Financial Services and Markets Bill

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill consolidates and increases MAS' powers. In doing so, it empowers MAS to take a comprehensive sector-wide approach to risk management and enforcement action. 

I thank MAS for holding a public consultation in preparation for this Bill in January 2020 and for incorporating some of the feedback into the Bill. I have three points of clarification to raise.

My first point is on the checks and balances against MAS' issuance of prohibition orders, or POs. The Bill allows MAS to issue POs to persons based on MAS' fit and proper criteria. POs are extremely powerful. They restrict things as significant as shareholdings and as granular as business activity. They can end livelihoods and shut down companies. Given the drastic nature of this enforcement action, it seems fair that MAS should at least explain the basis of such actions.

My question is this: why does the Bill not require MAS to publish an explanation for its imposition of POs? Clause 11 requires MAS to only give notice for and publish the PO. But it is entirely optional for MAS to explain its decision. In my view, MAS should be required to explain the rationale of its decision. It should at least state the category of fit and proper test criteria that the person has failed. To begin, it seems only fair that we tell people why they are being punished. In addition, it would strengthen the mechanisms of accountability.

The Bill imposes two checks on MAS' issuance of POs. First, MAS is obligated to hear out the subject of the PO. Second, the person can write an appeal to the Minister for Finance. In both cases, the process of justice would be strengthened if the person knows what they are being punished for. For example, if MAS explains that its PO is being issued due to a person's lack of financial soundness rather than due to dishonesty, that person could then present relevant evidence to the contrary.

My second point is also about accountability in the issuance of POs. Appeals are one key accountability mechanism for POs. The Bill requires that the Minister considers the written report of the appeal advisory committee when deciding on these appeals. Can the Minister share why the committee's written report is not required to be published for the public? 

The committee has broad disruptive powers. They can summon anyone to give evidence on oath and to produce any documents deemed necessary. The committee's work thus affects not only the person issued the PO but also potentially a whole array of other people. Given the extensive impact of the committee's work, it is not clear why their report should be shrouded in secrecy. Publication of their written report would provide important context on the Minister's decision and ensure that these inquiries are held in a professional and appropriate way.

My final point is on notices provided to financial institutions for POs issued and varied. MAS has stated that it will directly notify a person who is subject to the PO as well as the person's employer of the PO issued. Can the Minister clarify whether MAS will also notify the individual's employer if the individual's PO is later varied? 

In addition, how will MAS help ensure that financial institutions are notified in a timely manner when their service providers are issued a PO or have their PO varied? After all, financial institutions typically conduct due diligence checks of their service providers only at specific junctures. Until they conduct such checks, they may not know that their service providers have been issued POs or have had their POs varied. It will be helpful to financial institutions if MAS can ensure PO issuances and variations are promptly communicated to financial institutions.

Sir, notwithstanding these clarifications, I stand in support of the Bill.

Mr Alvin Tan (The Minister of State for Trade and Industry): Mr Speaker, Sir, I thank the Members who have shared their views on the Bill and for their support of its introduction. Members' comments and queries can be categorised into a few buckets and I will address them in turn.

Mr Don Wee, Mr Saktiandi Supaat, Mr Yip Hon Weng and Ms Janet Ang have raised questions on the scope of regulation of digital assets. Let me deal with these collectively.  

MAS adopts a technology-neutral regulatory approach that focuses on the nature of the activity and the risks involved. VASPs, or what we term as digital token service providers in Singapore, DT service providers, are therefore regulated based on the type of activity they conduct.

Correspondingly, where DT service providers deal in digital payment tokens, this could be a payment activity under the Payment Services Act. Where they deal in or provide financial advice on capital markets products, their activity would fall under the Securities and Futures Act (SFA) or the Financial Advisers Act (FAA).

These Acts are periodically reviewed to ensure that they remain fit-for-purpose and are in line with international norms. 

In most cases, DT service providers that incorporate or establish a place of business in Singapore do so to provide DT services in Singapore. They will be subject to the laws in Singapore. Similarly, foreign DT service providers that provide DT services in Singapore will also be subject to the laws in Singapore. 

