Regulatory Policy - Fitness and Propriety (December 2020)

Summary

This is CIMA's Regulatory Policy on Fitness and Propriety, dated December 2020, which sets out the criteria and approach the Authority uses to assess whether persons performing controlled functions at regulated entities (and the entities/applicants themselves) are fit and proper. It applies wherever CIMA's assessment powers arise under the Monetary Authority Law, the various Regulatory Laws, the Anti-Money Laundering Regulations, the Directors Registration and Licensing Law, and other relevant legislation or regulatory instruments. It should be read alongside CIMA's Regulatory Procedure for Assessing Fitness and Propriety, the Regulatory Policy on Changes in Ownership and Control, and CIMA's Personal Questionnaire (PQ).

Assessment Criteria and Scope

Honesty, integrity and reputation: CIMA weighs factors such as criminal convictions and disciplinary or insolvency history.
Competence and capability: CIMA weighs factors such as professional qualifications and relevant experience.
Financial soundness: CIMA weighs factors such as financial management history and source of wealth or funds.

The policy applies to natural persons in controlled functions (directors, senior officers, managers, shareholders, licensed professional directors, etc.) as well as to the legal person (Financial Service Provider or applicant) itself, and can extend to regulated funds whose direction and management has not been conducted fit and properly.

Ongoing Obligations and Duties

Nature of the test: The fit and proper test is both an initial gateway at licensing/registration and a continuing, ongoing test throughout the person's tenure.
Burden of proof and due diligence: FSPs bear the burden of satisfying CIMA that a proposed appointee is fit and proper, and are expected to conduct their own recruitment-stage and ongoing due diligence, including verifying qualifications, experience, and references, and conducting probity checks.
Truthful information: Persons and sponsoring firms must provide complete and truthful information, and providing false or misleading information can constitute an offence under the Regulatory Laws.
Notification duty: Any material change affecting the probity questions in the PQ must be reported to CIMA within 21 days, and FSPs must promptly inform CIMA if evidence arises that an approved person is no longer fit and proper.
Consequence of failure: Failure to satisfy CIMA on these criteria may prevent an FSP from appointing or continuing to appoint a person to a controlled function.

Key obligations

FSPs seeking to appoint a person to a controlled function bear the burden of satisfying CIMA that the person is fit and proper.
FSPs/applicants must conduct their own recruitment-stage and ongoing assessment, including verifying qualifications, experience, references, professional body membership, and probity checks (criminal history, sanctions, legal proceedings).
Persons and sponsoring firms must provide complete and truthful information to CIMA; supplying false or misleading information or false statements in documents sent to CIMA may constitute an offence under the Regulatory Laws.
Persons must notify the Authority of any material changes affecting the probity questions in the Personal Questionnaire (PQ) within 21 days.
FSPs must immediately inform CIMA where evidence comes to light that an approved person is no longer fit and proper.
Third parties submitting fit and proper documentation on behalf of a person must obtain and submit information in the requested form and ensure only complete applications are submitted to CIMA.
Persons subject to the Rehabilitation of Offenders Law must disclose spent convictions unless excluded under that law.

Applies to

Financial Service Providers (FSPs), applicants for licensing or registration, persons performing controlled functions (directors, senior officers, managers, officers, shareholders, licensed professional directors), regulated funds, legal persons (beneficial owners and controlled function holders)

Deadlines

21 days: Persons must notify CIMA of any material changes affecting the probity questions in the Personal Questionnaire (PQ) within twenty-one (21) days.