The Monetary Authority of Singapore (MAS) issued a consultation paper on 8 May 2023 proposing amendments to regulations and notices under the Payment Services Act 2019 (PS Act). The proposed amendments primarily address the expanded scope of cross-border money transfer (CBMT) services, domestic money transfer (DMT) services and digital payment token (DPT) services introduced in the Payment Services (Amendment) Act 2021 (PS(A) Act), which is not yet in effect. The proposed amendments also enhance provisions related to anti-money laundering and countering the financing of terrorism (AML/CFT) requirements to align with enhanced standards of the Financial Action Task Force (FATF), make miscellaneous changes to the regulations and notices and provide a temporary exemption from licensing for businesses providing services that will be regulated when the PS(A) Act becomes effective.
Comments on the proposed amendments must be submitted to MAS by 8 June 2023.
When the PS(A) Act becomes effective, the scope of CBMT, DMT and DPT services will be expanded as follows:
Please see our earlier articles, MAS Proposes to Regulate More Token and Money Transfer Services Under the Payment Services Act, Payment Services Bill Proposes to Increase Regulation of Payment Service Providers in Singapore, for more information about the PS(A) Act.
In general, the Payment Services Regulations 2019 (PSR) will apply fully to CBMT, DMT and DPT services after their scopes expand under the PS(A) Act. The PSR currently imposes a requirement on major payment institutions (MPIs) to safeguard money they receive in connection with CBMT (among other safeguarding requirements). The proposed amendment would not require MPIs to safeguard money for transfers between countries outside Singapore if both payer and payee are outside Singapore and the MPI does not receive the money in Singapore.
MAS Notices PSN01 and PSN02 set out AML/CFT regulations for wire transfers and value transfers, respectively. Those Notices will be amended to clarify that they apply fully to the expanded scope of CBMT, DMT and DPT services.
The proposed amendments will also:
The proposed amendments will extend the data collection requirements of MAS Notice PSN04 to apply fully to the expanded scope of CBMT, DMT and DPT services and to expand data collection related to higher risk customers and anonymity-enhancing technologies, among others. There will be a six-month grace period to allow existing and new licensees time to comply with the new requirements.
MAS Notice PSN07 imposes general conduct requirements on payment service providers. The proposed amendments will extend PSN07 to apply fully to the expanded scope of CBMT, DMT and DPT services and to allow for longer money transmission timelines for business customers as provided in contracts between the providers and the business customers. Money transmission timelines for consumers will not be changed.
MAS Notice PSN08 sets out risk warning statements that payment service providers must give to their customers. The proposed amendments will revise the statements to cover the expanded scope of DPT services and to clarify that MAS does not regulate certain cryptocurrency-related products (e.g., trading of DPT derivatives).
Similar to the temporary exemption available to businesses providing services that were regulated when the PS Act became effective, MAS proposes to grant a temporary exemption for businesses providing services that will be newly regulated under the PS(A) Act. The exemption period will be six months from the effective date of the PS(A) Act, after which businesses wishing to continue providing the regulated services must either have a licence or a licence application on file.
Businesses already holding licences for CBMT, DMT and/or DPT services will not need to apply to vary their licences if they are providing services which will be caught within the expanded scope of the services for which they are already licensed. However, if for example a CBMT licensee will now be seen as providing a DMT service because of the expanded scope of the latter service, the licensee will need to apply to vary their licence to include DMT services before the end of the temporary exemption period.
Businesses that intend to begin providing one or more services regulated under the PS Act after the PS(A) Act becomes effective must obtain a licence before providing those services. Similarly, businesses providing services under the temporary exemption but that do not obtain a licence or have a licence application on file before the end of the temporary exemption period must cease providing those services and obtain a licence before they resume providing them.
Companies providing or intending to provide services that will be newly regulated under the PS(A) Act should (1) assess their licence status and, if necessary, begin preparing to file applications with MAS to vary their existing licences or to obtain new licences and (2) begin to prepare policies, procedures, controls and systems that will enable them to comply with the requirements proposed in this consultation paper.
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Disclaimer: This article is for general information only and does not constitute legal advice.