Some of these businesses may also provide services in foreign markets and they would be expected to adhere to the rules that apply in the foreign markets where they operate. For instance, DT service providers that provide services in relation to capital markets products in foreign countries would be subject to the rules imposed by the capital market regulators in the foreign countries concerned.

MAS has cooperation arrangements with foreign regulators to ensure effective cross-border regulation. This approach is similar to the regulation of traditional capital markets products that are not tokenised. It is generally not necessary to impose additional requirements on a business that is created and operating in Singapore if it does not provide services in Singapore. 

Nonetheless, we recognise that there may be reputational risks to Singapore in respect of DT service providers created in Singapore but that provide DT services overseas – for instance, those involved in digital payment token or cryptocurrency activities, if they are found to facilitate money laundering activities.

It is for this reason that the new rules, which primarily relate to anti-money laundering and counter-terrorism financing requirements, are proposed in the FSM Bill. I would highlight that the FSM Bill also contains provisions that enable MAS to impose requirements across the financial sector to address money laundering and terrorism financing (ML/TF) risks.

Mr Saktiandi Supaat asked whether MAS has considered carving out DT service providers from licensing and regulation under the FSM Bill if they are already regulated in another jurisdiction which enforces the FATF standards. Ms Janet Ang raised a similar question as well. There may be differences in the implementation and enforcement of these standards even as countries accept and adopt the enhanced FATF standards. DT service providers created in Singapore but providing its services outside of Singapore still pose reputational risks to Singapore. Hence, regulating this group of DT service providers under the FSM Bill for ML/TF risks will mitigate these reputational risks.  

Nonetheless, MAS is aware that there will continue to be people who choose to take these risks. MAS is monitoring the adoption of digital payment tokens in Singapore and will consider if user protection measures are needed. However, even with user protection measures, it is just not possible for laws to protect against investment losses, especially for consumers who choose to seek investment opportunities overseas or online.

Thus, consumer education and awareness remain key, as the best defence is a discerning public. MAS and relevant Government agencies have been and will continue to raise public awareness, including advising the public to not deal or invest with unregulated entities or investment products. 

On Mr Louis Chua's suggestions relating to marketing activities of digital payment token service providers, MAS has issued guidelines in January this year outlining that digital payment token service providers should not market their services in public areas in Singapore, or engage third parties, such as social media influencers, to do so. They can continue, however, to promote their services on their own corporate website, mobile applications, or official social media accounts. However, they must not portray the trading in digital payment tokens in a manner that trivialises the associated risks. And this complements our continued consumer education efforts I mentioned earlier.

Mr Derrick Goh and Mr Yip Hon Weng asked if MAS will consider regulating non-fungible tokens, or NFTs, given its rising popularity and its susceptibility as a vehicle for money laundering. NFTs, in its current form, are often digital representation of arts and other collectibles, which are not financial products subject to MAS regulation. As I have earlier mentioned, the FSM Bill will cover digital tokens that are either one, a digital payment token; or two, a digital representation of a capital markets product. So, any digital token that meets the characteristics of a digital payment token or a capital markets product could be subjected to regulation by the MAS. 

In response to Mr Don Wee's point on the need for agencies to better identify criminal activity in this space, MAS has increased surveillance of the digital tokens sector, to identify suspicious networks and higher risk activities for further supervision, and they have established clear procedures with the Singapore Police Force (SPF) for collaborative enforcement action. All DT service providers must monitor transactions and file suspicious transactions reports with the Suspicious Transaction Reporting Office.

To more effectively combat cryptocurrency scams and crimes, the SPF established the Cryptocurrency Task Force in 2018 to monitor the cryptocurrency landscape and also to develop and improve operational procedures in the investigation and seizing of cryptocurrencies, and establish working relationships with overseas law enforcement agencies, industry professionals and academic experts in cryptocurrencies. The Cryptocurrency Task Force works closely with MAS and has links with the Association of Crypto Currency Enterprises and Start-ups Singapore (ACCESS), which is a Cryptocurrency and Blockchain Industry Association.

SPF also works with the various cryptocurrency exchanges based locally and abroad to investigate cryptocurrency crimes. SPF takes a serious stance against any person who may be involved in cryptocurrency scams and crimes and perpetrators will be dealt with in accordance with the law.

