Act (PS Act) was introduced to provide new and innovative payment products and services with regulatory certainty. The Act covers cryptocurrencies, or digital payment tokens as we would call it, as well as e-money, and domestic and cross-border fund transfers. Depending on its nature, Libra may be regulated under the PS Act and be subject to requirements on anti-money laundering and countering the financing of terrorism imposed under the MAS Act. As for personal data privacy, all entities operating in Singapore that collect personal data are subject to the requirements of the Personal Data Protection Act.”
“Digital banks with access to more wide-ranging data sources could adopt different credit risk assessment approaches to lend to underserved segments of the economy like young and micro enterprises. Further, the increased competition from digital banks is likely to spur existing banks to improve further on their own digital offerings. We are confident that the calibrated opening of banking to new digital players will benefit consumers and businesses, while preserving stability. It should ensure that Singapore's banking sector continues to be resilient, competitive and vibrant.”
“Digital full banks will also be required to participate in the deposit insurance scheme, which will cover an individual’s deposits of up to S$75,000. Third, to minimise risks to retail depositors, MAS will phase in the permissible activities of digital full banks via a two-stage process. A digital full bank will commence as a restricted digital bank to build up its business model and internal processes and gradually progress to become a full-fledged full bank. At the entry stage, a restricted bank will be subject to an aggregate deposit cap of S$50 million and an individual depositor cap of S$75,000. While digital wholesale banks are not subject to the two-stage process, MAS will impose appropriate activity restrictions in its initial years of operations to mitigate the risks of untested business models. MAS' regulatory and supervisory frameworks support the stability of the system as a whole and help preserve sound practices among individual banks. But MAS, like all financial regulators, cannot guarantee that individual banks will not fail, whether they are digital banks or otherwise. It hence remains important for consumers to be aware of the risks, and of the extent of protection that they will be accorded under the deposit insurance scheme if a bank fails. Mr Saktiandi Supaat asked about the impact of digital banks' operational costs on consumers. Digital banks are likely to operate with new technology stacks and may have more nimble solutions that enable lower operational costs than traditional banks. This can potentially benefit customers and the broader economy. New digital banks could potentially offer deposit accounts without imposing any minimum deposit amount or fall-below fees, as seen in the United Kingdom and Hong Kong.”
“The Monetary Authority of Singapore (MAS) has announced that it will be issuing up to five new digital bank licences, which will comprise up to two digital full bank licences that can access retail deposits, and up to three digital wholesale bank licences that will cater to small and medium enterprises and other non-retail segments. This is in addition to any digital banks that Singapore banking groups may establish under MAS' existing Internet banking framework introduced in 2000. The move will provide space in our banking system for innovative non-bank players and help spur further innovation in banking. In the same vein, MAS had announced in September last year that non-bank payment institutions will be granted direct access to the real-time payments network between banks, also known as Fast and Secure Transfer. MAS' operating terms for the new digital banks will be calibrated to maintain the trust and stability that are the hallmarks of Singapore's banking system. Let me elaborate. First, MAS will carefully evaluate the sustainability of applicants' business models. They must not engage in value-destructive competition to gain market share. MAS will monitor market dynamics and, where necessary, impose additional supervisory requirements or restrictions to deter such behaviour. The aim here is to avoid unsustainable banking practices and to preserve a level playing field among banks. Second, we will also preserve a level playing field in prudential requirements. The digital banks will have to meet the same capital and liquidity requirements as existing banks. They will be subject to the same consumer lending rules, such as limits on unsecured credit extended and loan-to-value ratios for mortgages.”
“Prematurely regulating these services for consumer protection may have a legitimising effect which can spur their acceptance and popularity, which we want to avoid. Hence, MAS will require DPT service providers to make appropriate disclosures, including stating clearly to their customers, both individuals and merchants, that the product purchased is a DPT and is not subject to safeguarding protection under the Act. MAS will be consulting the public on the proposed disclosure requirements in the coming months. In the meantime, MAS will continue to work with the media to highlight the risks of purchasing DPTs, including issuing advisories to warn the public of the risks. MAS is monitoring developments in this area closely to ensure that our regulatory framework remains relevant and effective.”
“In January this year, the Payment Services Act (the "Act") was passed in Parliament. It will strengthen the Monetary Authority of Singapore's (MAS') regulation of payment service providers, while facilitating innovation in this area. Firms that provide any payment service as a business in Singapore, including issuance of e-money and sale of digital payment tokens, will be regulated under the Act when it comes into effect later this year. The Act draws a distinction between e-money and digital payment tokens (DPTs), both of which can be used for payments. E-money is denominated in or pegged by the issuer to a national currency, whereas DPTs are not. A typical example of e-money is the value held in EZ-link cards. A major payment institution that issues such e-money will be required to safeguard customer monies, through measures, such as keeping them in a segregated bank account. So, customers here are not exposed to undue risks. Assoc Prof Walter Theseira is likely referring to DPTs rather than e-money. Firms that sell such DPTs must be licensed under the Act. MAS’ key regulatory intent with respect to DPTs is to address money laundering and terrorism financing risks which arise from the anonymity, speed and cross-border nature of DPT transactions. The Act does not provide customers of DPTs the same level of regulatory protection as for e-money. For example, the monies that they pay in exchange for DPTs are not required to be safeguarded in a segregated bank account. It is, therefore, important for members of the public to understand that by adopting DPTs as a form of payment, they are exposed to the risk of the DPTs losing their value. MAS has adopted this approach because DPT services are at a nascent stage of development and far from gaining mainstream adoption.”
