Singapore MAS Annual Report 2021/2022: S$513 Billion Reserves & S$4.7 Billion Net Loss, S$2.4 million Fines for AML, 7 Criminal Convictions, 20 Prohibition Orders
29th July 2022 | Singapore
Singapore central bank Monetary Authority of Singapore (MAS) has released the MAS Annual Report 2021/2022, providing key insights into Singapore S$513 billion ($379 billion) Official Foreign Reserves with S$4.7 billion net loss, 2022 Economic & Inflation Forecast, Interest Rate Transition (LIBOR, SORA), SPACs, Equity Financing, Residential Mortgage Practices, Cryptocurrency restrictions and Green (ESG / Sustainability) initiatives. In 2021, Singapore economy grew 7.6% and forecast to grow in the lower range of 3% to 5% in 2022. 2022 core inflation for Singapore is forecast to be in the range of 3% to 4% and CPI (Consumer Price Index) is forecast to be in the range of 5% to 6%. MAS also strengthened its enforcement power with the new Omnibus Financial Services and Markets Act (FSMA), and provided key insights into Money Laundering, and highlighted cases of 2021 enforcement on Insider Trading & Fraud, including 2003 $8 billion penny stock crash and reprimanding AIA Financial Advisers, Prudential, and 2 Aviva entities, S$2.4 million fines for anti-money laundering & countering the financing of terrorism control breaches, S$150,000 in civil penalties, 7 individuals criminal convictions for market misconduct or related offences and issued 20 prohibition orders against unfit representatives. See below for more info | View MAS 2021/2022 Report | Financial Statement
“ S$513 Billion Reserves & S$4.7 Billion Net Loss, S$2.4 million Fines for AML, 7 Criminal Convictions, 20 Prohibition Orders “
Singapore MAS Annual Report 2021/2022
Key Summary:
- GDP: 7.6% in 2021, Lower of 3–5% in 2022
- 2022 Inflation: 3-4%, CPI 5-6%
- MAS 2021/2022 Financial: S$7.4 Billion Net Loss
- S$2.4 million Fines for anti-money laundering & countering the financing of terrorism control breaches
- S$150,000 in civil penalties.
- 7 individuals criminal convictions for market misconduct or related offences.
- Issued 20 prohibition orders against unfit representatives.
MAS Official Foreign Reserves
- S$513.8 billion ($379.7 billion, 31/3/22)
- Portfolio of cash, bonds and equities
- Diversified across advanced & emerging market economies, currencies.
- Investment-grade bonds in the advanced economies form the largest allocation in the portfolio.
- 75% in US Dollar, the Euro, Japanese Yen & Pound Sterling (US Dollar – majority holdings).
- Investment gain of S$4.0 billion, mainly from interest income, dividends and realised capital gains.
- Currency effects were negative and amounted to S$8.7 billion (SGD strengthened)
- Overall loss of S$4.7 billion in FY 2021/2022.
Selected Top 10 2021/2022 Updates
- Discontinuation of London Interbank Offered Rate (LIBOR)
- Interest Rate Benchmark SOR and SIBOR to SORA
- Singapore Exchange (SGX) Listing Framework for SPACs
- Equity Financing for High-Growth Enterprises
- Consultation Paper on Due diligence Requirements for Corporate Finance Advisers
- Residential Mortgage Pricing and Disclosure practices
- MAS Issued Guidelines to Discourage Promotion of Cryptocurrency Trading to General Public
- MAS & Industry New Digital Platform to Fight Money Laundering, Terrorism & Proliferation Financing
- MAS Information Paper: Sets Benchmark & Good Practices on “Strengthening AML/CFT Name Screening Practices”
- IBF & MAS Launched Skills Maps for Family Office Professionals
Key Feature
- MAS Oversight & Enforcement 2021/2022
- Omnibus Financial Services and Markets Act (FSMA)
- MAS Green / ESG / Sustainability 2021/2022
MAS Enforcement Examples
- Masterminds of 2013 Penny Stocks Crash Convicted on Multiple Charges of Market Manipulation and Cheating of Financial Institutions
- MAS Reprimanded AIA Financial Advisers, Prudential, and 2 Aviva Entities
- Individual Charged Securities & Futures Act: False Trading & Fraudulently Inducing Others in Telegram Chat Groups to Deal in Shares
- 3 Individuals Charged for Insider Trading
- MAS Civil Penalty Action and Issued Prohibition Orders Against 2 Former Trading Representatives for False Trading
- Singapore-Hong Kong Joint Operation Against Suspected Cross-Border Pump-and-Dump Syndicate
