The Monetary Authority of Singapore (MAS) has introduced important amendments to the Payment Services Act (PS Act) and launched new measures aimed at holding digital payment token (DPT) service providers accountable for preventing money laundering and combating terrorism financing. These changes significantly expand the scope of payment services regulated by MAS and aim to enhance user protection and financial stability across the digital payment sector. The measures will be implemented in stages.
Key Amendments to the Payment Services Act
The amendments bring additional activities under the regulation of the PS Act, including:
- Provision of Custodial Services for DPTs: DPT service providers offering custodial services will now fall within the regulated framework.
- Facilitation of DPT Transfers Between Accounts: This includes facilitating the exchange or transfer of DPTs, even if the provider does not handle the actual funds or tokens.
- Cross-border Money Transfers: Facilitating international money transfers will also be regulated, even when funds are not physically accepted or received in Singapore.
Strengthening Accountability and Compliance
With these amendments, MAS will gain enhanced powers to impose requirements related to anti-money laundering (AML), countering the financing of terrorism (CFT), user protection, and financial stability. Entities involved in activities under the expanded PS Act will be subject to a transitional period. These businesses must notify MAS within 30 days and submit a licence application within six months from 4 April 2024 if they intend to continue operations during the review process.
In addition, entities are required to submit an attestation report of their business activities and AML/CFT compliance. This report must be certified by an external auditor and completed within nine months from the same date. Any entity failing to meet these requirements must cease operations when the amendments come into effect.
Protecting Customer Assets
A significant aspect of the amendments relates to safeguarding customer assets. New regulations stipulate that DPT service providers must separate customer assets from their own and place them in a trust account to protect customers' interests. They are also required to maintain accurate records and implement effective systems to ensure the integrity and security of customer assets. These provisions will take effect six months from 4 April 2024.
MAS’s latest amendments to the Payment Services Act mark a crucial step in enhancing the regulatory landscape for digital payment token service providers in Singapore. By expanding the scope of regulation, these changes are designed to foster greater transparency, financial stability, and user protection while addressing risks associated with money laundering and terrorism financing.
If your business is affected by these new regulations, it’s vital to act now. Ensure compliance by submitting your licence application within the required time frame, and prepare your attestation report to meet MAS’s new standards. Don't delay—secure your operations and ensure that your business continues to thrive under the evolving regulatory landscape.
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