“To give payment institutions adequate flexibility, MAS will expand the options for safeguarding measures available to Major Payment Institutions, beyond the current requirement of a bank guarantee. Under PSB, a guarantee given by a prescribed financial institution or segregation of customer monies in a bank account will be recognised as alternative safeguarding measures.3 These two key enhancements on the scope of e-money and options for safeguarding measures are similar to those in Australia, Hong Kong and the United Kingdom. To complement the measures in PSB and existing regulations on banking services, MAS has issued the E-Payments User Protection Guidelines (the Guidelines). The Guidelines essentially aim to enhance consumer confidence in e-payments. Financial institutions and e-payment users can look to the Guidelines for (a) their respective responsibilities for ensuring secure e-payment transactions; (b) how liability for unauthorised transactions ought to be apportioned; and (c) simplified error resolution processes when a user sends money to the wrong recipient. The Guidelines were finalised in September after MAS’ public consultation earlier this year. They will take effect in January next year. MAS will continue to engage both the industry and the public as the e-payments landscape evolves, so that we provide assurance to users without holding back innovations that enhance competition and efficiency in payment services.”
“Singaporeans have a growing range of e-payment options available to them. Besides PayNow, debit cards and credit cards, stored value facilities in the form of e-wallets are gaining popularity. Currently, the Monetary Authority of Singapore (MAS) requires entities which hold a stored value float in excess of S$30 million in these stored value facilities to safeguard the float with a bank licensed by MAS.1 Consumers will enjoy better protection of their funds held in stored value under the Payment Services Bill (PSB) that is being introduced in Parliament today. It contains two key enhancements. First, more types of stored value, or e-money, will be protected under PSB. E-money will include not just prepayment for goods and services, such as value stored in transport cards, but also any monetary value that is held for future payment transfers between individuals. This means that the value held in e-wallets that people use to pay merchants or pay one another will also be protected in future. Second, the threshold of e-money that will be protected under PSB will be lowered from S$30 million to S$5 million. This means that any e-money held by a payment institution will be wholly safeguarded if the average daily float exceeds S$5 million.2 If the average daily float does not exceed S$5 million, the safeguarding measures will not apply, provided the payment institution makes appropriate disclosures to consumers. We have sought to protect consumer interests while encouraging innovation in e-payments and ensuring Singapore's competitiveness as a payment services hub. This requires that our regulations are proportionate to the risks.”
“The Infocomm Media Development Authority (IMDA) has launched the e-Payment Learning Journey to help seniors learn how to make digital transactions. SkillsFuture Singapore has rolled out a SkillsFuture for Digital Workplace programme to reach out to members of the public. Banks are also reskilling branch customer service staff to become digital banking ambassadors to help customers enjoy the benefits of digital banking, including e-payments. In many constituencies, students are volunteering to help educate less digitally-savvy residents. Through the collective effort of the Government, industry players and the community, we can make e-payments work for all by bringing about greater convenience and benefits.”
“With PayNow, both individuals and companies can pay one another using their National Registration Identity Card (NRIC) numbers or phone numbers or Unique Entity Number as the case may be. And Singapore is the first country to adopt a standardised QR code for payments. Every merchant will just have one QR code for every e-payment scheme it decides to accept, and there will be no confusion on what QR code to scan. However, the benefits and convenience of e-payments are not fully felt yet. This is mainly because the solutions building on this infrastructure are just beginning to proliferate. The standardised SGQR is being rolled out progressively. And as more businesses sign up for PayNow Corporate, it will become easier for people to pay their bills or pay for goods and services or even hawker food by scanning a QR code using their mobile phone. The good thing about paying by QR code is that it does not need any payment accepting devices and the entry barrier is very low. There is also the alternative of contactless payments. Network for Electronic Transfers (NETS) and the major consumer banks are progressively replacing older NETS cards with newer NETS contactless bank cards in the coming months. A person just needs to wave his or her NETS contactless bank card to make a payment. This is actually the most convenient and intuitive e-payment mode for the elderly, who are already familiar with using their contactless concession cards for public transport. E-payments will, for sure, be more convenient over time, as the solutions to support it become more user-friendly, people gain familiarity with them, and they become pervasive. We are putting effort into educating the public to help everyone take advantage of e-payments.”
“Ms Sylvia Lim asked about the adverse impact of a move towards a cashless society. We do not aim to be a completely cashless society. Cash has been with us for centuries and will be around for quite some time more. Electronic payments are growing in ease and convenience, and more Singaporeans are taking to e-payments every day. Today, more than eight in 10 Singaporeans are using some form of e-payments. More than a million Singaporeans have signed on to PayNow. We want to help every segment in society to be able to use e-payments when it is convenient and beneficial to do so. For consumers, e-payments are now a lot more convenient than cash. Payment is as simple as waving a card, a smart phone or scanning a quick response (QR) code. More importantly, for the elderly, it means not having to carry cash for all their needs and does away with many trips to the automated teller machine (ATM). As it is, cash withdrawals at ATMs are coming down by S$300 million every year. For small businesses, accepting e-payments helps to reduce the time and effort in counting cash, reconciling money, and depositing the money in the banks. For a hawker, it means no need to handle cash as he prepares food, which also improves hygiene. It has been estimated that the cost of processing cash is about S$2 billion a year, or 0.5% of gross domestic product in 2015. This is the amount that businesses collectively, especially small businesses, can potentially save. The supporting infrastructure for e-payments has now been developed. We have implemented Fast and Secure Transfers (FAST) to facilitate real-time interbank account transfers.”
“In the case of the bank which the member asked about, as announced by the bank earlier, it has committed to retrain existing customer service officers at branches to take on these new roles, and does not expect them to be retrenched. Digital banking models will become more ubiquitous in the years ahead. This is a trend not just in banking, but across industries. With close collaborations among the Government, unions and employers, we will do our best to educate and help consumers, and to retrain workers, so that Singaporeans can ride the wave of the digital revolution.”
“Technology is changing the way that financial services are being provided and used. Consumers in Singapore, as in other countries, are increasingly making use of their smartphones for electronic payments and other banking transactions. This reduces the demand for physical bank branches, and for bank tellers. However, this also means new jobs are created in areas, such as service ambassadors, software development for banking apps, data analytics for consumer insights, and cybersecurity. The opportunities presented by technology are immense. But the upside is limited by how much we can retrain and reskill employees to take on new roles, and to educate and help consumers to embrace technology. On the first1, the approach taken by the Monetary Authority of Singapore (MAS) is to work closely with the banks and unions to pre-emptively reskill and redeploy affected employees into new job roles. Specifically for jobs in consumer banking, the National Trades Union Congress (NTUC), MAS, Workforce Singapore, the Institute of Banking and Finance (IBF) and the banks have put together a professional conversion programme to reskill bank tellers and customer servicing staff to take on new roles in relationship management, quality assurance, process redesign, data analytics and digital marketing. Through the programme, the major consumer banks have committed to retrain 3,500 employees over the next three years under the Professional Conversion Programme (PCP). To date, more than 800 employees have commenced training, of which over 450 have successfully completed their training and have been deployed into new roles. PCPs are in the works for three other areas in banking, namely, operations, technology and wealth management.”
“More Professional Conversion Programmes will be developed in various areas of specialisation, geared to emerging job roles. MAS will work with the Institute of Banking and Finance and tripartite partners to set up a dedicated career centre to provide job matching and placement assistance. MAS will continue to enhance its financial regulatory framework to help ensure stability amidst volatile global financial markets as well as new and emerging risks. We will strengthen cyber resilience across the industry and leverage technology to enhance our supervision and enforcement capabilities. MAS has implemented a 24/7 surveillance system to monitor cyber threats in the financial industry and will strengthen capabilities in cyber intelligence and enhance platforms for information exchange on cyber incidents. MAS will increasingly employ data analytics to sharpen its surveillance of risks in major financial institutions. We will employ advanced techniques, such as network analysis and text and voice analytics, to support our investigation and enforcement actions. Beyond setting rules, MAS is working to foster a culture that motivates ethical behaviour and responsible risk-taking in the financial industry. Culture and conduct weaknesses underlie many cases of misconduct, poor governance and excessive risk-taking. MAS will propose guidelines to raise standards of conduct across the financial industry and step up supervisory reviews relating to risk governance and culture in financial institutions.”
“We will support industry efforts to increase insurance penetration in the region and catalyse effective disaster risk financing solutions. We will also strengthen our capital market infrastructure to boost liquidity and price discovery in the foreign exchange, debt and equity markets. MAS will anchor deeper asset management capabilities in Singapore and implement the new Singapore Variable Capital Company structure to position Singapore as a global hub for fund management and domiciliation. MAS will work with the industry to enhance connectivity with our key regional markets, including China, India and the Association of Southeast Asian Nations (ASEAN). With Singapore chairing ASEAN in 2018, MAS will work with fellow ASEAN member states and industry partners to pursue initiatives to achieve sustainable growth, boost economic resilience and foster innovation in the region. MAS is also exploring innovative trade finance connectivity and cross-border real-time payment linkages with key partners in the region. MAS has been at the forefront globally in the use of regulatory sandboxes to encourage experimentation and will enhance this approach. We will strengthen the payments infrastructure to enable real-time, convenient electronic payment transfers. MAS worked with the industry to roll out PayNow, enabling people to make inter-bank transfers conveniently and securely using just their mobile number or National Registration Identity Card (NRIC). PayNow will be extended to allow businesses to pay one another and receive payments from customers seamlessly for efficiency gains and cost reduction. MAS will work with all stakeholders to help equip financial sector professionals with specialist skills and the expertise to leverage technology and data.”
