A New Regime For Regulating Outsourcing By Banks

The Banking (Amendment) Bill 2019 ("Amendment Bill") was passed by Parliament on 6 January 2020. The Bill seeks to make several significant changes to the current regulatory framework under which the banking industry is regulated by the Monetary Authority of Singapore ("MAS"). Amongst other things, the current divide between a bank's Domestic Banking Unit and Asian Currency Unit will be abolished, and merchant banks will be licensed and regulated by MAS as a separate licensing class under the Banking Act. This update will discuss one feature of the Amendment Bill that has largely been overlooked by mainstream media, but which may yet turn out to be of equal if not greater significance to existing players in the banking market, namely the introduction of a new section 47A in the Banking Act, that will establish a more formalistic regime under which MAS will oversee outsourcing arrangements that banks enter into.