Since the inception of the Monetary Authority of Singapore (MAS) in early 1971, the regulator has largely been successful in reining in the excesses of the financial services sector.
It has managed to make great strides in its quest to make Singapore a clean and trusted financial center through regulatory interventions and administering various statutes.
Over the last decade, MAS has gone on to centralize its enforcement function by establishing a dedicated Enforcement Department, aiming to:
- Detect misconduct and law-breaking early
- Provide effective deterrence
- Shape business and market conduct
As the Enforcement Department began ramping up its efforts to ensure MAS compliance in late 2016, financial institutions began incurring millions of Singapore Dollars in penalties. This was accompanied by criminal convictions, reprimands, warnings, and supervisory reminders to a whole host of investment advisors, executives, and relationship managers.
Financial service company executives in focus
In one of the most prominent actions by the MAS, Credit Suisse AG got hit with a civil penalty of $3.9 million on account of misconduct at the relationship manager (RM) level. The RMs, in violation of sections 201(c) and 201(d) of the Securities and Futures Act 2001 (SFA), had made post-trade disclosures that were inaccurate / incomplete, leading to clients being overcharged without being notified for 39 over-the-counter (OTC) bond transactions.
Notably, this enforcement action was just the beginning of a more aggressive enforcement regime. Per a report from MAS that covered regulatory action from January 2022 to June 2023, it opened 136 cases, leading to 39 criminal convictions, and penalized organizations and individuals to the tune of SGD 20.8 m. Out of the fines, a large chunk ($12.96m) was levied for insider trading, breaches related to disclosure violations, and false trading.
Further, the crackdown yielded $7.10m in fines from violators of Combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML) regulations. Given the serious nature of these crimes and the fact that dozens of perpetrators were imprisoned along with having to pay fines, it is mission-critical for MAS-regulated entities to put in place robust strategies to combat violations.
Key considerations for MAS-regulated managers to stave off fines
Banks and other regulated entities operating in the capital markets must employ robust governance frameworks to ensure fairness and transparency when it comes to their engagement with clients.
To remain compliant with MAS requirements, financial firms are obligated to:
Keep comprehensive records of communication
MAS recommends the capture of all the communication about orders and trades. Essentially, firms are expected to put in place call archiving measures to record all aspects of the order alongside maintaining a record of the written communication with clients.
In addition, it is crucial to maintain records of the communication between the client’s trading representative and the person instructing the Orders & Trades for capital market products in the customers’ accounts even in the case of the communication not resulting in a transaction.
Stay ahead of communication trends
Personnel may use private devices or unapproved instant messaging apps to circumvent conventional employee supervision techniques. Consequently, the management has to look towards solutions, like a network archiver that can capture text messages and calls from the top phone carriers without having an app installed on employees’ devices.
There are also solutions for compliant MAS archiving of WhatsApp, Signal, WeChat, etc., messages sent by employees to hide their client communication. It is worth noting that the regulator requires the maintenance of these messages in a tamper-proof manner for five years. Further, the messages are to remain confidential, making it imperative for the market participants to implement policies to safeguard customer data.
Even with the archiving system in place that can capture voice calls and messages sent on these platforms, financial service companies are required to implement policies, making it clear what channels of communication are approved and what can be conveyed through them.
Implement the latest compliance tech
Keeping in line with MAS’s commitment to help financial firms adopt regulatory technology, especially Artificial Intelligence and Data Analytics (AIDA), compliance teams need to adopt the best in class solutions for auditing their employees’ communication and order records, recordkeeping, access control, and ensuring traceability. As technology advances, it can do wonders for flagging suspicious market activity in real time.
Machine learning models can already gauge the sentiment of conversations, and pick up on irregularities in massive datasets, setting the stage for applications, such as the automatic and accurate monitoring of MAS violations, sending alerts to management of potentially fraudulent activity, etc.
Powerful insights can also be garnered on the orders and trades activities by categorizing the available information based on keywords, individuals, or teams.
Impressively, the technology can be used to ensure even the newest forms of communication adhere to MAS regulations, including GIFs, emojis, and video calls.
Outsource to experts with better tech capabilities
Financial firms can benefit from third-party archiving vendors that can safeguard their employee communication records for the duration of the retention period in a safe manner.
Third-party perspective can further be valuable when it comes to training on the latest advances in cybersecurity, financial communication compliance, etc. Training partners specializing in areas, like anti-money laundering (AML) and counter-terrorism financing (CTF), which happen to be key focus areas of MAS, can go a long way in helping avoid fines and criminal prosecutions.
Conclusion
Despite the best training and the most comprehensive of policies, non-compliant behavior can still slip through the cracks. When it comes to violations by senior executives, there is also the possibility of employees feeling intimidated to come forward. Consequently, financial firms also need to look into radical approaches, like setting up reporting channels for employee whistleblowers to confidentially bring to light violations.
Simultaneously, firms can get a 360-degree view of their internal operations with MAS archiving. At every crucial touchpoint, compliance teams can rest assured that the conversations are being retained for auditing, meeting MAS recordkeeping requirements, and ensuring that there is a single source of truth when it comes to handling litigation.
To bolster your MAS communication compliance efforts, reach out to our team.
About TeleMessage
TeleMessage captures and retains mobile content, including mobile SMS messages, voice calls WhatsApp, and WeChat conversations from corporate or BYOD mobile phones to ensure compliance with various data protection regulations. The messages are securely and reliably retained within TeleMessage servers or forwarded to your choice of archiving data storage vendor.
Our mobile archiving products securely record content from mobile carriers and mobile devices for various ownership models (BYOD, CYOD, and employer-issued). With our multiple archiving solutions, you can always find the right tools or blend for your requirements:
