Privilege and Cooperation: A Delicate Balance for Financial Institutions in Singapore

As financial institutions (FIs) in Singapore operate in a complex regulatory landscape, they must carefully consider the nuances of privilege and cooperation. This balance is crucial to ensure compliance with regulations while protecting their interests.

Legal Professional Privilege and the Privilege against Self-Incrimination

Financial institutions are entitled to rely on legal professional privilege and the privilege against self-incrimination. However, there may be instances where waiving privilege is necessary to demonstrate full cooperation with regulators.

The Role of Deferred Prosecution Agreements (DPAs)

The recent introduction of the DPA regime in Singapore has brought about a new era of cooperation between FIs and regulatory authorities. A DPA allows companies to avoid criminal prosecution in exchange for compliance with certain conditions, such as cooperating fully with investigations and implementing robust compliance programs.

Limited Waiver of Privilege

However, there are differences in what types of communications are regarded as privileged. Financial institutions must carefully consider whether a report can be submitted to regulators on a “limited waiver of privilege” basis. This requires a thoughtful approach to avoid waiving privilege wider than intended.

Cooperation with Regulatory Authorities

Cooperation with regulatory authorities is essential for FIs in Singapore. Failure to cooperate can result in serious consequences, including fines, penalties, and even criminal prosecution. The Monetary Authority of Singapore (MAS) has taken a more interventionist approach towards enforcement, expanding its powers to address market misconduct and financial services misconduct.

Trends and Expectations

The trend towards increased cooperation is expected to continue, with regulators seeking to enhance issuer accountability and investor confidence in the market. Financial institutions must be prepared to demonstrate their commitment to compliance and transparency, including:

• Implementing robust whistle-blowing policies
• Providing regular updates on their compliance efforts

Conclusion

While privilege remains an important consideration for FIs in Singapore, cooperation with regulatory authorities is increasingly essential. Financial institutions must navigate this delicate balance carefully, ensuring that they comply with regulations while protecting their interests and maintaining a positive reputation in the market.