MAS Tells Banks to Scrutinise Clients Linked to Haze

MAS is directing banks to identify, assess, manage, and monitor environmental risks stemming from their activities and exposures, encompassing issues like pollution and deforestation. Banks are also expected to integrate relevant information from the National Environment Agency (NEA) under the Transboundary Haze Pollution Act (THPA) into their risk assessments.

Specifically, banks should engage customers potentially linked to haze-contributing activities to gather sufficient information on their involvement, including evaluating their measures to prevent and stop fires. Where heightened environmental risks are identified, banks are expected to take corrective actions, which may involve imposing conditions, reviewing financing terms, or reassessing customer relationships.

Stronger measures, such as limiting exposures or terminating customer relationships, are warranted for clear breaches of environmental laws. This is not the introduction of entirely new regulations, but rather a reinforcement of existing supervisory expectations covered under MAS’s Guidelines on Environmental Risk Management, issued in 2020, and further detailed in its Guidelines on Transition Planning, issued in March 2026.

The transition planning guidelines will take effect in September 2027, following an 18-month transition period. MAS has stated that this reinforcement of expectations is a direct response to the prevailing haze situation, indicating a heightened focus on the implementation of established environmental risk frameworks within Singapore's financial sector.