Singapore Exchange Removes Ban on UOB Kay Hian after 2 Years Since 2022 as Issue Manager or Full Sponsor for IPO & Reverse Takeover, Singapore MAS Fined UOB Kay Hian $267,000 in 2022 for Failure in Compliance, IPO Due Diligence, Red Flags for Nominee Arrangement, Anti-Money Laundering
18th October 2024 | Hong Kong
Singapore Exchange Regulation (SGX RegCo) has removed the ban on UOB Kay Hian after yearly 2 years (2022) as issue manager or full sponsor for IPO (Initial Public Offering) & Reverse Takeover on both SGX Mainboard & Catalist. SGX (17/10/24): “Singapore Exchange Regulation (SGX RegCo) refers to its 27 December 2022 regulatory announcement, where SGX RegCo exercised its powers under Mainboard Rule 1405(1)(k) and Catalist Rule 305(1)(k), and imposed certain requirements on UOB Kay Hian Private Limited (UOBKH). These requirements included a prohibition from acting as an issue manager or full sponsor for SGX Mainboard and Catalist initial public offering (IPO) and reverse takeover (RTO) submissions (Moratorium), save for submissions which UOBKH agreed to act as issue manager or full sponsor (as may be applicable) under any agreement entered into before 31 August 2022, until such date as SGX RegCo specifies. SGX RegCo notes that UOBKH has taken remedial action to strengthen its policies and procedures for IPO and RTO transactions, including enhanced oversight on the activities of UOBKH’s Corporate Finance Department. Having considered the remedial actions that UOBKH has taken to address the recommendations, conditions and directions that SGX RegCo has imposed, SGX RegCo is lifting the Moratorium with immediate effect.” In 2022 December, Singapore Exchange Regulation (SGX RegCo) imposed a ban on UOB Kay Hian as issue manager or full sponsor for IPO (Initial Public Offering) & Reverse Takeover on both SGX Mainboard & Catalist, following Singapore central bank Monetary Authority of Singapore (MAS) fine on UOB Kay Hian of $267,000 (S$375,000, 31/8/22) for failure in compliance, IPO due diligence, Red Flags for nominee arrangement & Anti-money laundering. For UOB Kay Hian corporate finance business (2012 to 2018), brokerage firm UOB Kay Hian had failed to sufficiently involve compliance in senior management meetings, failed to meet IPO due diligence standards (Association of Banks in Singapore Listings Due Diligence Guidelines), and inadequate internal audit including no internal audits done since establishment in Sept 2012. Between 2016 to 2017, UOB had also breached MAS anti-money laundering & countering the financing of terrorism (AML/CFT) requirements, failing to verify customers’ source of wealth during on-boarding, accepting substantial 3rd party payments for IPO without adequate due diligence, failing to detect & report suspicious transactions despite red flags of potential nominee arrangements. See below for Singapore Exchange Regulation (SGX RegCo) and Monetary Authority of Singapore (MAS) statement.
“ Singapore Exchange Removes Ban on UOB Kay Hian after 2 Years Since 2022 as Issue Manager or Full Sponsor for IPO & Reverse Takeover, Singapore MAS Fined UOB Kay Hian $267,000 in 2022 for Failure in Compliance, IPO Due Diligence, Red Flags for Nominee Arrangement, Anti-Money Laundering “
Singapore Exchange Bans UOB Kay Hian as Issue Manager or Full Sponsor for IPO & Reverse Takeover, Fined $267,000 for Singapore MAS for Failure in Compliance, IPO Due Diligence, Red Flags for Nominee Arrangement, Anti-Money Laundering
28th December 2022 – Singapore Exchange Regulation (SGX RegCo) has imposed a ban on UOB Kay Hian as issue manager or full sponsor for IPO (Initial Public Offering) & Reverse Takeover on both SGX Mainboard & Catalist, following Singapore central bank Monetary Authority of Singapore (MAS) fine on UOB Kay Hian of $267,000 (S$375,000, 31/8/22) for failure in compliance, IPO due diligence, Red Flags for nominee arrangement & Anti-money laundering. For UOB Kay Hian corporate finance business (2012 to 2018), brokerage firm UOB Kay Hian had failed to sufficiently involve compliance in senior management meetings, failed to meet IPO due diligence standards (Association of Banks in Singapore Listings Due Diligence Guidelines), and inadequate internal audit including no internal audits done since establishment in Sept 2012. Between 2016 to 2017, UOB had also breached MAS anti-money laundering & countering the financing of terrorism (AML/CFT) requirements, failing to verify customers’ source of wealth during on-boarding, accepting substantial 3rd party payments for IPO without adequate due diligence, failing to detect & report suspicious transactions despite red flags of potential nominee arrangements. See below for Singapore Exchange Regulation (SGX RegCo) and Monetary Authority of Singapore (MAS) statement.
Singapore MAS: “UOBKH’s breaches of AML/CFT requirements exposed it to the risk of being used as a conduit for financial crime. UOBKH has taken remedial measures to enhance their internal policies and controls. In addition, MAS has required UOBKH to appoint an independent external party to validate the implementation and effectiveness of its remediation measures and report the findings to MAS.”
