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Monetary Authority of Singapore Issues Revised Guidelines on Outsourcing

On July 27, 2016, the Monetary Authority of Singapore (MAS) issued revised Guidelines on Outsourcing (Guidelines) that raise the standards of financial institutions’ outsourcing risk management practices.

Changes in the new Guidelines include a new section on cloud computing, which the Guidelines recognize as a form of outsourcing arrangement requiring the same level of sound governance and risk management practices mandated for other forms of outsourcing. Certain additional obligations are also imposed for “material outsourcing arrangements,” including the requirement to perform periodic reviews at least annually and to ensure that outsourcing agreements incorporate clauses granting MAS audit and information access.

The revised Guidelines apply to outsourcing arrangements with both third-party service providers and with entities within the institution’s corporate group (including its parent, subsidiaries, and affiliates). The Guidelines themselves are not legally binding, but MAS will consider an institution’s implementation of the Guidelines in determining the supervisory conduct of the institution’s board and senior management in the areas of governance, internal controls, and risk management.

In implementing the Guidelines, financial institutions should conduct a self-assessment of all existing outsourcing arrangements by no later than October 26, 2016 and rectify deficiencies identified in the self-assessments by July 26, 2017. A MAS Notice on Outsourcing, which will define a set of minimum standards for outsourcing management, will be issued at a later date once MAS completes an internal review of industry feedback.

Copyright © 2019 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

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About this Author

Barbara Melby, Morgan Lewis, data privacy and cybersecurity lawyer
Partner

Barbara Melby has been active in the outsourcing and technology transaction legal market for the last 25 years. As leader of the firm’s technology, outsourcing & commercial transactions practice, she represents clients in such complex transactions as outsourcing, strategic alliances, technology and data-related agreements, and other services transactions. She also advises businesses on privacy and security issues that arise in transactions involving sensitive data and technologies.

215-963-5053
Glen Rectenwald, Morgan Lewis, Technology Attorney
Associate

Glen W. Rectenwald focuses his practice on technology, outsourcing, and commercial transactions. He regularly assists a broad range of clients with development, licensing, and distribution agreements; strategic alliances and joint ventures; manufacturing and supply agreements; complex outsourcing and strategic commercial transactions; and general commercial matters. Glen’s experience also includes mergers and acquisitions, private equity, venture capital, and general corporate matters.

412-560-7413