Mr Louis Chua then also asked about the progress of licence applications for digital payment token, or DPT, service providers under the PS Act. MAS has received over 580 licence applications to date and has completed the review of close to half of these applications thus far.

All applications go through a rigorous application process. Applicants will know that MAS sets a high entry bar and commits time and resources to engage the applicants and scrutinise the applications, making sure that they are able to meet the required standards for managing ML/TF and technology risks before we approve their applications. Applications that do not meet the standards or are incomplete will naturally need more time to review.

Mr Louis Chua also asked about the travel rule or the value transfer requirements in MAS' Notice PSN02 applicable to DPT service providers. MAS will impose similar AML/CFT requirements to a DT service provider licensed under the FSM Bill. 

Mr Louis Chua asked whether MAS would be inundated with transaction data given the threshold of $1,500 to obtain certain information of the originator and beneficiary in a value transfer. Contrary to Mr Louis Chua's understanding of the travel rule, there is actually no requirement for the originating DPT service providers to report this information to MAS. Rather, they are required to relay the information to the beneficiary DPT service providers, for them to also conduct necessary screening for nefarious actors. The threshold of $1,500 is also aligned to the international standards for such cross-border transfers.

Ms Janet Ang also asked if there is a regulatory gap, as financial advisory services related to digital payment tokens offered outside of Singapore will be regulated under the FSM Bill, but the same service offered in Singapore is not regulated under the PS Act. These financial advisory services are provided more often for capital markets products and in this respect, the FSM Bill places the same AML/CFT requirements on them as if they had been offered in Singapore. As for digital payment tokens, we will continue to study whether there is a meaningful presence of service providers that solely provide these advisory services. Where entities provide these services along with other regulated services, such as dealing in, or facilitating the exchange of DPTs, they are already scoped into the PS Act.

I will next move on to the second bucket which is questions that Members raised related to technology risk management, or TRM.

Mr Derrick Goh asked how MAS will weigh the accountability on FIs should negligence fall on the part of their cloud service providers, considering that many FIs have no ability to audit such providers. MAS expects FIs to perform adequate due diligence on all third parties they engage. FIs remain responsible for any disruption that results from their service providers' negligence. And in determining the action to take against an FI, MAS will assess the impact of the breach, the extent to which necessary controls had been implemented to manage the outsourcing risk as well as to comply with MAS' requirements and remediation efforts.

Mr Yip Hon Weng asked how often the maximum penalty of $1 million per breach of a TRM requirement will be meted out for TRM lapses. He mentioned that with inflation, a fixed financial penalty might not be a good deterrent. He also asked how often the financial penalties would be amended.

In the event of a breach of TRM requirements, MAS will assess the breach to determine the appropriate course of action. A maximum of $1 million could be imposed by the Courts for each breach of MAS' TRM requirements. This means that where there are multiple breaches, the penalty that could be imposed by the Courts on the FI could be higher. This new maximum penalty is a significant increase from the current penalties under the various Acts administered by MAS.

In addition, MAS has the powers to take other supervisory actions, including requiring FIs to set aside additional regulatory capital until adequate measures have been put in place to address the control lapses or deficiencies. The financial penalty coupled with the flexibility to impose additional supervisory actions strikes a balanced approach which signals the importance of having robust TRM without being overly excessive for smaller FIs which Members have also asked about. As with other Acts which MAS administers, MAS will review and adjust the penalty framework under the FSM Bill, as necessary.

Mr Saktiandi Supaat suggested that MAS consider requiring prospective licencees to present adequate cybersecurity plans as a condition to granting licences.

Currently, when MAS assesses an application for a licence, MAS already considers factors such as the adequacy of the applicant's cyber hygiene measures, data protection controls and the level of compliance with MAS' TRM guidelines. Applicants that do not meet the requisite requirements will be rejected or given a conditional approval and such applicants will eventually still need to meet the requirements before they are allowed to offer their services.

Mr Saktiandi Supaat also referred to the PDPC's regulatory approach which considers the culpability of the offender when determining the appropriate enforcement actions In accordance with MAS' current practice, MAS will take into account the nature of the breach of the TRM requirement, the specific circumstance of each case, the culpability of the offender and then calibrate supervisory action to ensure that they are appropriate and fair.

