The Monetary Authority of Singapore (MAS) first introduced the Anti-Commingling Framework (the “Framework”) in 2001. The Framework required banks in Singapore to segregate their financial and nonfinancial businesses. The MAS’s intention was to ensure that banks remained focused on their core businesses and competencies and avoid any contagion problems that could arise from the conduct of nonfinancial businesses.
Given the advent of new technology and the considerable evolution of banking since then, the MAS recognised that adjustments needed to be made to the Framework. In 2011, it introduced an exemption which gave banks greater flexibility and allowance to conduct nonfinancial businesses that are related or complementary to their core businesses.
More recently in June 2017, the MAS announced its intention to streamline the requirements for banks seeking to conduct or invest in permissible nonfinancial businesses. On 29 September 2017, the MAS published a consultation paper on a review of the Framework, seeking comments on its proposals to simplify and adjust the Framework.
Restrictions Under the Framework
Under the Framework, banks in Singapore are confined under Section 30 of the Banking Act to carrying out banking and financial businesses, and businesses incidental thereto. They are generally prohibited from carrying on other businesses unless they were prescribed or approved by MAS.
Key Proposed Changes
MAS is proposing to refine the following key aspects of the Framework for banks:
- The conditions and requirements under regulation 23G will be streamlined to make it easier for banks to conduct or invest in permissible nonfinancial businesses that are related or complementary to their core financial businesses subject to certain requirements;
- Relaxing the list of nonfinancial businesses which banks are prohibited from conducting or investing in, such as allowing banks to engage, directly or indirectly in the operation of digital platforms that match buyers and sellers of consumer goods or services as well as in the online sale of such goods or services; and
- Simplifying the approval process for use of Singapore-incorporated bank names, logos or trademarks in events sponsored by the banks.
Comments on the proposals in the consultation paper were due on 15 November 2017. It may not be long before the revisions are introduced into legislation.