Singapore: ABS Issues Updated Guidelines For Outsourced Service Providers

Last Updated: 2 August 2017
Article by Eric Chan
Most Read Contributor in Singapore, December 2017

The Association of Banks in Singapore ("ABS") had on 1 June 2017 released a revised version of the Guidelines on Control Objectives and Procedures for Outsourced Service Providers (the "Guidelines"). First released on 26 June 2015, the Guidelines operate within the existing regulatory framework for outsourcing that is established by the Monetary Authority of Singapore ("MAS"). They serve as a set of minimum or baseline standards against which Outsourced Service Providers ("OSPs") are to be assessed when they serve banks in Singapore. While the Guidelines are not binding as such, the expectation of the ABS is that all banks in Singapore ought to follow them and should not depart from them without good reasons.

Broadly, the ambit of the Guidelines deal with the following three categories of controls:

  • Entity Level Controls
  • General Information Technology ("IT") Controls
  • Service Controls

The amendments made to the Guidelines, while generally minor, aim to refine the existing control processes on the OSPs. In so doing, it appears that financial institutions are to play a more involved role in relation to these outsourcing arrangements.

This note outlines the more significant changes made to the Guidelines.

Key Amendments

General audit and inspections requirements

  1. Clarification on engagement of external auditor

    In the event of a change in the external auditor or a different external auditor is appointed for validation of remediation activities, the OSP should ensure that there is a proper handover from the outgoing auditor to the incoming auditor in order to safe-guard the interests of the financial institution.
  2. Frequency of audit

    It is recommended that an audit be conducted once every 12 months. The updated Guidelines further recommend that the audit sample data should cover the entire period since the previous audit, with a minimum testing period of 6 months. This is an increase from the previous minimum testing period of 12 months. Additionally, should the testing period covered be less than 6 months, reasons should also be provided for the shorter period in the report.
  3. Reporting and handling of control failure / qualification of control objectives

    The Guidelines recommend that the auditor identify control failures and assess their potential impact on the services provided to the financial institution. This should be guided by the relevant auditing standards which specify the procedures for qualification of a control objective. OSPs should notify the financial institutions of any significant issues and concerns and their respective remediation plans, no later than the release date of the Outsourced Service Provider Audit Report. In the event that such issues could potentially lead to a prolonged service failure or disruption in the outsourcing arrangement, or any breach of security and confidentiality of the financial institutions' customer information, immediate notification should be made to the financial institutions.

    Additionally, the OSP should develop remediation plans to address the issues identified by the audit. If the issues require an extended time period to correct, the OSP should identify short term measures to mitigate these risks. The remediation measures should be validated by the auditor or another competent independent party.

Entity Level Controls

Entity level controls are internal controls to ensure that the OSP's management directives pertaining to the entire entity are implemented. In this respect, the Guidelines propose more stringent standards in relation to entity level controls.

  1. Risk assessment controls

    In relation to risk management controls, the Guidelines state that prior to introducing changes to the operating environment (including technology components), OSPs should assess the materiality of the changes to the financial institution's outsourced arrangement using a change management framework and should notify and/or seek approval from the financial institution. This also applies to sub-contractors used by the OSP.
  2. Monitoring

    The OSP should also implement processes to bring significant issues and concerns, identified through internal audits or other monitoring procedures, to the OSP's senior management and the financial institutions (if these impact the services provided to them). Copies of any reports and findings made on the OSP or its subcontractors, in relation to the outsourcing arrangements, must also be provided to the financial institution, and results discussed as part of ongoing service discussions.
  3. Information Security policies

    The Guidelines have also suggested that an information security awareness training programme be established, and conducted for the OSP's staff, subcontractors and vendors who have regular access to the OSP's IT resources and systems, to refresh their knowledge.
  4. Practices relating to sub-contracting

    The Guidelines have also established practices in relation to sub-contracting. In particular, the Guidelines have highlighted that because financial institutions expect subcontractors of the OSP to be managed with the same rigour as the OSPs, OSPs should require and ensure that their subcontractors adhere to the requirements stated in the Guidelines. As such, an OSP should do the following in managing its subcontractors:

    • Obtain approvals from the financial institution before engaging subcontractors
    • Be able to demonstrate due diligence and risk assessment of its subcontractors
    • Implement processes to inform and consult the financial institution on material changes to the subcontractors' operating environment
    • Conduct a review of its subcontractors every 12 months
    • Monitor the performance and risk management practices of the subcontractors
    In relation to due diligence and risk assessments of subcontractors, the Guidelines indicated that this should involve an evaluation of relevant information such as the experience and capability of the subcontractor to implement and support the outsourcing arrangement over the contracted period, as well as the financial strength and resources of the subcontractors, as specified in paragraph 5.4.3 of the Monetary Authority of Singapore's Guidelines on Outsourcing (published on 27 July 2016) ("MAS Outsourcing Guidelines"). Additionally, where the subcontractor operates outside Singapore, the requirements in paragraph 5.10 of the MAS Outsourcing Guidelines should be complied with.

    In the event of an intra-group outsourcing arrangement, similar due diligence procedures should be undertaken.

General IT Controls and Service Controls

In general, the Guidelines recommend more stringent periodic reviews of the OSP's IT controls and service controls. It is recommended that the following controls be reviewed every 12 months:

  • Change management controls
  • Incident management controls
  • Backup and disaster recovery policies and procedures
  • Network and security management
  • Security incident response procedures
  • System vulnerability assessments, including vulnerability assessment policies and procedures, penetration testing, and procedures for fixing issues identified by vulnerability assessment and penetration testing
  • Technology refresh management plans and procedures
  • Operating procedures and processes

A copy of the Consultation Paper can be assessed here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions