title: Frequently Asked Questions: Fit and Proper Criteria¶

Frequently Asked Questions: Fit and Proper Criteria¶

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Overview¶

Q1: What are the Fit and Proper criteria under MAS guidelines?¶

The Fit and Proper criteria, set out in MAS Guidelines on Fit and Proper Criteria (FSG-G01), assess whether an individual is suitable to serve as a representative of a financial institution. The three core criteria are:

Honesty, integrity, and reputation: The individual must be of good character and have not engaged in conduct that calls into question their honesty or integrity.
Competence and capability: The individual must possess the necessary skills, knowledge, and experience to perform their role effectively.
Financial soundness: The individual must be financially sound and not in a position where financial difficulties could compromise their judgment or conduct.

Q2: Who assesses Fit and Proper status?¶

Both the financial institution (FI) and MAS play roles in assessment: - The FI is primarily responsible for conducting due diligence and assessing the Fit and Proper status of its representatives before submitting appointment notifications - MAS reviews the information submitted and may conduct its own checks, request additional information, or object to an appointment - The FI must maintain ongoing oversight of representatives' Fit and Proper status throughout the appointment

Q3: When is Fit and Proper assessment conducted?¶

Assessment is conducted at multiple points: - Pre-appointment: Before submitting the appointment notification to MAS (this is the statutory certification point — FSG-G01 ¶3, SFA s99H(1)(b) / FAA s23F(1)(b)) - On an ongoing basis: Fit-and-proper is a continuing duty (FSG-G01 ¶10(c)) — the FI must maintain internal controls to keep confirming staff stay fit and proper. (Note: MAS does not fix a specific re-certification interval; a periodic — e.g. annual — internal review is common good practice, not a MAS-mandated cadence.) - Triggered reviews: When material changes occur (e.g., bankruptcy filing, criminal charges, regulatory action) - Upon cessation: To determine if any adverse information should be disclosed in the cessation notification

Disqualifying Factors¶

Q4: Does bankruptcy automatically disqualify someone?¶

Being an undischarged bankrupt is a significant negative factor but is not an absolute bar in all circumstances. Key considerations: - Undischarged bankrupts are generally considered unfit under the financial soundness criterion - Discharged bankrupts may be considered, but the FI and MAS will review the circumstances, including the cause of bankruptcy, duration, and evidence of financial recovery - The bankruptcy must be disclosed in the Form 3A regardless of status - MAS takes a particularly serious view of bankruptcy for representatives handling client monies

Q5: What criminal offences lead to disqualification?¶

Offences that most directly affect Fit and Proper assessment include: - Fraud and dishonesty offences: Theft, forgery, cheating, criminal breach of trust, money laundering - Financial crimes: Insider trading, market manipulation, securities fraud - Drug offences: Particularly those involving trafficking - Violent offences: Depending on severity and circumstances - Regulatory offences: Breaches of financial services legislation

The severity, recency, and relevance to financial services all factor into the assessment.

Q6: How long do criminal records remain relevant?¶

There is no fixed "expiry" period for criminal records under the Fit and Proper assessment. MAS considers: - Spent convictions: Under the Registration of Criminals Act, certain convictions can become "spent" after a crime-free period. (The specific eligibility conditions and periods are set by that Act, not by FSG-G01 — check the Act for the current thresholds rather than relying on a rule of thumb.) - Relevance: A 20-year-old minor offence may carry less weight than a 5-year-old fraud conviction - Pattern of behaviour: Multiple offences over time are viewed more seriously than a single isolated incident - Rehabilitation evidence: Steps taken to address the underlying issues

Even spent convictions must generally be disclosed to MAS for Fit and Proper assessment purposes.

Q7: Does a regulatory action by an overseas regulator count?¶

Yes. MAS considers regulatory actions taken by overseas regulators, including: - Licence revocations or suspensions - Fines or penalties imposed - Prohibition orders - Formal warnings or reprimands - Conditions imposed on licensure

The FI must disclose all known overseas regulatory actions in the appointment notification. MAS may liaise with overseas regulators for additional information.

Q8: Can civil lawsuits affect Fit and Proper status?¶

Civil lawsuits alone do not automatically affect Fit and Proper status. However, they become relevant when: - The lawsuit involves allegations of fraud, dishonesty, or breach of fiduciary duty - There are multiple civil claims suggesting a pattern of misconduct - A judgment has been entered against the individual for financial misconduct - The claims are related to the individual's financial services activities

Pending civil claims involving fraud or dishonesty must be disclosed.

Specific Scenarios¶

Q9: What if someone has been investigated but not charged?¶

An investigation without charges does not automatically disqualify an individual. However: - Ongoing investigations by regulatory bodies or law enforcement should be disclosed - The FI should assess the nature and status of the investigation - MAS may defer the appointment decision until the investigation concludes - The FI must exercise judgment about the risk of appointing the individual while an investigation is pending

Q10: Does poor credit history affect Fit and Proper status?¶

Yes, poor credit history is relevant to the financial soundness criterion. MAS and FIs consider: - Outstanding debts and their amounts - History of defaults or late payments - Whether the individual has been subject to legal proceedings for debt recovery - Whether financial difficulties could create incentives for misconduct - Steps taken to resolve financial issues

A credit bureau report is typically obtained as part of the due diligence process.

