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    MAS Proposes Changes to Rules Arising from Banking Amendment Act

    December 02, 2020

    MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020. The Banking (Amendment) Act 2020 introduced several amendments to the Banking Act to update and enhance banking regulatory framework of MAS. Among significant amendments are the removal of the requirement for banks to segregate their accounting books into the Domestic Banking Unit and Asian Currency Unit (DBU-ACU divide) and the consolidation of the regulation of merchant banks under the Banking Act. MAS has already commenced sections of the Banking (Amendment) Act 2020, on October 01, 2020, which are legislatively and operationally straightforward and do not require further consultation. This consultation paper sets out the remaining amendments to regulations, notices, and guidelines for the remaining changes in the Banking (Amendment) Act 2020. MAS requests comments on this consultation by January 15, 2021.

    The proposed amendments arising from the Banking (Amendment) Act 2020 include the following:

    • Removing the DBU-ACU Divide—The Banking (Amendment) Act 2020 will effect the removal of the DBU-ACU divide. MAS had consulted the industry on supporting amendments to regulations, notices, and guidelines arising from the removal of the DBU-ACU divide for banks in 2015. Following the 2015 Consultation, MAS has reviewed the anti-commingling framework for banks in Singapore in 2017. Further amendments to regulations 23F and 23G of the Banking Regulations arising from the 2017 review are set out in green in Annex A(1) of the consultation paper.
    • Regulating Merchant Banks Under Banking Act—The Banking (Amendment) Act 2020 introduces a new Part VIIB in the Banking Act, which sets out a new licensing framework for merchant banks, as a class of financial institutions distinct from banks and replaces the existing approval regime for merchant banks under the MAS Act. Existing merchant bank directives, notices, and guidelines will be cancelled and replaced by provisions in Part VIIB as well as regulations, notices, and guidelines issued under the Banking Act, as set out in Annex A. The new merchant bank instruments are not intended to introduce new requirements or modify existing ones, except for changes that have been previously communicated or consulted with the merchant banks. Annex B lists the cancelled notices that have been issued under the MAS Act and are being replaced.

    MAS plans to consult separately on the proposed requirements for outsourcing arrangements of banks and merchant banks. In addition to the amendments arising from the Banking (Amendment) Act 2020, MAS proposes to extend its composition powers by prescribing the offences under section 47 and section 47 as applied by section 55ZI of the Banking Act, in relation to the privacy of customer information and the offence under section 49 of the Trust Companies Act in relation to the confidentiality of protected information, as compoundable offences under the Banking Act and Trust Companies Act, respectively. The proposed amendments to regulation 36 of the Banking Regulations, regulation 37 of the new Merchant Bank Regulations, and regulation 23 of the Trust Companies Regulations have been set out in Annexes A(1), A(2), and A(4) of the consultation paper, respectively.


    Comment Due Date: January 15, 2021

    Keywords: Asia Pacific, Singapore, Banking, Merchant Banks, Banking Act, Banking Amendment Act 2020, MAS

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