The Monetary Authority of Singapore published its inaugural Enforcement Report on March 20, giving an overview of prior enforcement efforts in the financial markets during the period of July 2017 to December 2018. The report further outlines MAS’s strategic priorities.
The Monetary Authority of Singapore (MAS) has consistently taken a firm stance on financial regulatory enforcement. There are three principles underpinning its enforcement philosophy: early detection, effective deterrence, and the shaping of business and market conduct.
From July 2017 to December 2018, the MAS targeted enforcement in three main areas:
Because of these efforts, the MAS has taken the following actions (among others):
MAS’s review and investigations are completed fairly quickly, generally within eight months, compared to the 19.1 months the UK’s Financial Conduct Authority generally takes.
Significant cases that illustrate the suite of MAS’s regulatory powers include the following:
The report details that MAS’s enforcement priorities for 2019–2020 are to ensure the following:
The report provides greater transparency into MAS’s role in policing errant behavior in Singapore’s financial markets. In particular, providing real-life case examples and penalties meted out gives useful insight into what MAS views as unlawful behavior and the corresponding severity with which it views such misconduct. Outlining MAS’s future enforcement priorities sends a clear message to companies and individuals alike that MAS’s focus on compliance in these areas will be backed up by enforcement action where necessary.
The report was published after a February 2019 speech by an executive director of MAS in the context of fund management highlighted a similar focus on enforcement. The speech recognized that Singapore’s growth as a key asset management hub was in no small part attributable to Singapore’s robust regulatory and supervisory regime. One of MAS’s strategies has been to structure the teams of its compliance officers such that funds with similar focuses or strategies are being supervised by the same group of officers—this allowed MAS to better keep up with trends and developments affecting similar clusters of fund managers.
The report reveals two other noteworthy features of MAS’s enforcement policy.
First, the MAS is leveraging technological advances in data analytics and artificial intelligence to identify unusual trends. The report identified “Project Apollo” as an augmented intelligence tool that automates computation of key metrics used for trade analysis to identify market manipulation, boasting a system accuracy rate of 98%. The MAS has already been applying data analytics to identify unusual trends and flag outliers in the asset management space, and we expect the future use of text analytics on financial statements and audit reports of fund managers to come into play.
Second, as a board member of the International Organisation of Securities Commission (IOSCO) and a signatory to IOSCO’s Multilateral Memorandum of Understanding (MMOU) and Enhanced MMOU, the MAS is able to request assistance from regulators worldwide to enforce Singapore’s securities and derivatives law. Such assistance can range from obtaining records to freezing assets.
MAS has consistently displayed innovation in discharging its role as Singapore’s principal markets regulator. We can expect a similar level of robustness in the enforcement standards in the next report, which will be published every 18 months.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers, who are solicitors of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated with Morgan, Lewis & Bockius LLP:
Singapore
Daniel Yong