Assoc Prof Jamus Lim cited the rising trend of scams and the need for a consumer protection law to ensure that FIs do more to protect consumers. The points he raised are not directly related to the Bill but I will briefly address them here. 

On the issue of combating scams, MAS, MCI and MHA have made three Ministerial Statements on 15 February this year to explain how the Government is undertaking a comprehensive approach to counter the threat of phishing scams.

For the financial sector, Minister Lawrence Wong had elaborated at length on the measures by MAS and the banking industry, including measures that retail banks had implemented immediately and further measures which would be implemented to strengthen banks' ability to deter, detect and combat phishing scams. Minister Wong also highlighted that MAS was working with the industry to review the use of SMS to deliver one-time-passwords, or OTPs, and also develop a loss sharing framework to ensure an equitable sharing of losses for scams based on the extent to which parties have fulfilled their responsibilities. For the sake of time, I will not repeat the points here.

On the experiment relating to PayNow, it is stated in the PayNow scheme rules that transaction signing, through the use of OTPs or other two-factor authentication methods, is required for transactions above $1,000. All banks offering PayNow are required to adhere to this. Where a customer has installed and then activated a digital token in his or her mobile banking application, the digital token performs transaction signing in the background of the application, a process that is not obvious to the customer. MAS will reach out to Assoc Prof Jamus Lim to seek clarity on the facts relating to the PayNow experiment and the instance of the credit card limit being exceeded.

On Assoc Prof Jamus Lim's points in support of a consolidated legislation to address consumer protection, let me clarify that there is no conflict between MAS' supervisory mandate and its role in consumer education and protection. MAS recognises that the core role of the financial sector is to serve the economy, businesses and consumers. To do so, public confidence in financial services and FIs must be safeguarded. MAS sets out both prudential and business conduct standards for FIs, and expect them to operate safely and deal fairly with their customers. Both reinforce public confidence in FIs and their services that they provide.  

MAS has been able to effectively implement these standards and expectations through a mix of legislation, legally binding regulations and notices, as well as guidelines that are specific to the activities and risks in the different segments of the financial sector. This approach ensures that the requirements are relevant for the said regulated activities. For instance, banks are required to implement IT controls to protect customer information from unauthorised access and also the contravention of which can attract penalties.

Where consumers find themselves in a dispute with an FI that cannot be settled, MAS has provided consumers an avenue to seek recourse at a low-cost independent dispute resolution body – I mentioned yesterday in the FSM Bill – the Financial Industry Disputes Resolution Centre Ltd, or FiDReC. Given these, there is no need to have a single consumer protection law for financial services.

But I want to assure the Member that MAS continues to place a high priority on consumer education and protection. The functions that Assoc Prof Lim speak of under the Market and Business Conduct Department continue to be taken up by the Market Conduct Policy and Consumer Issues Divisions.

I will next move on to the prohibition order (PO) framework, of which we received many questions from Members.

Mr Derrick Goh asked how proximity will be assessed in determining whether a person has a nexus to the financial industry and whether staff from an FI’s service provider will be subject to a PO. Proximity will be assessed in light of the policy objectives of this new PO powers, namely, to protect the financial industry, customers and investors against persons who have demonstrated by their misconduct that they have the potential to cause harm to, or are unsuitable to take up certain roles, activities and functions in the financial industry for which they are prohibited. In response to the example raised by Mr Derrick Goh, outsourced service providers who are individuals, such as those who work for IT vendors and ecosystem partners such as e-commerce platforms, may be subject to a PO.

MAS recognises that outsourcing arrangements are becoming increasingly prevalent, but also complex and MAS must be able to issue POs to service providers who have demonstrated by their misconduct that they have the potential to cause harm to the financial industry. Whether a PO will be issued or not, always depends on the specific circumstances of a case.

Mr Derrick Goh acknowledged that the basis for streamlining the disparate grounds for issuing POs under the SFA, FAA and Insurance Act into a single fit and proper test is sound – so thank you for that. But he also sought clarification on whether there will be retrospective application of the single fit and proper test for persons with past misconduct that might not have been caught under the three Acts. If so, Mr Derrick Goh also asked whether the PO would commence from the point of misconduct.