“The Singapore economy is restructuring towards higher value-added activities while adjusting to a more moderate rate of economic growth in line with slowing labour force growth. The Monetary Authority of Singapore’s (MAS') monetary policy will facilitate this economic transition, by ensuring that consumer price inflation is kept low and providing a conducive macroeconomic environment for innovation and investment. The financial sector is integral to Singapore’s growth as a competitive economy, a globally connected city, and a Smart Nation. As an integrated regulator and supervisor of the financial sector, MAS will safeguard the stability of Singapore’s financial system while ensuring that our regulatory frameworks remain supportive of innovation. MAS will work with the financial industry to advance financial technology (FinTech) innovations, including those aimed at more convenient and lower-cost services for consumers, support Asia’s development while being a leading hub in global finance, and serving the growth of the Singapore economy. The Financial Services Industry Transformation Map (ITM) sets out strategies to grow the financial services sector by 4.3% per annum and create annually 3,000 net jobs in financial services and an additional 1,000 in the FinTech sector from 2016 to 2020. The ITM comprises three broad thrusts – leveraging global and regional opportunities, embracing innovation and deepening the talent pool. Asia is expected to remain economically the most dynamic region in the world, with demand for financial services growing robustly with growing infrastructural needs and rising affluence. MAS will implement strategies to facilitate the growth of infrastructure financing, trade financing and enterprise financing to support the region’s development.”
“MAS has instructed NETS to appoint an independent consultant to determine how controls could be enhanced to minimise the chances of human errors and to mitigate the consequences if an error does occur. In the interim, NETS has scheduled all system administrator access to off-peak hours and tightened controls over system administrator IDs. Together, this should prevent a similar incident from happening. MAS will closely monitor NETS' remediation of the identified gaps and issue supervisory directives to NETS as needed. Separately, recognising that no payment system is infallible, it is important to ensure that alternative payment methods are in place. During the NETS EFTPOS incident, many affected consumers were able to switch to other electronic payment instruments, such as debit or credit cards, as well as stored value facilities, such as transport cards and e-wallets.”
“Following the NETS Electronic Funds Transfer at Point Of Sale (NETS EFTPOS) outage, NETS has conducted their investigations. The investigations have established that the outage happened because while preparing for a planned system change activity, a system administrator inadvertently executed a command that abruptly terminated a communications module which is required for connectivity to the banks. In other words, it is due to a human error. MAS takes very seriously the reliability of our payments infrastructure as it forms a critical part of our financial system and economy. Payment systems that are considered important for financial stability or for public confidence are designated under the Payment Systems (Oversight) Act as Designated Payment Systems (DPS). Examples include Singapore Dollar Cheque Clearing, Inter-bank GIRO, Fast And Secure Transfers (FAST) and the NETS EFTPOS. All DPS operators have to adhere to MAS’ requirements on recoverability and reliability. DPS operators have to ensure that the systems are able to resume operations within four hours following any disruption. DPS operators are also restricted to a maximum downtime of no more than four hours across a period of 12 months. In this case, NETS EFTPOS has not breached our regulatory standards. NETS was prompt in notifying the public about the outage, providing updates, and most EFTPOS' services were recovered in about one-and-a-half hours. NETS EFTPOS has not experienced a similar outage since being designated as a DPS in 2010. Notwithstanding, we need to learn from this episode and ensure that similar incidences will not happen in future.”
“For example, MAS partnered local polytechnics in the PolyFinTech 100 initiative and has equipped more than 1,500 students with skillsets relevant to FinTech. However, growing our own timber takes time. While we build up our local pipeline in these specialist skills, we need to anchor strong international capabilities and talent in Singapore to complement our existing local professionals. But such talent is scarce even internationally, and we must ensure an attractive environment for them in Singapore. MAS is working with the Ministry of Manpower and WSG to pilot the Capability Transfer Programme to bring in expert professionals in these areas and facilitate the transfer of capabilities to our local professionals. We will continue to take a holistic approach, doing all we can to develop our local pipeline of talent, and tapping on international expertise and talents.”
“Data analytics, machine learning and artificial intelligence (AI) are some of the skills in growing demand in the financial sector. There is also nascent growth in demand for quantum computing skills. As a global financial centre, it is important that financial institutions (FIs) in Singapore build capacity and competencies in these areas, and they are doing so. More than 20 FIs have set up innovation labs or research centres in Singapore specialising in areas, such as data science and machine learning. In building up capacity, shortage of talent remains the key bottleneck. Equipping our local professionals with deep capabilities in these new areas is, therefore, a priority. To do this, the Monetary Authority of Singapore (MAS) is driving a multi-prong approach. First, to encourage FIs to upgrade the skills of their staff in data analytics, MAS launched a $27 million AI and Data Analytics Grant scheme last year. MAS has seen keen interest from the industry since the introduction of the scheme. Second, the Institute of Banking and Finance is offering professionals new learning modules on data science, human-centric design, agile thinking and cybersecurity awareness. The Infocomm Media Development Authority, SkillsFuture Singapore and Workforce Singapore (WSG) under the TechSkills Accelerator initiative are also expanding opportunities for skills upgrading. Third, MAS is working closely with the Institutes of Higher Learning to scale up efforts to build the talent pipeline in emerging technologies. This includes more courses in FinTech specialisation, and also more modular, industry-relevant courses in emerging technologies.”
“Mr Chairman, sorry, I had meant to record my vote as "Yes".”
