Notice to banks (MAS notice 658); and FAQ on MAS guidelines on outsourcing re same.
Notices and FAQ
The notices introduce new terminology and concepts that require a new corresponding set of Guidelines on outsourcing (banks) that only apply to banks and merchant banks.
FAQ provides clarifications re frequently asked questions on Guidelines on outsourcing.
Overview of Circular
This circular is addressed to all insurers and designated financial holding companies.
Existing Guidelines on outsourcing have been amended and renamed Guidelines on outsourcing (financial institutions other than banks) due to issuance of Guidelines on outsourcing (banks);revisions below, re existing set of guidelines, take effect Dec. 11.
Specifically, the removal of references to banks as well as merchant banks; as well as the addition of an annex of exempted outsourced services, which had previously been communicated to financial institutions through/via Circular ID 26/20 on Jun. 9, 2020.
SIN MAS said these are services that are wholly provided by Government Technology Agency, or services not for the conduct of financial business and where the service provider does not handle the financial institution’s confidential/customer information.
In addition, amendments relating to business continuity management (BCS) for alignment with the revised Guidelines on business continuity management, #123942.
SIN MAS said it will consider whether and how to impose the equivalent of the notices on non-bank financial institutions as well; SIN MAS will consult industry as well as relevant stakeholders prior to imposing specific requirements relating to such services.
As reliance on third parties for service delivery increases, financial institutions are expected to assess the risks arising from such reliance, as well as implement controls.
Financial institutions should do so regardless of whether the reliance constitutes an outsourcing arrangement; third-party services are also subject to other SIN MAS requirements and expectations on areas i.e. operational risk, technology risk and BCM.
SIN MAS will also consider need for more specific guidelines to address risks arising re financial institutions’ broader use of third-party services i.e. non-outsourced services.
Effectiveness
Revisions above to the existing set of guidelines take effect from Dec. 11, 2024.
Regulators
SIN MAS
Entity Types
B/D; Corp; Ins; Inv Co
Reference
Cir ID 19/23, FAQ, Gd, Nt 658, 1121, PR 12/11/2023
