Country Manuals Private Banking
SINGAPORE OUT OF BANK’S COUNTRY OF ESTABLISHMENT (Def, RS, BT & RT)
Regulatory Summary and Regulatory Template
Material changes
This Country Manual has been reviewed to ensure that the content of all the documents remains accurate and up-to-date. In particular, this update follows an in-depth analysis of the Singaporean regulation relevant for cross-border purposes.
As a preliminary remark, note that financial services in Singapore are regulated by a number of different legislation; in particular
Deposit-taking and the issuing of credit cards is regulated by the Banking Act;
Payment services are regulated by the Payment Services Act (“PSA”);
Custodial, brokerage and discretionary asset management services regulated by the Securities and Futures Act (“SFA”) and
Investment advisory services are regulated by the Financial Advisers Act (the “FAA”).
While the overall approach of the Country Manual has not undergone massive changes, following consultations with our local counsel, the Country Manual now includes enlarged explanations of the regulatory framework taking into consideration not only the legislation relevant for cross-border purposes (including the new legislation entered into force such as the PSA), but also the interpretation of the regulator and regulatory practice. Specifically with regard to the recognition of reverse solicitation under the different regulations and its interpretations, the update provides more background information. Moreover, we have prominently stated existing exemptions under the law for qualified prospects and clients for services regulated under the SFA and the FAA.
Notable changes include the following:
(1) Financial advice exclusively provided to institutional investors (financial institutions regulated in Singapore) is generally exempt from licensing requirements under the FAA), which has been introduced into the Manual in the context of qualified clients for all FAA-related activities (i.e. for any solicitation, negotiation and provision of such services). Where non-qualified prospects and clients are concerned, however, we have clarified that reverse solicitation is not recognised under the regulatory practice for FAA-regulated services conducted on-site upon request (again, pertinent for all solicitation, negotiation and provision of such services).
(2) Pursuant to explicit MAS guidance, an activity within the ambit of a service regulated in the SFA to a financial institution regulated in Singapore is exempt from licensing requirements, even when undertaken on the Bank’s initiative, if the activity is carried out wholly outside Singapore (i.e. not in case the Bank’s representative visits Singapore) and where this is a bona fide sale or purchase of financial services between the foreign entity and the regulated person. Therefore, in such a situation concerning such qualified client, the Bank is for example allowed to actively solicit or undertake pre-contractual activities related to discretionary asset management services via remote means of communication into Singapore (e.g. providing a prospect with a discretionary asset management agreement via remote means of communication upon the Bank’s initiative).
(3) Custodial services follow the same rules as discretionary asset management services. Such an activity is generally subject to a license requirement and reverse solicitation is not recognised on-site. Therefore, for example, the collecting of ID documents on-site in Singapore upon request may not relate to custodial services.
(4) The legal situation (including the new PSA) is interpreted that where the Bank serves a Singapore client wholly in compliance with Singapore law and does not offer other new services, the Bank should be permitted to offer a debit card to an existing client in relation to the existing offshore account with the Bank, either on its own initiative or upon a client’s request. Note, however, that there is no formal rule of official position to rely upon. The same rules presumably apply to the collection of signed debit card agreements and to the delivery of the debit card in or into Singapore (i.e. activities are permitted in and into Singapore either when the Bank is acting upon reverse solicitation or servicing an existing client without offering new services to such client). Furthermore, the contract must be accepted, concluded and executed abroad (this must be explicitly stated in a clause within the contract, i.e. the Bank has to countersign it outside of Singapore).
(5) While a foreign bank is still only permitted, to offer credit cards to existing clients for their existing offshore accounts where the Bank reacts on a client’s explicit and unsolicited request, we have clarified that this is – under the current interpretation of the law – also permitted during occasional onsite visits. The collection of signed credit card agreements in this situation, however, is not permitted during on-site visits; the agreement has to be sent to the Bank’s country of establishment (on client’s initiative), and the extent possible, the client should sign the agreement outside of Singapore. The delivery of the ordered credit card in or into Singapore, in the case of an application that has not been accepted in Singapore, does not seem to be restricted by local regulation for the foreign Bank if the aforementioned has been complied with. Note, however, that there is no formal rule of official position to rely upon.
(6) The offering of a Lombard credit and collecting/receiving of a respective agreement are activities regulated under the SFA and therefore follow the same rules as for example discretionary asset management, i.e. SFA-regulated services. Therefore, for example, the Bank may actively offer a Lombard credit to a qualified client (see above) via remote means of communication into Singapore, but not conduct such activity on-site in Singapore, even upon a client’s request.
(7) The provision of investment research or financial analysis constitutes a regulated and licensable financial advisory service under the FAA (see above). Consequently, actively providing investment research to a non-qualified client on Singaporean territory is not allowed. Such activity seems to be allowed when undertaken via remote means of communication upon the Bank’s initiative towards a non-qualified client provided the service is covered by an ongoing advisory agreement. Note, however, that there is no formal rule of official position to rely upon.
(8) We have clarified that in order to avoid any requalification of the service, the provision of macroeconomic information should not aim at the provision of personalised investment advice or the solicitation of orders, be it in Singapore or via remote means of communication.
(9) As financial advice exclusively provided to institutional investors (financial institutions regulated in Singapore) is exempt from licensing requirements under the FAA, the provision of research material, generic and personalised recommendation lists and investment advice with or without an ongoing advisory agreement to a qualified client (see above) is allowed, be it in Singapore (on an occasional basis) or via remote means of communication.
(10) Singapore laws and regulation generally do not provide for a licensing requirement for reporting activities. Reporting to a client on the performance of the managed account is permitted on an occasional basis in Singapore, be it actively or upon request. However, such activity bears the risk of being considered an ancillary activity directly related to the provision of discretionary asset management services.
The rationale of the third-party section in the RT takes into account the overall regulatory framework of Singapore and the above-mentioned clarifications, but essentially has not changed in its approach. We have highlighted that case-by-case analysis on a detailed level is recommended before entering into a cooperation agreement with a local third party.
Further, miscellaneous sections on cross-border licensed and cooperation with a local group company as well as on representative offices have been reviewed and amended in light of recent developments under Singaporean law.
Non-material changes
The documents have been reformatted onto the latest templates. Some comments have been reworded, additional references to applicable law/regulation have been made in order to provide more clarity and to reflect the current regulatory situation more accurately. Further non-material changes have been made throughout the document.
Behaviour Template
The answers in the BT have been aligned to those contained in the RT.
BT Short Comparison
BRP has created a comparison document allowing users to quickly identify the modifications made compared to the previous version of the PB Manual (BT Short Comparison). The BT Short Comparison can be found on BRP’s platform (mybrponline) in the Search tab by entering in the Document Field “CM PB BT SHORT COMP” and “Singapore” in the Target Country Field.
The BT Short Comparison should be read as follows:
The first column contains a short description of the activity in question. The second column contains the answers of the previous version of the Country Manual (online until the day of the alert). The third column contains the new answers of the most recent version of the Country Manual. Only the modified answers are displayed (in color). If the answers in the new version are unchanged compared to the previous version, they are shaded in grey.
Best regards,