Green / ESG / Sustainability 2021/2022
- MAS Information Papers: Environmental Risk Management for Banks, Insurers and Asset Managers
- Green Finance Industry Taskforce (GFIT): Improve Disclosures & Foster Green Finance Solutions
- Sustainable and Green Finance Institute (SGFIN): Drive Green Finance Education & Research
- Climate Impact X (CIX) Completes First Portfolio Auction of Voluntary Nature-Based Carbon Credits
- MAS & CDP Promote Access to Quality ESG Data
- Institute for Banking and Finance Singapore (IBF) & MAS: 12 Technical Skills & Competencies in Sustainable Finance
- MAS Sustainability Group: Appoints Dr Darian McBain as Chief Sustainability Officer
- MAS Green Investment Programme: Appointed Asset Managers
Overview
Singapore Economy 2021/2022:
- 7.6% GDP in 2021
- 2022 Forecast: Lower half of the 3–5% forecast range
- 2022 MAS Core Inflation forecast: 3–4%
- 2022 CPI-All Items inflation forecast: 5–6%
MAS 2021/2022 Financial: S$7.4 Billion Net Loss
For the financial year ended 31 March 2022, MAS recorded a net loss of $7.4 billion. Investment gains arising mainly from interest income, dividends and realised capital gains were recorded despite challenging market conditions and concerns over monetary tightening by global central banks to address higher inflation, as well as slower global growth and geopolitical tensions. These gains were however outweighed by negative currency translation effects as the Singapore Dollar strengthened significantly against the Euro, Japanese Yen and Pound Sterling. Total expenditure of $2.8 billion, was due largely to interest expenses on MAS bills and other borrowings for domestic money market operations.
MAS Reserve Management (S$513 billion)
- MAS held S$513.8 billion (US$379.7 billion) of Official Foreign Reserves (OFR) as at 31 March 2022.
- Portfolio of cash, bonds and equities that ensures sufficient liquidity to support the conduct of monetary policy, and aims to provide good long-term sustainable returns, while being resilient across market conditions.
- diversified across advanced and emerging market economies, and across different currencies.
- Investment-grade bonds in the advanced economies form the largest allocation in the portfolio.
- Around 75% of the OFR are denominated in US Dollar, the Euro, Japanese Yen and Pound Sterling, with US Dollar (majority holdings).
- In FY2021/22, MAS recorded an investment gain of S$4.0 billion, mainly from interest income, dividends and realised capital gains.
- Currency effects were negative and amounted to S$8.7 billion as the Singapore Dollar strengthened significantly against the Euro, Japanese Yen and Pound Sterling.
- The OFR made an overall loss of S$4.7 billion in FY 2021/2022.
Inaugural Singapore Government Securities (Infrastructure) Issuance
Parliament passed the Significant Infrastructure Government Loan Act (SINGA), authorising the Government to borrow up to S$90 billion over the next 15 years to finance major, long-term infrastructure, such as new rail lines and coastal protection infrastructure to protect Singapore against rising sea levels. MAS issued the first Singapore Government Securities (SGS) (Infrastructure) under SINGA on 1 October 2021. The new S$2.6 billion 30-year benchmark bond, was issued at a cut-off yield of 1.95%.
Selected Top 10 2021/2022 MAS Updates
1) Discontinuation of London Interbank Offered Rate (LIBOR)
MAS issued supervisory guidance for the financial industry to reduce its LIBOR exposures in line with global transition timelines, including ceasing the issuance of new contracts based on USD LIBOR by 31 December 2021. Singapore FIs managed a smooth transition when non-USD LIBOR currency panels, as well as the 1-week and 2-month USD LIBOR settings, ceased in end 2021.
2) Interest Rate Benchmark SOR and SIBOR to SORA
The Steering Committee for SOR & SIBOR Transition to SORA (SC-STS) published recommendations for the transition of legacy SOR contracts across the spectrum of financial products to support a coordinated shift towards a Singapore Overnight Rate Average (SORA)-centred interest rate landscape. Market participants to actively transition out of legacy SOR exposures by 31 December 2021.
