MAS Fit and Proper Criteria: What Singapore Financial Firms Need to Know

This guide explains what MAS’s fit and proper framework covers, how it is applied in practice, and what steps firms and individuals should take to meet these requirements.

What Are the Fit and Proper Criteria?

MAS’s requirements are set out in the Guidelines on Fit and Proper Criteria (Guidelines FSG-G01). These guidelines apply across MAS’s regulated sectors: capital markets, banking, insurance, and payment services.

The criteria assess individuals across four dimensions:

1. Honesty, Integrity and Reputation

This is the broadest and most heavily weighted dimension. MAS considers whether the individual has been the subject of adverse findings by any regulator or supervisory authority in Singapore or overseas, has criminal convictions for offences involving fraud, dishonesty, or financial misconduct, has been a director of a company wound up due to insolvency in circumstances where the individual bears responsibility, or has been subject to civil or regulatory proceedings that reflect on their professional conduct.

A single adverse finding does not automatically disqualify an individual. MAS will consider the nature and gravity of the matter, how long ago it occurred, and what remedial action was taken.

2. Competence and Capability

MAS assesses whether the individual has the necessary experience, qualifications, and track record to perform the role. For capital markets entities, MAS expects:

• A/I LFMC CEOs to have at least 5 years of relevant seniority in fund management
• Retail LFMC CEOs to demonstrate a more extensive experience profile given the higher investor protection standards applicable to retail-facing entities
• Relevant Professionals (RPs) and licensed representatives to hold recognised qualifications and relevant experience in the regulated activity
• VCFM applicants’ approved persons to demonstrate genuine expertise in venture capital investment, not simply experience in adjacent financial activities

3. Financial Soundness

MAS considers whether an individual is, or has been, bankrupt or has entered a scheme of arrangement with creditors, has unsatisfied court judgments against them, or has had assets seized or restrained. Financial difficulties do not automatically disqualify an individual where the circumstances are historic and have been resolved – but MAS expects full and proactive transparency.

4. Independence

For independent directors and non-executive directors, MAS considers whether they are genuinely independent from controlling shareholders and management. The assessment considers personal, financial, and professional relationships that might impair independent judgment or create conflicts of interest.

Who Must Satisfy the Fit and Proper Criteria?

The criteria apply to:

• Directors of the licensee (including non-executive and independent directors)
• Substantial shareholders (those holding 5% or more of the licensee’s shares, subject to applicable statutory thresholds)
• Chief Executive and any individual exercising equivalent management authority
• MAS-approved representatives and Relevant Professionals registered with MAS under the Securities and Futures Act or Financial Advisers Act

Changes to any of these positions – including appointment of new directors or resignation of key persons – must generally be notified to MAS within specified timeframes.

Ongoing Obligations

Satisfying MAS’s fit and proper criteria is not a one-time exercise completed at licence application. The obligation is continuous.

• Notification obligations: Licensees must notify MAS promptly when a key person ceases to satisfy the fit and proper criteria or when relevant circumstances change. MAS Notice provisions typically require notification within 14 days of the licensee becoming aware.
• Changes in key personnel: New directors and CEOs must be assessed before or upon appointment. For material appointments, MAS may conduct its own assessment before formally acknowledging the change.
• Self-disclosure: Individuals are expected to proactively disclose relevant matters. Waiting for MAS to discover a regulatory or criminal matter through its own channels is not acceptable, and late disclosure is taken seriously.

What Happens When an Individual Fails the Test?

MAS has a range of enforcement powers available:

• Refusal to grant or renew a licence where a key person does not meet the criteria
• Prohibition orders preventing an individual from performing regulated activities in Singapore
• Directions to remove a director, CEO, or substantial shareholder from their position at a licensee

MAS has used these powers in recent years, including issuing prohibition orders against individuals involved in fund management misconduct. Firms should treat fitness and propriety as a live governance matter, not a historical checkbox ticked at the time of licensing.

Practical Steps for Firms

How Alder Can Help

Alder advises MAS-regulated firms on fit and proper assessments, licence applications, and governance reviews. We help firms prepare for MAS’s assessment of key personnel, manage notification obligations, and navigate complex circumstances involving individuals with historic regulatory or legal matters.

This article is for general information only and does not constitute legal or regulatory advice. Contact Alder for advice specific to your circumstances.