“The Monetary Authority of Singapore (MAS) takes seriously the security of electronic payment transactions. Encryption is one of the safeguards against cyber threats and fraud concerning e-payments, but not the only one needed. The specific measures that payment service providers must put in place depend on the risks associated with different e-payment modes, and they include: (a) strong authentication, such as the use of biometrics or dynamic passcodes, to verify customers' identity and to authorise electronic payment transactions; (b) encryption to protect sensitive information against unauthorised access during data storage and transmission; (c) fraud monitoring to facilitate timely detection and blocking of suspicious transactions; and (d) transaction notification via short message service or email to alert customers when transactions exceed a specific threshold or when unusual payment behaviours are observed. The contingency plans that have to be put in place for a network breakdown or power failure will depend on how each system is designed and the criticality of the service provided. Financial institutions (FIs) are required by MAS to have plans, such as back-up power supply or an alternate telecommunications service provider, to ensure continuity of service during disruptions. MAS conducts periodic reviews of FIs to assess the adequacy of controls to manage technology and business continuity risks.”
“Singapore Savings Bonds (SSBs) were introduced to provide Singaporeans with a safe and flexible way to invest for the long term. For those wanting a low-risk retirement savings instrument, SSBs are a good alternative to cash held in savings accounts. As of 1 February 2018, more than 55,000 individuals hold over $1.8 billion of SSBs. Given the objectives of SSBs, we intend to allow the use of Supplementary Retirement Scheme (SRS) monies for the purchase of these bonds. It will enhance the range of low-cost products available on the SRS platform. However, the allocation mechanism for SSBs will continue to ensure that small savers amongst the public get preference in the event of over-subscription. The Monetary Authority of Singapore is making information technology system changes to bring this about and will make an announcement when it is ready.”
“But equally, we will stay alert to new risks.”
“But people must also beware of the marketing pitch by operators encouraging them to put more money into cryptocurrencies when prices fall, in the hope of making money if prices surge again. It is, in fact, an inherently unstable, high-risk game. MAS has issued advisories to warn members of the public of the risks of investing in cryptocurrencies. We will continue to work with the media to highlight these risks. When dealing with entities located outside Singapore, there is also greater risk of fraud, as it is more difficult to verify their authenticity or credibility. For now, the nature and scale of cryptocurrency trading in Singapore does not pose risks to the safety and integrity of our financial system. Its use in making payments is small, and trading volumes of cryptocurrencies in Singapore are also not high – they are much smaller than in countries like the United States (US), Japan and South Korea. Further, connections between cryptocurrency trading and Singapore’s financial system are also not significant at present. Singapore’s banking system does not have any significant exposure to global and local entities dealing in cryptocurrencies. We, hence, do not have broader, systemic risk concerns with regard to cryptocurrencies. That said, the cryptocurrency space is rapidly changing and regulatory thinking internationally is still evolving, including in the US, the United Kingdom and Europe. MAS is watching these developments closely and is part of the regulatory discussions internationally on how the risks posed by cryptocurrencies are best addressed. We will continue to encourage experiments in the blockchain space that may involve the use of cryptocurrencies, because some of these innovations could turn out to be economically or socially useful.”
“In fact, today, a significant portion of bitcoin transactions globally is suspected to be for illicit purposes. MAS will be imposing anti-money laundering and countering the financing of terrorism (AML/CFT) requirements on the intermediaries that buy, sell or exchange virtual currencies. We set out this AML/CFT regulatory framework for virtual currency intermediaries last year as part of our public consultation on the proposed Payment Services Bill. In the meantime, there are general safeguards that are in place against AML/CFT risks. Our enforcement agencies are on the lookout for illegal activities related to cryptocurrency trading. Everyone is required under the law to report suspicious transactions which they come across in the course of their trade, profession, business or employment to the Suspicious Transaction Reporting Office (STRO) in the Commercial Affairs Department (CAD). All suspicious transaction reports, including those involving cryptocurrencies and digital tokens which are commonly known as initial coin offerings, are analysed by STRO. Where there are indications of an offence, STRO will refer the matter to the enforcement agencies, such as the Inland Revenue Authority of Singapore for possible tax crimes, and the CAD for possible money laundering. The second priority is to help people be aware of the risks of putting their money in cryptocurrencies. Cryptocurrencies, such as bitcoins, are a very high-risk investment, subject to sharp swings in prices driven by speculation. They are also mainly traded on opaque markets, with no regulatory protection for investors. The big fall in bitcoin prices in recent weeks illustrates the risk.”
“Cryptocurrencies are an experiment. The number and different forms of cryptocurrencies are growing internationally. It is too early to say if they will succeed. If some do succeed, their full implications will also not be known for some time. The Monetary Authority of Singapore (MAS) has been closely studying these developments and the potential risks they pose. As of now, there is no strong case to ban cryptocurrency trading here. But we will be subjecting those involved as intermediaries to our anti-money laundering regulations. And we will keep highlighting to Singaporeans that they could lose their shirts when they invest money in cryptocurrencies. There are two main uses of cryptocurrencies today. The first is as a means of payment. The second, which has become far more prominent, is where cryptocurrencies are assets in their own right. People are trading in them in the hope of making a profit. In both these uses, the underlying technologies, in the form of blockchains or distributed ledgers, may prove to have potentially useful applications in facilitating payments and trade settlements. MAS has, for this reason, been involved in and encouraging a number of blockchain experiments with the financial industry. However, there are significant risks in the use of cryptocurrencies. There is a clear risk of money laundering. And there is a clear risk that people will lose a lot of their money by investing in cryptocurrencies. We are addressing both these risks. First, money laundering and terrorist financing risks. Cryptocurrency transactions are anonymous. Given also the decentralised systems behind cryptocurrency payments, and the speed at which they can be performed, they can be used to conceal the illicit movement of funds.”