3) Singapore Exchange (SGX) Listing Framework for SPACs
SGX introduced a listing framework for SPACs. The framework, which was launched after extensive public consultation, provides an alternative capital-raising avenue for enterprises, offering them faster time-to-market, while providing investors with access to early-stage investments typically available only to professional investors.
4) Equity Financing for High-Growth Enterprises
MAS worked with the Ministry of Trade and Industry, EDBI, Temasek, and SGX to launch two co-investment funds to encourage listings on SGX. In addition, MAS enhanced the Grant for Equity Markets Singapore (GEMS) scheme for firms to be listed in Singapore, to help develop Singapore’s equity research ecosystem.
5) Consultation Paper on Due diligence Requirements for Corporate Finance Advisers
MAS issued a consultation paper to seek views on the proposed due diligence requirements for corporate finance advisers when they advise on corporate finance transactions, with additional requirements when advising on initial public offerings to raise the minimum standards of conduct for corporate finance advisers.
6) Residential Mortgage Pricing and Disclosure practices
MAS published an information paper on residential mortgage pricing and disclosure practices of large mortgage lenders. The paper highlights good practices and sets out MAS’ supervisory expectations in the areas of (i) transparency; (ii) consideration of customer’s interests; and (iii) accountability and product governance over banks’ mortgage lending business. MAS also consulted on new requirements for financial institutions to enhance mortgage disclosures.
7) MAS Issued Guidelines to Discourage Promotion of Cryptocurrency Trading to General Public
MAS issued guidelines setting out expectations that digital payment token (DPT) service providers should not market or advertise DPT services in public areas in Singapore, or engage third parties to do so, given that the trading of DPTs is highly risky and not suitable for the general public.
8) MAS & Industry New Digital Platform to Fight Money Laundering, Terrorism & Proliferation Financing
MAS announced its intention to launch a digital platform and enabling regulatory framework for financial institutions (FIs) to share with one another relevant information on customers and transactions to prevent money laundering (ML), terrorism financing (TF) and proliferation financing (PF). The digital platform, Collaborative Sharing of ML/TF Information and Cases (COSMIC), will enable FIs to securely share information on customers or transactions, where they cross material risk thresholds. Such information sharing will help FIs identify and disrupt illicit networks more effectively and efficiently, safeguarding the Singapore financial centre. MAS will be introducing legislative amendments to the Financial Services and Markets Act to set out a regulatory framework for COSMIC later this year. This will provide the legal basis for the sharing of risk information between FIs for anti-money laundering/ countering the financing of terrorism (AML/CFT) purposes.
9) MAS Information Paper: Sets Benchmark & Good Practices on “Strengthening AML/CFT Name Screening Practices”
The paper followed MAS’ thematic inspections on the AML/CFT name screening practices of selected financial institutions (FIs) in 2021. It sets out MAS’ supervisory expectations, as well as good practices, areas for improvement, and illustrative examples observed from the inspections. MAS expects all FIs to benchmark themselves against the supervisory expectations and good practices in the paper.
10) IBF & MAS Launched Skills Maps for Family Office Professionals
IBF and MAS launched two skills maps for family office professionals under the Skills Framework for Financial Services. The new skills maps serve as a resource for training providers and FIs to design family office-related training, and provide guidance on the skills and competencies family office professionals should possess.
MAS Oversight & Enforcement 2021/2022
MAS Investigative & Powers under MAS-administered Acts
MAS proposed legislative amendments to strengthen its investigative powers under MAS-administered Acts. The proposals include enhanced powers for MAS to enter premises in connection with investigations under the SFA and the Financial Advisers Act (FAA) without prior notice or a court warrant, where MAS assesses that there is a risk of evidence being destroyed. MAS also proposed to extend this power, along with other investigative powers that are currently available under the SFA and FAA, to other MAS-administered Acts, namely the Banking Act, Insurance Act, Trust Companies Act, Payment Services Act and Financial Services and Markets Act.
Omnibus Financial Services and Markets Act (FSMA)
The FSMA was passed in Parliament, to enable and empower MAS to respond more effectively to the opportunities and challenges posed by a dynamic and rapidly evolving financial sector, and position Singapore as a safe, trusted and innovative global financial centre.
There are four key aspects to the Act:
- First, it provides MAS with broader powers to issue prohibition orders, which enables MAS to better protect the financial industry from bad actors.