Under this Bill, the new PO powers can be applied to misconduct that took place before the Bill comes into effect. However, the single fit and proper test is not in substance a new test but rather, as Mr Derrick Goh acknowledges, streamlines the existing disparate grounds under the three Acts into one single test, based on MAS' guidelines on fit and proper criteria. Thus, if a person's past misconduct would not have been caught under any of the three Acts, it is unlikely that MAS would assess that that person is not fit and proper under the new powers.

MAS will also continue to apply the old PO powers to cases where Notices of Intent to issue the prohibition order have already been given to the individual. In response to the second question, the present position and the position under the Bill is that a PO will take effect on the date the PO is issued by MAS. A PO will not commence from the point of misconduct.

Mr Louis Ng asked why the Bill does not require MAS to publish an explanation for the imposition of POs, as it is only fair that people are being told why they are being punished. To clarify, actually before issuing any PO, MAS will always issue a Notice of Intention to a person informing them that MAS intends to issue a PO against him or her. This Notice of Intention will set out all the material facts and grounds on which MAS has determined that a person is not fit and proper. There is, hence, no unfairness as the person will be fully aware of the basis for which MAS intends to issue a PO against him or her. In any case, the person is given the opportunity to respond by sending representations to MAS. MAS will carefully consider such representations before making its decision whether to issue a PO against the person.

Mr Saktiandi Suppat asked if an individual's previous PO can be purged from the records after a specific period of time. Currently, the only public "record" of POs issued may be found on MAS' "Enforcement Actions" webpage, where all enforcement actions are published for a period of five years, except POs that are of a longer duration than five years. Therefore, where POs are of a shorter duration, the information on the PO will remain on the webpage for a period of five years from the date of publication. Where the PO is longer than five years, the information on the PO will be removed when the PO expires. Effectively, this means that information on POs will not remain on MAS' "Enforcement Actions" webpage forever and will be removed from the webpage after five years for POs with a duration shorter than five years, or after the PO expires, where the PO is longer than five years.

The minimum duration for enforcement actions to remain on the "Enforcement Actions" webpage is therefore five years. And the duration is fair, because it takes into account: one, the need to send a deterrent message to others that the misconduct justifying the enforcement action – for example, for breaching MAS-administered laws – is a grave matter; and two, the period of five years is also broadly consistent with the period after which a conviction for an eligible crime could also be spent under the Registration of Criminals Act.

Mr Yip Hon Weng asked if a person has been placed on a watchlist or issued something of equivalence to our PO by an overseas jurisdiction, would they be issued a PO here by default. A PO will not be issued by default. While this is a factor that MAS will consider in applying the fit and proper test, MAS will consider all the circumstances of the case, including the facts surrounding why such a person has been placed on a watchlist or the equivalent of a PO, before deciding whether to issue a PO. 

Mr Yip Hon Weng also mentioned that a person issued with a PO may be prohibited from becoming a substantial shareholder of an FI. In this context, he also asked whether it will be an offence to willfully assist the PO individual to evade the PO. The answer is: this could amount to an offence. And to be clear, it is an offence for a person who has been issued a PO to contravene the PO. If a third party assists this person to contravene the PO, then the third party could also be liable for abetting the commission of the offence.

Mr Louis Ng has sought clarification on whether MAS will notify the individual's employer if his PO is varied and how MAS will help to ensure that FIs are notified in a timely manner if their service providers are issued a PO, or have their PO varied. MAS will notify the individual's employer if a PO is issued, and then correspondingly, also notify an individual's employer if their PO has been varied. MAS will send out these notifications concurrently with the issuance of a PO or a varied PO. This is to ensure that the individual's employer is informed in a timely manner. MAS will consider whether and how to notify FIs if their service providers have been issued a PO or have their POs varied.

Mr Derrick Goh asked if existing and incoming foreign talent will be subject to the same due diligence as that of local staff and if so, whether clearer guidelines on the background checks for foreign talent would be issued. This is because misconduct in non-regulated but critical functions may not be captured in overseas registries.