Loo Siew Yee, MAS Assistant Managing Director (Policy, Payments & Financial Crime): “MAS expects capital markets services licensees to comply with all business conduct and AML/CFT regulations, including ensuring that its control functions act as an effective and independent line of defence against risks. Boards and Senior Management of licensees should exercise strong oversight of risk management and inculcate a high level of AML/CFT and compliance risk awareness among staff.”
Singapore Exchange Regulation (SGX RegCo) on UOB Kay Hian
SGX RegCo on 27th Dec 2022 – After deliberating the actions taken against UOBKH by MAS and considering the interests of the market, SGX RegCo hereby exercises its powers under Mainboard Rule 1405(1)(k) and Catalist Rule 305(1)(k), and imposes the following requirements on UOBKH:
- UOBKH will not be allowed to undertake new mandates to act as an issue manager or full sponsor for SGX Mainboard and Catalist initial public offering (IPO) and reverse takeover (RTO) submissions, save for IPO and RTO submissions for which UOBKH had agreed to act as issue manager or full sponsor (as may be applicable) under any agreement entered into before 31 August 2022, until such date as SGX RegCo specifies in writing.
- UOBKH will be subject to certain requirements imposed by SGX RegCo in respect of its introducing activities as a full sponsor.
- A review of the requirements set out above by SGX RegCo will be subject to, among others, UOBKH satisfactorily addressing and fulfilling all recommendations, conditions, and directions that SGX RegCo has imposed on UOBKH.
Compliance with the abovementioned requirements does not constitute a waiver of any kind. SGX RegCo reserves the right to take disciplinary action against UOBKH for breaches of the Mainboard and/or Catalist Rules, including the failure to comply with any of the requirements imposed by SGX RegCo.
UOB Kay Hian
Backed by the UOB Group, UOB Kay Hian is one of Asia’s largest brokerage firms. Headquartered in Singapore, we are supported by more than 80 branches worldwide including a growing network of offices across Southeast Asia, Greater China, the United Kingdom and North America. Our global footprint and strong international presence have enabled us to feel the pulse of key financial markets and deliver incisive intelligence across industry sectors and asset classes.
Singapore MAS Fines Brokerage UOB Kay Hian $267,000 for Failure in Compliance, IPO Due Diligence, Red Flags for Nominee Arrangement, Anti-Money Laundering
1st September 2022 – Singapore central bank Monetary Authority of Singapore (MAS) has fined brokerage UOB Kay Hian $267,000 (S$375,000) for failure in compliance, IPO due diligence, Red Flags for nominee arrangement & Anti-money laundering. For UOB Kay Hian corporate finance business (2012 to 2018), brokerage firm UOB Kay Hian had failed to sufficiently involve compliance in senior management meetings, failed to meet IPO due diligence standards (Association of Banks in Singapore Listings Due Diligence Guidelines), and inadequate internal audit including no internal audits done since establishment in Sept 2012. Between 2016 to 2017, UOB had also breached MAS anti-money laundering & countering the financing of terrorism (AML/CFT) requirements, failing to verify customers’ source of wealth during on-boarding, accepting substantial 3rd party payments for IPO without adequate due diligence, failing to detect & report suspicious transactions despite red flags of potential nominee arrangements. Singapore MAS: “UOBKH’s breaches of AML/CFT requirements exposed it to the risk of being used as a conduit for financial crime. UOBKH has taken remedial measures to enhance their internal policies and controls. In addition, MAS has required UOBKH to appoint an independent external party to validate the implementation and effectiveness of its remediation measures and report the findings to MAS.” Loo Siew Yee, MAS Assistant Managing Director (Policy, Payments & Financial Crime): “MAS expects capital markets services licensees to comply with all business conduct and AML/CFT regulations, including ensuring that its control functions act as an effective and independent line of defence against risks. Boards and Senior Management of licensees should exercise strong oversight of risk management and inculcate a high level of AML/CFT and compliance risk awareness among staff.”
Singapore MAS Fines UOB S$375,000
The Monetary Authority of Singapore (MAS) has imposed a composition penalty of S$375,000 on UOB Kay Hian Private Limited (UOBKH) for its failures to comply with business conduct requirements under the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR) and anti-money laundering and countering the financing of terrorism (AML/CFT) requirements under MAS Notice SFA04-N02. These failures were identified during an inspection by MAS. UOBKH has paid the penalty in full.
Composition of SFR offences
MAS’ business conduct requirements for capital market intermediaries are set out in Securities and Futures (Licensing and Conduct of Business) Regulations. Each breach of the SFR is an offence punishable under regulation 55 of the SFR, where the maximum prescribed fine is $50,000 per offence. The breach is compoundable under section 336(2) of the Securities and Futures Act read with section 26A of the Interpretation Act.
Composition of AML/CFT offences
MAS’ AML/CFT requirements for capital market intermediaries are set out in MAS Notice SFA04-N02 on Prevention of Money Laundering and Countering the Financing of Terrorism – Capital Market Intermediaries. Each breach of Notice SFA04-N02 is an offence punishable under section 27B(2) of the MAS Act, where the maximum prescribed fine is $1,000,000 per offence. The breach is compoundable under section 176 of the MAS Act.
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