- Second, it sets out a harmonised power to impose technology risk management requirements and increases the maximum penalty for a breach of such requirements to S$1 million. This will bolster the security and resilience of financial services and public confidence in our financial sector.
- Third, it further aligns Singapore with the revised international standards for money laundering and terrorist financing risks posed by digital token service providers, and helps to safeguard Singapore’s reputation as a safe and sound financial centre.
- Fourth, it offers statutory protection for liability for personnel of an operator of a dispute resolution scheme, which in turn strengthens the confidence and autonomy of these individuals when they carry out their duties.
MAS 3rd Enforcement Report
The report highlighted the strong enforcement actions taken against financial institutions and individuals for breaches of laws and regulations administered by MAS, covering the period July 2020 to December 2021. MAS imposed S$2.4 million in composition penalties for anti-money laundering and countering the financing of terrorism control breaches and S$150,000 in civil penalties. Together with the Attorney-General’s Chambers, MAS successfully secured the criminal convictions of seven individuals for market misconduct or related offences. MAS also issued 20 prohibition orders against unfit representatives. In response to investor and industry feedback, MAS introduced a new section in the report providing updates on ongoing major investigations such as Hyflux Ltd and Noble Group Ltd, and embarked on a study on investor recourse for losses due to market misconduct.
MAS Enforcement Examples
1) Masterminds of 2013 Penny Stocks Crash Convicted on Multiple Charges of Market Manipulation and Cheating of Financial Institutions
Mr Soh Chee Wen and Ms Quah Su-Ling were convicted by the High Court for market manipulation and cheating offences involving an elaborate scheme to manipulate the shares of Blumont Group Ltd, Asiasons Capital Ltd and LionGold Corp Ltd. Mr Soh and Ms Quah were convicted of a total of 180 and 169 charges respectively. This is the largest market manipulation case in Singapore’s history. During investigations, MAS and the CAD of the SPF raided over 50 locations and interviewed more than 70 persons. The investigations covered extensive documentary evidence comprising over two million emails, half a million trade orders, and thousands of telephone records and financial statements.
2) MAS Reprimanded AIA Financial Advisers, Prudential, and 2 Aviva Entities
MAS reprimanded AIA Financial Advisers Private Limited, Prudential Assurance Company Singapore (Pte) Limited, Aviva Ltd and Aviva Financial Advisers Pte Ltd (Aviva FA) for breach of requirements relating to the remuneration of supervisors and risk management arrangements. Aviva FA’s ex-CEO and Director, Mr Lionel Chee, was also reprimanded for his failure to discharge the duties of his office.
3) Individual Charged Securities & Futures Act: False Trading & Fraudulently Inducing Others in Telegram Chat Groups to Deal in Shares
MAS and the Commercial Affairs Department (CAD) of the Singapore Police Force (SPF) charged Mr Goh Jia Poh, Kenneth, under the Securities and Futures Act (SFA), for trading in multiple securities listed on the Mainboard or the Catalist of the Singapore Exchange (SGX), and creating a false appearance regarding the market for the securities. Mr Goh was also charged for making false statements in Telegram chat groups to induce others to deal in securities.
4) 3 Individuals Charged for Insider Trading
Three individuals were charged for offences under the SFA and the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA). In July and August 2016, two of the individuals allegedly purchased shares of Broadway Industrial Group Limited, a company listed on the SGX, ahead of the company’s announcement on 22 August 2016 that it had entered into a conditional sale and purchase agreement to sell two of its businesses. The investigation was jointly conducted by the MAS and the CAD of the SPF.
5) MAS Civil Penalty Action and Issued Prohibition Orders Against 2 Former Trading Representatives for False Trading
MAS imposed civil penalties and issued prohibition orders against two former trading representatives, Ms Ngin Kim Choo and Mr Yeo Jin Lui, for false trading. Both executed a client’s instructions to purchase KS Energy Ltd (KSE) shares for the purpose of creating a false or misleading appearance with respect to the price of KSE shares.
6) Singapore-Hong Kong Joint Operation Against Suspected Cross-Border Pump-and-Dump Syndicate
MAS and the CAD of the SPF launched a joint investigation into a syndicate suspected of operating pump-and-dump scams on stocks listed on the Hong Kong Stock Exchange, in contravention of the SFA. The simultaneous joint operation, which involved securities regulators and law enforcement agencies in Singapore and Hong Kong, was the first-of-its-kind in tackling cross-border pump-and-dump scams.