Insofar as POs are concerned, the "due diligence" and "background checks" that would have to be conducted by an FI, whether under the current framework or the new framework, is to ensure that they do not hire individuals who have been issued a PO by MAS to perform the roles or activities that have been prohibited. This applies to both foreign and local employees. FIs can check the MAS' "Enforcements Actions" webpage, or write to MAS to enquire whether a particular individual has been issued a PO by MAS.

Mr Derrick Goh also mentioned that the Bill has broadened the scope for MAS to issue POs covering activities beyond MAS-administered Acts, including serious misconduct in activities, such as fund management, risk and technology management, which were previously not covered.

To this end, Mr Goh has also asked what the severity thresholds for misconduct are, how proportionality of prohibitions is assessed and how culpability for misconduct would be assessed across the ranks, from junior staff to senior management. To clarify, while the Bill does broaden the scope for MAS to issue POs, the areas of handling of funds, risk management and administration of critical systems are areas that have an important impact on the soundness and integrity of our financial sector and MAS does exercise regulatory oversight over such areas. MAS has set standards of practice for these functions through the issuance of regulations, notices and guidelines.

On the question of what the threshold of severity is, or how serious the misconduct must be before a PO is issued, MAS will generally take into account factors such as: one, the harm caused or risks posed by the misconduct; two, whether the misconduct was one-off or continued over a period; three, the reasons why the person carried out the misconduct; and four, public interest and policy considerations.

On how proportionality of the prohibition is assessed, if Mr Derrick Goh is asking how the duration and scope of a PO is determined, one can expect that the more serious the misconduct is, the longer the duration and wider the scope of the PO is likely to be. Ultimately, each case will be assessed on its own merits, its own facts, taking into account factors that I mentioned previously.

Finally, being in senior management would not automatically mean a longer or shorter PO period, though in some cases, the fact that a person was in a senior position and therefore, a position of higher authority and greater responsibility may increase his culpability and therefore, the duration of a PO.

To respond to Mr Saktiandi Supaat's question on whether an FI would be able to "shift" the regulatory burden to its service providers when employing the defence to show that it had taken all reasonable steps to ensure compliance that it has not employed, directly or indirectly, or used the services of a person against whom a PO has been made, there will be no "shift" in the regulatory burden as FIs are still ultimately responsible for checking that their service providers' relevant employees, who directly or indirectly undertake key functions for or on behalf of the FIs, have not been issued with POs prohibiting them to do so. For an FI to avail itself of the defence, the FI must minimally show that they have performed due diligence checks on the employees of its service providers, for example, again, checking the MAS' "Enforcement Actions" webpage.

Mr Yip Hon Weng also shared that it is not difficult for seasoned fraudsters to set up businesses here and cheat customers, which calls for a more proactive enforcement of our laws. This is in line with what the PO powers are trying to achieve, by pre-emptively and comprehensively keeping known bad actors out of our financial industry.

Mr Saktiandi Supaat then asked whether in addition to the current publication of formal regulatory and enforcement actions taken by MAS on its "Enforcement Actions" webpage, MAS intends to create and maintain a public register of POs. This is something that MAS could consider implementing in future, once the new PO powers take effect under the Financial Services and Markets Act. For now, the search function on the "Enforcement Actions" webpage may be used by any FI or its agent, to check if a PO is currently in effect against a person. Alternatively, there is also an option for the FI or its agent to contact MAS to obtain records of the POs issued against the person, upon payment of a fee. There is hence, sufficient means for an FI to determine if an individual has been issued with a PO.

Mr Saktiandi Supaat then spoke on the need for clarity in the form of MAS guidance on the specific scope of POs issued in the newly extended areas. He also asked for data on the number of persons who had previously been issued with a PO and who have thereafter returned to the financial sector. Clauses 6 and 7 of the Bill sets out clearly the scope of POs which may be issued, which are to prohibit unsuitable persons from certain roles, activities and functions. There is no ambiguity here on the maximum possible scope of a PO.

In summary, the more serious the misconduct is, the longer the duration, the wider the scope of the PO is likely to be. Nevertheless, as MAS has mentioned before in its response to the public consultation, MAS will be issuing guidelines to provide greater clarity on how the new PO powers will be used. MAS does not monitor whether persons who have previously been issued with a PO return to the financial sector after the PO expires.