“This includes rejecting suspicious customers, closely monitoring fund flows, and reporting any suspicious transactions. As money laundering schemes are increasingly complex and cross-border in nature, international cooperation is critical in identifying, disrupting and deterring illicit activities. MAS and Singapore’s law enforcement agencies have been exchanging information and working with their foreign counterparts to investigate suspicious schemes.”
“Ms Sylvia Lim asked about an article published by the Organised Crime and Corruption Reporting Project (OCCRP), an international non-governmental organisation (NGO) consortium, on what it dubbed "the Russian Laundromat". The article charged that US$20.8 billion from 19 Russian banks was laundered between 2011 and 2014, using banks in 96 countries. The article stated that US$77 million, or 0.4%, of the allegedly laundered monies had flowed into the accounts held in banks in Singapore. It also stated that US$927 million had flowed into banks in Hong Kong, US$916 million into mainland China, and US$608 million into Switzerland. Singapore is a global business and financial centre that sees substantial financial flows daily into and out of the country. To put the total US$77 million that was allegedly laundered through Singapore into perspective, the banking system saw US$357 billion of financial flows in total over the same period. The Monetary Authority of Singapore (MAS) nevertheless takes a serious view of any alleged money laundering through Singapore, small or large. MAS’ probe into the specific OCCRP allegations has not been completed. It has thus far not surfaced evidence of major lapses in anti-money laundering (AML) controls at banks in Singapore. Where the banks detected suspicious activities relating to the flows in question, they had taken appropriate risk-mitigating measures. To reiterate, we are constantly vigilant against the threat of money laundering. That is why we have put in place a robust Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime. Financial institutions are required to conduct, amongst other things, adequate customer due diligence.”
“The basic idea is for our policies and rules to foster innovation while mitigating risks, including from ML/TF.”
“Ms Foo asked how the Monetary Authority of Singapore (MAS) and law enforcement agencies can enforce anti-money laundering and counter-financing of terrorism (AML/CFT) laws on bitcoin currency transactions. When it comes to money laundering or terrorism financing (ML/TF), Singapore's laws do not make any distinction between transactions effected using fiat currency, virtual currency or other novel ways of transmitting value. Hence, MAS' AML/CFT requirements apply to all activities of financial institutions, whether conducted in fiat or virtual currencies. The Commercial Affairs Department (CAD) is empowered to investigate and prosecute all manner of ML/TF cases. Everyone is required under the law to report suspicious transactions which they come across in the course of their trade, profession, business or employment, to the Suspicious Transaction Reporting Office in CAD. MAS recognises that virtual currency transactions, given their anonymous nature, may be used to conceal illicit movement of funds. Further, the absence of a central clearing house for such transactions makes enforcement challenging, as it is difficult to identify the parties upon which enforcement orders can be applied. However, at some stage, fiat currency will have to be exchanged for virtual currency, or vice versa, at intermediaries that buy, sell or exchange virtual currency. MAS, therefore, intends to impose AML/CFT requirements on such intermediaries. MAS is currently conducting public consultation on a proposed Payment Services Bill that will empower us to do this. The virtual currency space is still evolving. Like most innovations, it presents new opportunities as well as risks. MAS is closely watching these developments and studying the approaches taken in other jurisdictions.”
“0 system, will be based on newer and more efficient technology, including cardless payments, to further improve motorists' experience.”
“Mr Ong's question refers to the CashCard issued by Network for Electronic Transfers (NETS), which can be used by motorists for Electronic Road Pricing (ERP) and car park payments. However, there are also other payment options. The existing NETS CashCard is a physical stored value facility that has been in use since 1995. The stored value in the CashCard can be topped up at NETS top-up machines, any local bank automated teller machine (ATM), and at terminals at some convenience store chains3. This existing CashCard cannot be topped up through mobile apps or Internet banking, such as through PayNow, as it requires a physical contact point for topping up. Besides the NETS CashCard, however, there are other options for motorists and those using public transit, namely, the ez-link card and NETS FlashPay card. These cards are based on the Contactless e-Purse Application Standard (CEPAS). There are a few convenient ways to top up CEPAS cards, such as through automatic top-ups via General Interbank Recurring Order (GIRO), credit and debit cards or via smartphones4, which remove the hassle of performing manual top-ups. Motorists can also sign up for electronic payment of ERP fees via EZ-Pay or NETS CashCard. These latter payment methods allow motorists to pay for ERP charges directly with their credit or debit cards. As for car parks, Mr Ong is right to say that the CashCard is the only payment card that can be accepted in all car parks. Most car parks are already on the Electronic Payment System and accept both the CashCard and CEPAS cards. However, some of the older car parks cannot accept CEPAS cards but these are a declining minority, as car park operators upgrade their systems. Upcoming developments, such as the Land Transport Authority's next generation ERP 2.”
