Singapore legislation
Regulation 15
Regulation 15
Safeguarding of relevant moneys by guarantee
Subregulation 1
If a major payment institution or licensee mentioned in section 23(1) or (3) of the Act intends to safeguard or safeguards the relevant money of a customer by a guarantee given by a safeguarding institution mentioned in paragraph (b) of the definition of “safeguarding institution” in section 23(14) of the Act for the relevant money, the major payment institution or licensee must —
before obtaining a guarantee from the safeguarding institution —
assess, and satisfy itself of, the suitability of the safeguarding institution with respect to the giving of the guarantee; and
give written notice to the safeguarding institution and obtain an acknowledgment from the safeguarding institution that the guarantee is being obtained by the major payment institution or licensee for the purpose of complying with section 23(2) or (4) of the Act, as the case may be;
ensure that —
the guarantee states that in the event of the insolvency of the major payment institution or licensee, the safeguarding institution assumes a primary liability to pay a sum equal to the amount of the relevant money held by the major payment institution or licensee at the end of the business day immediately preceding the date the major payment institution or licensee becomes insolvent; and
there is no other condition or restriction on the immediate paying out of money by the safeguarding institution to a separate trust account held by the major payment institution or licensee in accordance with section 23(6) of the Act, in the event of the insolvency of the major payment institution or licensee;
disclose in writing to the customer that the relevant money is being safeguarded by a guarantee given by the safeguarding institution for the relevant money;
assess, and satisfy itself of, the suitability of the safeguarding institution with respect to the giving of the guarantee, on an annual basis subsequent to obtaining the guarantee; and
keep, for a period of 5 years or longer, records of the grounds on which the major payment institution or licensee satisfied itself of the safeguarding institution’s suitability under sub‑paragraph (a)(i) or (d).
Subregulation 2
For the purposes of paragraph (b)(ii) of the definition of “safeguarding institution” in section 23(14) of the Act, the prescribed financial institution is —
a merchant bank that holds a merchant bank licence, or is treated as having been granted a merchant bank licence, under the Banking Act 1970;
a finance company licensed under the Finance Companies Act 1967; or
any financial guarantee insurer as defined in regulation 2 of the Insurance (Financial Guarantee Insurance) Regulations (Rg 6).