To be clear, a PO only bars an individual from taking up specified roles, functions and activities in the financial industry. An individual is free to take up employment in the financial industry in areas or activities that are not covered by the PO or even outside the financial industry. An individual may choose to find employment in the areas prohibited by the PO when the PO expires. And in such a scenario, it is then up to their prospective employers to determine independently whether or not to hire such a person.

Mr Derrick Goh has noted that an appeal to the Minister on MAS' decision to issue a PO must be referred to an Appeal Advisory Committee selected from an Appeal Advisory Panel (AAP). He asked about the considerations for ensuring the independence of the AAP and Committee. He also asked whether, in addition to the right of appeal to the Minister, a person may bring his appeal to the Court. On the first question, the members of the AAP will be appointed by the Minister from the financial industry, and the public and private sectors, and will have strong credentials which attest to their good judgment and ability to discharge their duties professionally.

The AAC will comprise of any three members from this panel. Under the existing regulations governing appeals to the Minister for PO purposes, the AAC is obliged to declare the nature and extent of all of their conflicts of interest or potential conflicts of interest to the Minister. If the Minister is satisfied that any AAC member is unable to discharge his duties effectively because of any conflict of interest or potential conflict of interest, the Minister may replace the AAC member. This will also be the process in appeals to the Minister under the new Act.

On the second question, a person will be afforded the right to appeal to the Minister under the new Act. This avenue of appeal under the new Act is consistent with the existing practice under the SFA, the FAA and the IA. However, if a person has exhausted his right of appeal to the Minister and remains unsatisfied with the results, he may still pursue other legal processes which he may be entitled to. 

Mr Louis Ng asked why the AAC's reports are not published publicly. He suggests that first, this would provide important context on the Minister's decision and secondly, ensure that the AAC exercises its powers professionally and appropriately.

On the first aspect, the Minister is not bound by the recommendations in the AAC's report but rather exercises his own discretion in deciding on the appeal. The Minister may agree with some of the AAC's assessments while disagreeing with other aspects. He may consider other factors outside the AAC's report. Thus, publishing the AAC's report may not be all that helpful and may even be an inaccurate reflection of the Minister's considerations.

On the second aspect, as mentioned in response to a previous question by Mr Derrick Goh, the members of the AAP, from which the AAC is constituted, will be appointed by the Minister and will have strong credentials which will attest to their good judgment and ability. If the AAC in any way exercises its powers improperly, the parties can always include this in their submissions, which the Minister will consider.

Mr Saktiandi Supaat also asked when the new PO regime under the FSM Bill will be brought into effect. This is a matter which MAS is considering carefully. MAS is currently preparing for the new PO regime to commence and also intends to give the industry time to prepare for the new PO regime, which includes understanding how the new provisions will be applied. MAS will announce the specific date in due course.

My third bucket is a short one, is on the provision of statutory protection for personnel of the operator of an approved dispute resolution scheme. Mr Yip Hon Weng asked if there will be exceptions to this.

For statutory protection to be accorded, the mediator, adjudicator or employee must have acted with reasonable care and in good faith. This will have to be determined based on the facts and circumstances of each case.

Finally and lastly, there are a whole host of different inquiries which I will bucket into this last segment. Ms Janet Ang asked broadly about MAS' plans to enhance the skills and competencies required in the financial services ecosystem.

MAS works closely with the industry such as the Institute of Banking and Finance to develop the workforce in the financial sector. To seize opportunities for growth, we are always on the lookout for new growth drivers, including from the digitalisation wave. To meet the new job demands, we also have multiple training pathways to reskill and upskill our financial sector talent.

Ms Janet Ang and Mr Louis Chua asked broadly about central bank digital currencies (CBDCs).

As Ms Janet Ang mentioned, MAS recently collaborated with the BIS Innovation Hub Singapore Centre and several other central banks on a project known as Project Dunbar to explore a common platform for cross-border interbank payments using CBDCs. Very briefly, Project Dunbar proved that financial institutions (FIs) could use CBDCs issued by participating central banks to transact directly with one another on a shared platform.

This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions and is part of the journey that MAS has been embarking on with the industry and other central banks over the few years to explore the potential benefits and feasibility of adopting wholesale CBDC for global payments.

Source: Hansard