Guidelines on Outsourcing (Financial Institutions other than Banks)

In view of the increasing use of outsourcing arrangements by financial market players, the Monetary Authority of Singapore (MAS) has published new guidelines in this context. In these guidelines, MAS outlines its expectations of firms currently engaged in outsourcing arrangements or that plan to be come engaged in such. MAS thereby covers a wide range of issues including the following:
– the responsibilities of the board of directors, including the decision over and set up of an adequate corporate strategy with respect to outsourcing based upon the risk appetite of a firm, the oversight of senior management to „transpose“ this strategy, and the assignment of clear tasks and responsibilities in this matter;
– the responsibilities of senior managers to implement the beforementioned strategy and to develop business procedures to ensure proper monitoring of outsourcing arrangements, frequent risk assessments of existing arrangements, and adequate fallback policies in case of service disruptions;
– the evaluation of risks in relation to existing and possible upcoming outsourcing arrangements and the maintenance of an outsourcing register;
– the evaluation of a potential service provider before engaging with such, including the assessment of its experience, capabilities, the existence of indemnity insurance, its risk management controls, and others;
– the key components of any outsourcing arrangement such as the scope of service to be provided, responsibilities of either party to such arrangement, notification requirements in case of incidents, or dispute resolution mechanisms;
– the ongoing monitoring and control of outsourcing arrangements; and
– the notification requirements of in-scope firms in case of incidents resulting from an outsourcing arrangement that may affect the operation of such firm.
The guidelines also provide specific guidance for outsourcing certain operations to overseas service providers and reference a link where a list of services may be found that are exempt from the requirements stipulated in the document besides those relating to non-financial services.
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As these are only the key provisions provided in the new guidelines, please refer to the original legal document for more detailed, comprehensive information.