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Banking Institutions in Singapore: An Overview of Regulations, Regulatory Challenges and Compliance

Banking Institutions in Singapore: An Overview of Regulations, Regulatory Challenges and Compliance

What are the Institutions that come under Banking Laws and Regulations in Singapore?

Institutions carrying out all of the following banking activities come under banking laws and regulations and are subject to regulatory requirements of banking compliances in Singapore.
  • The business of receiving money on a current or deposit account
  • Paying and collecting cheques drawn by or paid in by customers and making advances to customers
  • Financial institutions that are permitted to accept deposits from the public

Do Banking Laws and Regulations Apply to Fintech Companies?

Fintech companies carrying out banking business in Singapore would be treated as traditional banks and the same banking laws and regulations will apply.

What are the Banking Regulations in Singapore?

The Monetary Authority of Singapore (“MAS”) is the sole regulator in Singapore having regulatory oversight of the banking institutions. The MAS is also the central bank of Singapore.

The Banking regulation in Singapore including the subsidiary regulations govern the banking institutions and are acts passed by the Parliament and are mandatory. Besides regulating the banking sector in Singapore, these regulations also focus on establishing a legal banking framework that can keep pace with the latest developments in the global banking sector. The main regulations applicable to the banking institutions are as follows

  • The Banking Act (Cap.19) is the legislation that governs all commercial banks
  • The MAS Act (Cap.186) is the governing legislation for all matters related to MAS and its operations
  • The Securities and Futures Act (Cap.289) is the governing legislation for banks that provide capital market and financial advisory services
  • The Financial Advisers Act (Cap. 110) is the governing legislation for the financial advisers in Singapore, including their representatives and supervisors
  • Anti Money Laundering Regulations

Several subsidiary legislations has been enforced under the Banking Act, Securities and Futures Act and Financial Advisers Act. The resolution regime comprising emergency liquidity infusion, recovery and resolution planning etc. applicable to the banks in Singapore are also set out in the Banking Act as well as the MAS Act.

Other applicable regula­tory instruments issued by MAS including directives, notices, guidelines, codes, practice notes and circulars also apply to the Banking institutions in Singapore.

What are the main regulatory challenges for the banking institutions in Singapore?

As banks keep increasing their focus on digitizing their businesses, they continue to face increased regulatory and compliance-related challenges while striving for keeping pace with the unprecedented transformation across the banking industry.
  • Rise in competition, financial stability issues and heightened consumer risks due to increased shadow banking by non-banking financial intermediaries as enforcement of Financial Services Regulatory Compliance in the shadow banking space is often challenging for the regulators
  • Cybersecurity is a serious ongoing challenge due to increased digital financial services delivery on the internet and especially in the face of regulatory obligations to protect consumers' privacy and personal information
  • Anti Money Laundering/Countering the Financing of Terrorism (AML & CFT) is a very big challenge due to the increased activities financial institutions perform for Financial-Services-Compliance to fulfil legal requirements for active monitoring for and reporting of suspicious activities
Want to learn more about Banking Institutions in Singapore?
Speak to one of our experts today.

How does Singapore Address the Anti-Commingling Policy Framework to ease Regulatory Challenges?

MAS introduced a policy to separate the financial and non-financial businesses of banks in Singapore in 2001, called the anti-commingling policy to encourage banks to stay focused on their core banking business and competencies, and avoid non-financial businesses. MAS has recently announced plans to provide relaxation in certain aspects of the anti-commingling policy framework for banks as part of the next round of amendments to the Banking Regulations, allowing banks to widen their range of services and compete effectively against non-financial players delivering financial services amidst a rise in shadow banking.

Does Consumer Protection Act Apply to the Banking Institutions in Singapore?

Singapore banking institutions providing common financial products and services including bank deposits, loans, unit trusts and securities must ensure that there is no breach of the provisions for fair trading under the Consumer Protection/Fair Trading Act (CPFTA) due to their sales practices. Any such breach will give consumers the right to initiate civil action against a supplier of such products and services, under the CPFTA.

How does Singapore Address the Anti-Commingling Policy Framework to ease Regulatory Challenges?

A banking regulatory compliance software facilitates how banking institutions can easily comply with the regulations and manage them more efficiently. It allows banks to use a framework that helps them ensure banking compliances in Singapore by always staying up to date with regulatory requirements digitally.

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