Green / ESG / Sustainability MAS 2021/2022
1) MAS Information Papers: Environmental Risk Management for Banks, Insurers and Asset Managers
MAS published information papers on environmental risk management for banks, insurers and asset managers. The papers, based on a thematic review conducted by MAS in 2021, provide an overview of the progress made by selected FIs in implementing the MAS Guidelines on Environmental Risk Management. The papers also highlight emerging and good practices by FIs and identify areas where further work is needed.
2) Green Finance Industry Taskforce (GFIT): Improve Disclosures & Foster Green Finance Solutions
GFIT issued a detailed implementation guide for climate-related disclosures by financial institutions (FIs); a framework to help banks assess eligible green trade finance transactions; and a white paper on scaling green finance in the real estate, infrastructure, fund management and transition sectors. GFIT had earlier issued a Phase 1 taxonomy for public consultation, which set out environmental objectives, focus sectors, and a traffic light system framework. Work on developing more granular criteria, including metrics and thresholds to help operationalise the classification system is ongoing. GFIT also launched a public consultation on detailed thresholds and criteria for economic activities in the energy, transport, and real estate sectors. This builds on GFIT’s earlier proposed taxonomy in January 2021. It also incorporates a user guide for financial institutions and companies to apply the taxonomy.
3) Sustainable and Green Finance Institute (SGFIN): Drive Green Finance Education & Research
The SGFIN, established by the National University of Singapore in September 2021, addresses research gaps on real economy sustainability topics such as corporate impact measurement and assessment frameworks, and provides capability building training programmes for university students and business practitioners across a range of disciplines and industries. Supported by MAS, SGFIN will provide thought leadership and shape sustainability outcomes and policymaking across the real economy and financial sector.
4) Climate Impact X (CIX) Completes First Portfolio Auction of Voluntary Nature-Based Carbon Credits
CIX is a joint venture between DBS Bank, Standard Chartered, SGX and Temasek. Forged from Singapore’s Emerging Stronger Taskforce Sustainability Alliance for Action and supported by MAS, CIX is a global marketplace and exchange for high-quality carbon credits. In November 2021, CIX piloted an auction of a portfolio of eight high-quality nature-based carbon credits projects, and the pilot auction cleared 170,000 carbon credits and was supported by 19 buyers across various industries. In March 2022, CIX launched Project Marketplace and started a pilot with Carbonplace, a new carbon credit settlement platform developed by seven banks.
5) MAS & CDP Promote Access to Quality ESG Data
MAS and CDP (formerly known as the Carbon Disclosure Project) signed a Memorandum of Understanding to promote sustainability disclosures and access to quality ESG data across the financial sector and real economy. Through exchanging information between CDP’s disclosure system and MAS’ Project Greenprint, as well as implementing capacity-building programmes, the partnership seeks to support financial institutions in their sustainable finance and investment decisions by providing access to transparent, trusted, and efficient ESG data.
6) Institute for Banking and Finance Singapore (IBF) & MAS: 12 Technical Skills & Competencies in Sustainable Finance
MAS and IBF set out 12 Sustainable Finance Technical Skills and Competencies (SF TSCs) under the IBF’s Skills Framework for Financial Services. The SF TSCs cover a range of functional knowledge (e.g. sustainability risk management, sustainability reporting, sustainable investment management) and thematic (e.g. climate change policy developments, natural capital, green taxonomies) topics. The SF TSCs will provide information on competencies needed for occupations and job roles in sustainable finance, career pathways, and training programmes for skills upgrading and mastery.
7) MAS Sustainability Group: Appoints Dr Darian McBain as Chief Sustainability Officer
MAS announced the formation of a new Sustainability Group and the appointment of Dr Darian McBain as Chief Sustainability Officer, with effect from 1 October 2021.
8) MAS Green Investment Programme: Appointed Asset Managers
5 asset managers were appointed under MAS’ Green Investment Programme (GIP) to manage new equity and fixed income mandates focused on climate change and the environment. The GIP will help to enhance the climate resilience of the Singapore’s Official Foreign Reserves, attract sustainability-focused asset managers to Singapore, and catalyse funding towards environmentally sustainable projects in Asia and beyond. The asset management companies appointed under the GIP will establish their Asia Pacific sustainability hubs in Singapore and launch new ESG thematic funds for the Asia Pacific region.
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