Q11: What about individuals who were directors of failed companies?¶

Being a director of a company that failed does not automatically disqualify an individual. Assessment considers: - The individual's role and level of responsibility in the company - Whether the failure was due to misconduct or poor management versus market conditions - Whether any regulatory or legal action was taken against the individual in connection with the failure - Whether there are patterns of involvement in failed entities

Q12: Does mental health history affect Fit and Proper assessment?¶

MAS does not specifically require disclosure of mental health history. The Fit and Proper criteria focus on competence, integrity, and financial soundness. However: - If a mental health condition has led to a legal finding of incapacity, this may be relevant - FIs should focus on the individual's current ability to perform their role competently - Any medical disclosures should be handled in accordance with privacy laws and the Personal Data Protection Act (PDPA)

Q13: Can someone dismissed from a previous FI be appointed?¶

Yes, but with careful scrutiny. The FI must: - Conduct thorough reference checks with the previous employer - Understand the reasons for dismissal - Assess whether the dismissal was related to misconduct, poor performance, or other factors - Disclose the circumstances in the appointment notification - MAS will review the disclosed information and may request additional details

If the dismissal was related to regulatory breaches or misconduct, this will be a significant factor in the assessment.

Disclosure Requirements¶

Q14: What must be disclosed in the Fit and Proper declaration?¶

The declaration must cover: - Criminal history: All convictions (including spent convictions), ongoing investigations, and charges - Civil proceedings: Lawsuits involving fraud, dishonesty, or breach of fiduciary duty - Bankruptcy and financial difficulty: Current and past bankruptcy, debt arrangements, unsatisfied judgments - Regulatory history: Actions by any financial regulator worldwide, licence refusals or revocations - Employment history: Dismissals, forced resignations, and reasons for leaving financial services roles - Professional misconduct: Disciplinary actions by professional bodies - Truthfulness: A declaration that all information provided is true, complete, and accurate

Q15: What happens if adverse information is not disclosed?¶

Failure to disclose material information is itself a serious Fit and Proper concern. Consequences include: - For the individual: Potential refusal or revocation of appointment, prohibition from the industry, criminal liability for false declarations - For the FI: Regulatory action for inadequate due diligence, fines, reputational damage - MAS takes a very serious view of non-disclosure, often more seriously than the underlying issue - Belated disclosure after MAS independently discovers the information is viewed more negatively than proactive disclosure

Yes. Under the Personal Data Protection Act (PDPA) and employment law: - The individual must provide written consent for the FI to conduct background checks - This includes credit bureau checks, criminal record checks, and reference checks - The individual must be informed of the purpose and scope of the checks - Refusal to consent to necessary checks will typically prevent the appointment from proceeding

Ongoing Monitoring¶

Q17: How should FIs monitor ongoing Fit and Proper status?¶

The continuing fit-and-proper duty (FSG-G01 ¶10(c)) requires FIs to maintain internal controls; the specific measures below are industry good practice, not a prescriptive MAS checklist — adopt what is proportionate to your business: - Periodic declarations: Require representatives to re-declare fit-and-proper status periodically (many FIs do this annually — the interval is the FI's choice, not a MAS-fixed cadence) - Continuous monitoring: Systems to detect changes in bankruptcy status, criminal records, and regulatory actions - Self-reporting obligation: Require representatives to report any material changes promptly - Complaint monitoring: Track customer complaints and internal disciplinary matters - Media monitoring: Monitor for adverse media reports about representatives - Credit monitoring: Periodic credit checks (with consent)

Q18: What triggers an immediate Fit and Proper review?¶

Events that should trigger an immediate review include: - Filing of criminal charges against the representative - Bankruptcy filing or commencement of debt restructuring proceedings - Regulatory action by any financial regulator - Significant customer complaint alleging fraud or misconduct - Internal disciplinary proceedings - Adverse media reports - Discovery of previously undisclosed information - Notification from another FI (e.g., in connection with a reference check)

Q19: What should an FI do if a representative fails an ongoing Fit and Proper review?¶

The FI should: 1. Immediately assess the risk to customers and the FI 2. Consider whether to suspend the representative from regulated activities 3. Conduct a thorough investigation 4. Notify MAS if the matter is material 5. Take appropriate action, which may include additional supervision, restricted duties, or cessation of appointment 6. Document all steps taken and the rationale for decisions 7. If appointment is ceased, submit the cessation notification with full disclosure

Q20: Can MAS revoke an appointment based on Fit and Proper concerns?¶

Yes. MAS has the power to: - Object to an appointment after notification - Issue a prohibition order preventing the individual from acting as a representative - Require the FI to cease the appointment - Take enforcement action against the FI for failing to maintain adequate Fit and Proper standards

MAS will typically communicate its concerns to the FI and allow an opportunity to respond before taking formal action, except in urgent cases where immediate action is necessary to protect the public interest.