If the CMS license holder, either in Singapore or elsewhere, ended up or dissolved, the CMS license will expire. MAS can also cancel or withhold a CMS license if it has legitimate grounds to conclude that the holder of the CMS license, or its agents or officers, has not effectively, legitimately and reasonably performed their duties or behaved in the best interest of its customers or violated the conditions placed on their licenses.

Fines of up to $150,000 will be levied upon arrest, and for any day the crime occurs after arrest, an additional fine of not exceeding $15,000 will be levied. This is to ensure that clients are not tricked into working with errant holders of CMS licenses that may cause financial penalties or credit difficulties for unknown clients.

CMS license holders are also expected to get prior permission from MAS to ensure that CMS license holders are soundly and prudently controlled or guided by “fit and proper” individuals. This prohibits persons from being named who is not of good faith, especially if they have been convicted of deceit or bribery in Singapore or elsewhere or are insolvent bankrupts, have been compounded by creditors, or have dissatisfied judgment liabilities.

Individuals planning to undertake any controlled action within the scope of the SFA are expected to be designated members, provisional members, or interim representatives for that regulated activity. Only after they have fulfilled the admission and evaluation criteria for regulated activities under the SFA and their name has been entered into the Public Registry of Representatives will they enter into transactions in regulated activities.

Such a person is convicted of a crime and liable to a fine not exceeding $50,000 or to a period of incarceration not exceeding 12 months, or both. In the case of a persistent offense, with any day or part of it during which the crime occurs after arrest, to a further fine not exceeding $5,000.

The aims of the one-representative-one-principal provision are two-fold: to ensure that members are informed about the role of members, the principalities they represent, and, most specifically, where responsibility for grievances and resolution rests; and to guarantee that principals track and organize their members closely at all times.

Any person who violates the one-representative-one-principal rule violates SFA 99J (1) and is liable for a crime and responsible for a fine not exceeding $50,000 or imprisonment for a period not exceeding 12 months or both on the prosecution. With a continuing breach, for any day or part of it during which the crime occurs after arrest, to a further fine not exceeding $5,000.

He must be at least 21 years of age, have a minimum level of education equal to at least 4 GCE-O-Level credit passes, or at least 2 GCE-O-Level credit passes if he has a work experience of 6 months within the last 5 years, has met the criteria of the CMFAS test for those supervised activities in which he will be involved, and he must have reliability, competency and sound credibility qualities.

Probity confirms the identity of the delegate by collecting and checking a copy of his verified identity documents (e.g. the National Registration Id Card, International Identification Number, or Passport). If the potential delegate is an outsider, the holder of the CMS license must check that he either has an acceptable job pass or he has acquired the authorization of the competent authority to operate in Singapore.

Financial entities can, through the Representative Notification Framework (‘RNF’), register members with the MAS as designated or temporary representatives. The RNF requires financial institutions to send MAS notices to their members electronically who wish to perform supervised activities through the online framework.

Along with the name of the representative, the regulated practices approved to be carried out by the representative, the key firms for which the representative has served for the past three years and any specific regulatory action taken by the MAS against the representative shall be displayed in this registry.

With this number, members of the community could validate the identity of the representatives they interact with via the Register of Representatives, thus reducing their risk of interacting with unauthorized persons. Financial companies are encouraged to make their members’ specific representative numbers freely accessible to customers to validate the regulatory status of their members.

If the principal informs MAS of any suspension; if the appointed representative has been continuously failing to be a delegate for a month and the principal has not informed MAS of his suspension as a representative, if MAS has revoked the rank of the appointed representative; if the principal declines to be involved in that form of controlled activity; the authorization of its principal lapses, the authorization is suspended by the MAS, or the prohibition order imposed by the MAS against its principal forbids it from carrying out a supervised operation of that kind, the status of the representative would be ceased.

The status of an interim or provisional delegate shall be applicable only for a period not exceeding 3 months from the date on which his name is entered in the Public Registry of Representatives. In certain conditions, their position regarding any controlled operation remains valid until it expires.