“Consumers should consider their protection needs, how much coverage they require, and whether they can afford the premiums in the long term.”
“MAS will not hesitate to take regulatory action against insurers or agents who are found to have engaged in improper switching. A second concern with insurers offering attractive financial incentives to attract agents is that consumers may, in effect, bear the cost of such financial incentives. MAS has, therefore, made it clear to the industry that financial incentives offered by an insurer to recruit agents from another firm cannot be charged to the insurance funds as an expense and must be borne by the insurer’s shareholders. MAS will also check that insurance premiums are not raised to recover costs incurred from such financial incentives, although we expect that competition in the market will reduce the risk of this happening. But this should not be just about the powers that MAS has to supervise the industry. It is in the interests of insurance companies collectively to work together to uphold proper standards. As the industry association which promotes best practices among life insurers in Singapore, the Life Insurance Association of Singapore (LIA) has signalled its commitment to getting its members to adopt responsible recruitment practices to safeguard the interests of consumers. MAS is engaging LIA on the association's proposal to develop guidelines to govern recruitment practices within the industry as well as to address the risks of improper switching following mass movement of agents from one firm to another. Finally, we have been working to educate and empower consumers, so they can make informed financial decisions. Through MoneySENSE, the national financial education programme, MAS works with industry and community partners to help consumers understand the factors they should consider when buying an insurance policy.”
“The Monetary Authority of Singapore (MAS) takes the issue raised by Ms Foo Mee Har seriously. When an insurer offers attractive financial incentives to attract agents from other insurers, the incentives usually depend on sales targets that these agents have to meet. This poses the risk that the agents may encourage their customers who bought policies from the previous insurer to surrender these policies and buy new ones from the new insurer. This is known in the industry as a "switch" and may not always be in the best interests of consumers. For example, they may forgo policy charges or fees they had already paid during the initial years of their existing policies or be subject to exclusions for health conditions which have developed since they purchased their existing policies. MAS has, therefore, put in place a few safeguards to protect the interests of consumers. MAS requires the supervisor of the agents to validate that each and every recommended switch is appropriate, taking into account the customer's objectives, financial situation and needs. In the case of vulnerable customers, the supervisor is required to call these customers to check that they understand the policies they have purchased before the policies are issued. In the event that a customer changes his mind about buying a policy, there is a free-look period of 14 days where the sale can be cancelled and the insurer will refund all premiums paid (less medical and other expenses that had already been incurred). As an additional safeguard, MAS requires a party independent of the sales process to perform sample checks on sales transactions. MAS' supervisory activities also cover insurers' compliance with these requirements.”
“But recognising that the risks of investing in virtual currencies are significant, MAS and the Commercial Affairs Department have published an advisory alerting consumers to these risks and are working together to raise public awareness of potential scams.”
“First, virtual currencies, due to the anonymous nature of the transactions, can be exploited for money laundering and terrorism financing risks. MAS is working on a new payment services regulatory framework that will address these risks. A second example is fundraising. Virtual currencies can go beyond being a means of payment and evolve into "second generation" tokens representing benefits, such as ownership in assets, like a share or bond certificate. The sale of such "second generation" tokens to raise funds is commonly known as an initial coin offering (ICO). A number of ICOs have been structured out of Singapore in recent months. These are financial activities that fall under MAS' regulatory ambit. Hence, on 1 August 2017, MAS clarified that if a token is structured in the form of securities, the ICO must comply with existing securities laws aimed at safeguarding investors' interest. So, the requirements of having to register a prospectus, obtain intermediary or exchange operator licences will apply. These intermediaries must also comply with existing rules on anti-money laundering and countering terrorism financing. MAS has not issued new legislation specifically for ICOs. We will continue to monitor the developments of such offers and consider more targeted legislation if necessary. Some consumers may be attracted to invest in virtual currencies and digital tokens due to their recent exponential rise in value. However, as a financial regulator, our focus is securitised interests in assets, such as shares in a company. MAS does not and cannot regulate all products that people put their money in thinking that they will appreciate in value.”
“We are familiar with money, that is, notes and coins, as a medium of exchange – an intermediary instrument used to facilitate transactions. I make a television (TV) set, sell it for money, and then use it to buy a pair of shoes. Money becomes a medium of exchange because all of us put our trust in its reliability. The Central Bank issues these notes and coins, and makes them legal tender. Legal tender means that the medium of exchange is recognised by law to be valid for meeting a financial obligation. With advancement in technology, new virtual means of payment have emerged, such as cryptocurrency, which is a form of digital token secured by cryptography. They are not legal tender. But some people put their trust in them and use them as a means of payment. Hence, Bitcoin and Ether have been adopted by people in some communities to pay one another or to pay for goods and services. The Monetary Authority of Singapore (MAS) has been monitoring the use of such virtual currencies. Their use is not prevalent in Singapore. About 20 Singapore retailers like restaurants and online shops currently accept Bitcoins3. This is unlike places like Japan, where the use is more popular. Likewise, in the Singapore financial industry, use of virtual currencies as a mode of payment is not significant. Trading is generally for speculative investment purposes, and the volume is low4 compared to other countries, such as the United States, Japan and Hong Kong. Similar to most jurisdictions, MAS does not regulate such virtual currencies per se. However, we regulate the activities that surround them if those activities fall within our more general ambit as financial regulator. Let me give two examples.”
“But recognising that the risks of investing in virtual currencies are significant, MAS and the Commercial Affairs Department have published an advisory alerting consumers to these risks and are working together to raise public awareness of potential scams.”
“First, virtual currencies, due to the anonymous nature of the transactions, can be exploited for money laundering and terrorism financing risks. MAS is working on a new payment services regulatory framework that will address these risks. A second example is fundraising. Virtual currencies can go beyond being a means of payment and evolve into "second generation" tokens representing benefits, such as ownership in assets, like a share or bond certificate. The sale of such "second generation" tokens to raise funds is commonly known as an initial coin offering, or ICO. A number of ICOs have been structured out of Singapore in recent months. These are financial activities that fall under MAS’ regulatory ambit. Hence, on 1 August 2017, MAS clarified that if a token is structured in the form of securities, the ICO must comply with existing securities laws aimed at safeguarding investors’ interest. So, the requirements of having to register a prospectus, obtain intermediary or exchange operator licences, will apply. These intermediaries must also comply with existing rules on anti-money laundering and countering terrorism financing. MAS has not issued new legislation specifically for ICOs. We will continue to monitor the developments of such offers and consider more targeted legislation if necessary. Some consumers may be attracted to invest in virtual currencies and digital tokens due to their recent exponential rise in value. However, as a financial regulator, our focus is securitised interests in assets, such as shares in a company. MAS does not and cannot regulate all products that people put their money in, thinking that they will appreciate in value.”
“We are familiar with money, that is, notes and coins, as a medium of exchange, an intermediary instrument used to facilitate transactions. I make a television (TV), sell it for money, and then use it to buy a pair of shoes. Money becomes a medium of exchange because all of us put our trust in its reliability. The Central Bank issues these notes and coins and makes them legal tender. Legal tender means that the medium of exchange is recognised by law to be valid for meeting a financial obligation. With advancement in technology, new virtual means of payment have emerged, such as cryptocurrency, which is a form of digital token secured by cryptography. They are not legal tender. But some people put their trust in them and use them as a means of payment. Hence, Bitcoin and Ether have been adopted by people in some communities to pay one another or to pay for goods and services. The Monetary Authority of Singapore (MAS) has been monitoring the use of such virtual currencies. Their use is not prevalent in Singapore; about 20 Singapore retailers like restaurants and online shops currently accept Bitcoins. This is unlike places like Japan, where the use is more popular. Likewise, in the Singapore financial industry, use of virtual currencies as a mode of payment is not significant. Trading is generally for speculative investment purposes, and the volume is low compared to other countries, such as the United States (US), Japan and Hong Kong. Similar to most jurisdictions, MAS does not regulate such virtual currencies per se. However, we regulate the activities that surround them if those activities fall within our more general ambit as financial regulator. Let me give two examples.”
“PayNow will use the SGQR for e-payment transactions, which means there is no need for any point-of-sale terminals or any rental fees involved for this equipment. NETS has recently announced plans to roll out NETS Pay, which offers a wide range of solutions for merchants to receive payments from consumers at an affordable rate. NETS Pay will add to the range of low-cost e-payment solutions available in the market. The Government has also been engaging various stakeholders to raise awareness of the available e-payment solutions and, hence, help drive further adoption. Businesses need to be aware of the advantages of various e-payment solutions and identify a solution that would best suit their needs. As of now, our focus is to ensure these low-cost options are available and spur competition to keep cost affordable to small businesses. It will minimally be cheaper than having to handle cash. As to whether we should regulate the fees for e-payment, we are studying the experience of other jurisdictions and will study them carefully.”
“Assoc Prof Daniel Goh asked if the Monetary Authority of Singapore (MAS) will regulate transaction fees and platform rental fees charged by e-payment platform providers, so as to accelerate the adoption of e-payments. Transaction fees vary across different types of payments, whether it is cash, cheques, debit cards, credit cards, Network for Electronic Transfers (NETS), stored value cards, e-wallets or PayNow. The cost of using cash or cheques is actually relatively high, and this is, in fact, one of the motivations for promoting e-payment. We are, in fact, taking a multi-pronged approach to promote e-payment. This includes: (a) putting in place infrastructure, such as Fast And Secure Transfers (FAST), to ensure an open architecture; (b) ensuring the interface is convenient and easy to use; (c) stipulating standards when necessary, such as the impending common quick response (QR) code standard for Singapore (SGQR), so that a merchant just needs one QR code to receive all types of e-payment; (d) promoting adoption of e-payment amongst merchants and consumers; and (e) keeping cost of e-payment as low as possible, which is what Assoc Prof Daniel Goh has asked about. To keep fees at a reasonable level, it is important to ensure there is enough competition. Hence, we have always insisted on an open architecture system so that e-payment will not be monopolised over time by one dominant player. The Monetary Authority of Singapore (MAS) worked with the banking industry to develop PayNow. Today, it enables convenient and safe peer-to-peer transactions, and we are now working to extend PayNow to businesses as a cheaper way to make e-payments.”