A designated, interim or provisional representative shall notify his principal company, within 7 days of the date of the modification of the records, of any modification in his address of residence or other personal details. No less than 14 days after the change of the details in the specified form and manner, the principal company is expected to inform MAS of the modification of the details of its representative.

SIPs have diverse characteristics and uncertainties that can reveal more variables to investors which could lead to a loss.  Examples of SIPs not listed on an exchange are structured notes (e.g. equity-based structured notes, credit-related structured notes), certain unit trusts, and certain investment-linked life insurance plans.

Customer Knowledge Assessment (CKA) must be carried out by CMS license holders and excluded financial firms based on the conditions set before starting a SIP trading account for a consumer who is an institutional trader for trades on any SIP that is not listed on a stock or futures exchange.

For CAR and CKA, details about a customer’s professional credentials, investment history, and job experience must be taken into account by a CMS license holder or an exempt financial institution. In the absence of such details from the customer, the customer shall be considered having no understanding or experience of derivatives (CAR) or unlisted SIPs (CKA).

CMS license holders or excluded financial companies shall determine the investment history of consumers based on the description of the product(s) of the capital markets previously purchased by the consumer and the listing position of the product(s) of those capital markets at the time when the customer bought and sold the product(s) of those capital markets.

It shall notify the customer in writing regarding the result of the CAR; receive written assurance from the customer that he wishes to proceed; clarify to the customer the characteristic features and risks involved with investing in derivatives and provide him with a written statement of the reason given; and alert the user in writing that it is the duty of the customer to make sure that the customer invests in derivatives.

The license holder of the CMS or the excluded financial institution can allow the client, for a term of 1 year from the date of the evaluation, to conduct the unlisted SIP. After a year has expired, the holder of the CMS license or the excluded financial institution shall, before transacting on behalf of the client on any unlisted SIP, execute a new CKA on the client.

Details got from a customer about his or her academic credentials, job experience, and investment experience; an evaluation of the customer’s expertise and experience of derivatives or unlisted SIPs; the result of the CAR or CKA; and the consent of the senior staff to open, where appropriate, the SIP trading account of the customer must be included in the documentation.

The risk warning statement includes the extent of investor security and protections offered in the applicable foreign jurisdiction; discrepancies between foreign jurisdiction legal structures and Singapore; tax consequences, currency risks, potential increased transaction costs; sensitivity to counterparty and correspondent broker uncertainties; and influential political, economic and social trends.

Both CARs and CKAs performed for each client shall be recorded by the CMS license holder or excluded financial institution. CMS license holders or excluded financial institutions shall keep Consumer Certification Records for a term of not less than five years.

In compliance with Section 47 of the Banking Act (for banks) and the Banking Regulations (for merchant banks), exempted financial institutions that are accredited banks or merchant banks are entitled to banking confidentiality restrictions. Under common law and the Personal Data Protection Act (PDPA), all intermediaries are expected to secure the security of their consumer details.

The disclosure is mandatory for the risk control of the bank and for internal examination by internal auditors, lawyers or contractors allowed or appointed by the bank; for the investigation or enforcement of a suspected crime, and when the bank has the prior written permission of the customer and in compliance with the terms of the permission.

An individual who violates Section 47 of the Banking Act shall be liable to a penalty fine not exceeding $125,000 or for imprisonment for a period not exceeding 3 years, or both in the case of an individual, or for a fine not exceeding $250,000 in any other case.

Under the SFR (LCB), for the acquisition or selling of shares or futures contracts by the next trading day, a CMS license holder shall give its customer a contract notice. In situations where any specifics of the deal to be contained in the contract note are available only later, the holder of the CMS license should issue the contract note by the next business day after the specifics have been made available.

The monthly statements are not necessary if the details to be presented in the document have already been submitted to the consumer by the Clearing House, or no modifications have been made to the customer’s account in a month, or the customer is an Authorized Investor, and the customer has been provided with real-time electronic updates and he has opted to use such electronic statements only.

If the monthly report for the last quarter of the calendar(i.e. March, June, September, and December) has not been issued, then the holder of the CMS license must give the customer a quarterly statement containing the same details as the monthly statement of account needed.